Third party commercial renters

[Sandisw]

The rental policy posted earlier in this thread was, I think, an amended version passed in late 2007 https://dvcnews.com/dvc-program-men...commercial-renting-limitations-amended-to-pos
I don’t know when it changed, but I believe (but am not 100% sure) the current language simply states that “The Association has adopted a policy regarding what constitutes a commercial enterprise, practice or purpose, which policy is a record of the Association and may be reviewed upon request.”
Thus until someone makes a request to review the current policy who knows whether it’s the old 20/12 rule, something closer to what was reported regarding the CFWs & debated extensively 4 months ago here on DIS https://www.disboards.com/threads/new-definition-of-rental-activity.3939178/ , both, or something new .

Let me check to see what I can find in the current documents. I thought it was still the same. If this is no longer in the POS, then I will request an updated version...I did just get hard copies of the most recent CFW and multi-site POS, and will check out the language in both.

UPDATED: I reviewed my RIV and VGF POS statements....the language you mention above is in my VGF POS, but is not in RIV (I will post below)

Both do say that DVC or the Board of the association, get to determine the definition of "commercial purpose"...however the VGF POS uses the word reasonable discretion and the RIV POS does not... both use the words "pattern of rental activity....what is missing from both documents is the enforcement language that existed in the 2007 language....so, the published POS for, at least these two resorts, and the MS POS do not define that...that to me is a big piece of info.

The MS POS is where you find the language about the total number of points one can own (8000) that say "to encourage personal use.

So, it does appear that the Commercial Use language from 2007 is no longer being written into the contracts, and the RIV and Resort Use Plan for CFW do have a bit more specifics than VGF, the enforcement of it is not included. So, I emailed DVC because I want the legal document that currently exists that spells it out...and did include that I don't want a random CM to say "we do this..." Is it still the 20 reservation threshold, or is it different? As owners, that is something that should be included when and if it is ever updated....

What is interesting, and it is part of the Resort Use plan for CFW, is that the RIV POS does add some more specific examples of what DVC may (not shall) use in finding an owner in violation (see below), it is incomplete without knowing what they are using today and how they are enforcing it. This is what RIV POS says for RIV owners, but is not the language for VGF owners.

 

[lowlight]

You don;t fill out 1099s for yourself, unless you are incoorporated. Century 21 send me a 1099 because they manage my regular rental properties, and because the money runs through them. I did not need a 1099 for my DVC rentals because I did not use a broker, I rented them directly, but still noted them on my tax stuff for my CPA.

My point was that commercial is a very legal term to the IRS, and kind of a wishy washy term to Disney. I’m not really sure what their goal was with the number 20, because if you have 50 points and rent 100% of them out every year in 1 reservation with no intention of staying, it’s commercial in my eyes.

 

[mistysue]

So, how many total reservations do you feel is a good mix of personal and rentals for an owner to have at one time within that 12 months span?

It's not a question of how many total reservations a person is allowed to have. It's a question of how many reservations you can make before they ASK THE QUESTION whether this is your business or your vacation hotel. If YOU want to stay in 40 different rooms, nobody cares. If you want to book and rent 15 reservations and only use 1, that is still against the rules but Disney won't even check yet because it's fewer than
20. That's not saying it's okay. It's just saying Disney knows they're not going to catch you.

That is very important to differentiate, because their TOS saying that you can have 20 reservations before they will review is NOT the same as saying you're allowed to do 19 rentals and nothing else. It's just saying they know they aren't going to review you. So if that number became 5, it would not change anything for owners who were using their points, it would simply make it harder for those corporations who were not.

 

[Genie+]

Contracts are to be adhered to in their entirety. If somewhere says you can paint your balcony green and elsewhere says you cannot use leaded paint, you can’t use leaded paint and say it’s OK because it’s for a green balcony.

My guess as to what’s going on here is back in 2007 DVC first started seeing the need to address the blossoming rental market, but they also didn’t want to make such a big deal out of it unnecessarily. The occasional rental is great for the membership, which in turn increases value in the brand. It addresses many concerns of potential buyers, like if they end up unable to use their points before expiration or need to skip a couple trips they have a way not to waste the value of those points. Still they did need to put something in place as to the limits, and it seems like a middle ground between not scaring off members yet being able to thwart major wheeling and dealing.

Fast forward almost 2 decades later and the activity and sophistication of the tools exploded. There’s a long list of advantages that come with switching gears from personal use to major operation. I’m still working on that list and will post when completed.

 

[Chuck S]

So, again, if you want it adhered to in it's entirety, then you do want DVC to take the time and money to review each and every reservation and approve each one?

