Stripped resale

[jdomka]

I have been looking at resales for a while now and was just wondering about a resale that has been stripped of its points for 2009 and 2010. Does the current member pay for the MF before using the points that he/she borrowed from 2010? My confusion is would I need to start paying MF for 2009 and 2010 while I had no points until my UY 2011?

 

[hellerjw]

The dues are calendar year based not UY based. He would have paid, or be paying monthly, his 2009 dues now. He wouldn't pay his 2010 dues until January 2010. All things are negotiable via resale so I would definitely ask for MF to be paid for both years if no points were available to use.

 

[JimMIA]

The technical answer to your question is that dues are assessed by calendar year, so the 2009 dues have already been billed and should have been paid. If they have not been paid, they'll have to be paid by somebody before the deal closes, I believe.

On the 2010 dues, you will receive a bill for the 2010 dues in December 2009 and you will have to pay them.

In a resale, everything is negotiable. The normal deal is that you do not pay dues for banked points you might get (they're a deal-sweetner and may already be reflected in the price), nor do you pay for points you will not receive. The price of a stripped contract may already have been set lower to adjust for the dues you'll have to pay. But I'd be sure you have a good idea what those dues are and that appropriate adjustments are made.

 

[jdomka]

Thanks for the clarification!

 

[RobDoc]

Be sure to have a clear understanding regarding the annual dues before you make an offer (or just include those details in your offer). Unless that issue is spelled out in advance, you should assume that you will be responsible for the 2010 dues since the bill will be sent to the owner of record next January.

I think I'd put something in the offer about the seller paying $x.xx for the 2010 dues (and I'd plan for a 3-4% increase over the 2009 dues).

Good luck!

 

[spiceycat]

get the owner to pay for all the points he/she used.

you can. there are definitely more sellers than buyer these days.

 

[blondietink]

I would insist as part of the deal that the seller pays for all of the dues on the year(s) you cannot use points as the seller has already benefited from those points. I don't care if they have already reduced the price of the points to compensate. If they are despeate enough, I would make sure they had sent a good check to pay for those MF's with an inflation factor. Otherwise, you will have paid for the points but you will be stuck paying for the MF's for something you can't use during that year.

 

[mommacat56]

In order to avoid all the confusion (and at the same time trying to make a fair offer that will pass ROFR), I'd look to purchase another contract altogether. There are loads of them out there with very motivated sellers. Just my 2 cents...
Mary

 

[maburke]

On the 2010 dues, you will receive a bill for the 2010 dues in December 2009 and you will have to pay them.

In case it was not clear from the other posts, the above statement is true. No matter what else happens, you will get a bill for the dues for 2010, and you will have to pay them. If you want (as is perfectly reasonable) for the seller to pay the dues on points they've used, make sure that is in writing (an estimated amount, as people suggested, with a 3% increase) in your offer. Then the seller will credit you that amount at closing. Once it closes, the seller has no further obligation.

I bought a stripped contract, and the documents I received ahead of the closing did not reflect that the seller was paying mf's on the used points. I pointed it out to the agent (at TTS) and, since it was clearly spelled out in the contract, she was able to have the documents redrawn. No matter how reasonable it sounded that the seller should pay the mfs on the used points, I don't know that I would have been able to get that done if it wasn't in the contract explicitly.

In order to avoid all the confusion (and at the same time trying to make a fair offer that will pass ROFR), I'd look to purchase another contract altogether. There are loads of them out there with very motivated sellers. Just my 2 cents...
Mary

I'd say if you don't need the points right away, don't avoid stripped contracts -- they can be great bargains. And Disney knows they're stripped and hard to sell when they come in for ROFR, so they're fair about that. Maybe more than fair, since they can't resell them until the points are current.

 

[CarolMN]

I.......And Disney knows they're stripped and hard to sell when they come in for ROFR, so they're fair about that. Maybe more than fair, since they can't resell them until the points are current.

Sure they can. They would just make some internal accounting changes to add points they own to the contract. Based on the amount of developer points available for incentives, I'd venture to guess it wouldn't be a problem for them to make the contract whole. But more likely, they just throw the future points into their "pot" and make whatever contracts from them that people want to buy.

Disney may or may not exercise ROFR on a stripped contract. We can only guess at the criteria they use. But if the price is low enough, they will buy the contract even if it's stripped.

 

[Caskbill]

Keep in mind that dues are based on a calendar year, while points are based on a use year.

To equate dues to points, you need to know the use year month and pro-rate dues to points on a month to month basis.

Depending on the use year and how many of the 2010 points were used, the dues applicable to some of those points may actually be part of the 2011 calendar year dues and not payable until Jan 2011.

Example: Suppose it's a June use year month and all of the 2010 points have been used. Technically the dues for calendar year 2010 cover 5/12ths of the 2009 points and only cover 7/12ths of the 2010 points (June-Dec). Dues paid Jan 2011 cover the remaining 5/12ths of the 2010 points (Jan-May 2011)

This is because in this example the use year goes June-May while the calendar year goes Jan - Dec.