 

[Genie+]

So, again, if you want it adhered to in it's entirety, then you do want DVC to take the time and money to review each and every reservation and approve each one?

That’s not what I’m talking about. I doubt anyone else is interpretting like that.

 

[Chuck S]

That’s not what I’m talking about. I doubt anyone else is interpretting like that.

However, if they don't do that, how else can they possibly stop all commercial renting without reviewing each reservation, and adhere to the POS in it's entirety?

 

[mistysue]

However, if they don't do that, how else can they possibly stop all commercial renting without reviewing each reservation, and adhere to the POS in it's entirety?

You are truthfully going to some pretty weird extremes to defend commercial renting.
I get that you are obviously making some money off of your contract at this point. I think we all are able to infer that from your responses.

 

[Sandisw]

It's not a question of how many total reservations a person is allowed to have. It's a question of how many reservations you can make before they ASK THE QUESTION whether this is your business or your vacation hotel. If YOU want to stay in 40 different rooms, nobody cares. If you want to book and rent 15 reservations and only use 1, that is still against the rules but Disney won't even check yet because it's fewer than
20. That's not saying it's okay. It's just saying Disney knows they're not going to catch you.

That is very important to differentiate, because their TOS saying that you can have 20 reservations before they will review is NOT the same as saying you're allowed to do 19 rentals and nothing else. It's just saying they know they aren't going to review you. So if that number became 5, it would not change anything for owners who were using their points, it would simply make it harder for those corporations who were not.

Again, if they are not going to ask the question until you reach 20 (see post above about my reading again of the current POS and my request to DVC for the most up to date language for the threshold), then they are telling you that for now, rentals below that number won't be seen as in violation.

I agree that if they lower the total number, that reviews happen more often...more owners will be reviewed...but, in order to find someone in violation of the membership agreement, they still have to have a threshold number that triggers enforcement, don't they?

For example, if they lower the review to 10 and all 10 of mine are rentals, and DVC decides not to do anything, then it means that 10 okay....what they can't do is keep it secret of when I will or will not be in violation...I have a right to know that....and if it is changed, I should be notified.

So, we are back to, what is a reasonable threshold to trigger the reviw of your membershp?

ETA: And before its asked, I have rented a total of two reservations via brokers, and any other "rentals" have been to friends in which they covered only the cost of dues for the points used...those might total 5 or 6 reservations over my 15 years of owners....

 

[CWTC]

what is a reasonable threshold to trigger the reviw of your membershp?

And what will the financial costs be in terms of dues? If they are going to review some/all rentals they are going to need to hire people and/or task current member services personnel to do it which will make it harder to get phone assistance, process resale buyers new contracts, etc.

I am not keen on commercial or spec renters gobbling up reservations but I must say the fix may be more draconian than we would all want.

 

[Sandisw]

Contracts are to be adhered to in their entirety. If somewhere says you can paint your balcony green and elsewhere says you cannot use leaded paint, you can’t use leaded paint and say it’s OK because it’s for a green balcony.

My guess as to what’s going on here is back in 2007 DVC first started seeing the need to address the blossoming rental market, but they also didn’t want to make such a big deal out of it unnecessarily. The occasional rental is great for the membership, which in turn increases value in the brand. It addresses many concerns of potential buyers, like if they end up unable to use their points before expiration or need to skip a couple trips they have a way not to waste the value of those points. Still they did need to put something in place as to the limits, and it seems like a middle ground between not scaring off members yet being able to thwart major wheeling and dealing.

Fast forward almost 2 decades later and the activity and sophistication of the tools exploded. There’s a long list of advantages that come with switching gears from personal use to major operation. I’m still working on that list and will post when completed.

I completely agree that with the expansion of the rental market... that updated rules may need to be put in place. Not because I believe there are hundreds of thousands of owners out there who are renting DVC as a business, but because I think so many more owners are renting than in 2007....that the average owner who rents is tenfold....because its so easy to do it and we are allowed to do it!

That is a solid argument and for all we know, DVC has done that...I have requested that information....because as owners we have a right to know what the specifics are (the 2007 language was very specific and why many of us still quote it) and what the enforcement policy is...because that must be consistently applied to all owners.

You still have to have a threshold to trigger the review of the membership...and that threshold needs to be consistent...it was 20. Should it still be 20, should it be less? If it is less, then what does the process look like? Lowering it will trigger more reviews so the current process of what happens when a memberhips is flagged, may not still work....

That is one thing we all should want...a consistent threshold that triggers review and then a consistent threshold and pattern of behavior that triggers enforcement, and what the enforcement will be...under the 2007 language, the enforcement was all reservations above 20 were canceled, unless the first 20 were proven to be just for owners use (including family/friends).

The bigger problem in all of this is the amount of time a review would take if DVC has to reach out to every owner who exceeds a lower threshold. Let's say it is reduced to 10...the membership is flagged...now what? If all those reservations are still in the name of the owner, then what? How often will an owner get reviewed to see if the names change?

Not saying that all of this can't be part of the process, but there is a lot that will need to go into it. And, I still believe that whatever specific rules DVC puts in place, they will be ones that most owners see as a reasonable rule.

 

[Chuck S]

You are truthfully going to some pretty weird extremes to defend commercial renting.
I get that you are obviously making some money off of your contract at this point. I think we all are able to infer that from your responses.

Actually, you can infer no such thing. In 32 years of DVC Ownership, I've rented 98 total points, last year, for a total of $1,666. I own ONE membership, spread over 4 contracts, for a total of 345 points at OKW. I am not incorporated, and I also make no money moderating the DVC Rent/Transfer Board. All the moderators are volunteers.

All the rest of the time, my membership has been used by myself, my family, and friends for no compensation, unless you consider them buying an occasional meal during a trip compensation.

There are those here saying ANY compensation received makes it "commercial rental" and based upon that supposition, I'm simply saying the steps required to eliminate it completely (as many posters seem to want) and adhere entirely to the POS without a reasonable definition of commercial renting will destroy the flexibility of DVC for almost every DVC Member as we know it with no substantial benefit to 95%+ of the membership. I think the 20 reservation limit IS a reasonable definition.

I'm also saying that commercial renting likely would not be the probllem it is if DVC had not ever allowed a member to have less than the original 230 points as the program was originally designed, and if we were not allowed to sell off small add-on contracts separately from our main original contracts. Leading to too many small point owners in the system vying for the same value studio reservations.

 

[Sandisw]

And what will the financial costs be in terms of dues? If they are going to review some/all rentals they are going to need to hire people and/or task current member services personnel to do it which will make it harder to get phone assistance, process resale buyers new contracts, etc.

I am not keen on commercial or spec renters gobbling up reservations but I must say the fix may be more draconian than we would all want.

Here is what we know for sure....DVCMC gets paid 12% of our annual budget to manage the program and that includes making sure owners are not in violation of the commercial purposes clause.

If owners want them to start reviewing more memberships, and spending time talking to more owners about establishing for DVC that the reservations on their membership are for themselves, families, and only X number of rentals (which has to be part of the mix since we are allowed to rent), that money is going to come from reducing CMs from doing other tasks...like answering phones, loading new points, etc. DVC is not going to eat into its profits from that 12%, or spend money out of their own pocket, nor are they required to.

That is why I do not see DVC ever implementing rules that are too strict to enforce....it will strick an acceptable balance between the two.

 

[mistysue]

I'm not sure we need the assumption needs to be a monitoring for X number of total reservations.
What needs to be watched for is X number of reservations without an owner on the reservation.

ChuckS - glad to hear it's more of a recent blip and not that you're power renting, it's what your responses were starting to sound like. I don't think it's reasonable to say you can never rent or let others stay, we can certainly agree there.

There are contracts owned by people whose intent was never really to stay in them, but just to use them as an income source. DVC used to do all reservations over the phone, which allowed them to confirm what was going on. Now they don't, were those savings passed back to members when that changed? If they can't have someone at least randomly auditing (may just pick out 1/20 stays to check in on and flag members with suspicious activity, the least they could do is an automated feature where the the owner is a primary guest. If the owner isn't on the reservation at all, it requires a click that starts tallying the number of reservations being made for others. Over years of use, it would immediately be obvious that I'm booking a room for my same daughter every Spring vs I never go myself and book for 15 different strangers every year.

Disney is tracking all sorts of things about us, you can't tell me nobody back there can tell which accounts change the name on every single reservation and they are all completely different people year after year.

 

[JackosinDIS]

Did you rent the stay to your colleague for free? If not, are you filling out a 1099?

No I charged them a fee. We are in the UK so don’t have 1099s, but I do have to include the income on both a US tax return and UK tax return! We have a wonderful marginal rate of tax of 45% here as well… which is nice.

 

[Sandisw]

I'm not sure we need the assumption needs to be a monitoring for X number of total reservations.
What needs to be watched for is X number of reservations without an owner on the reservation.

ChuckS - glad to hear it's more of a recent blip and not that you're power renting, it's what your responses were starting to sound like. I don't think it's reasonable to say you can never rent or let others stay, we can certainly agree there.

There are contracts owned by people whose intent was never really to stay in them, but just to use them as an income source. DVC used to do all reservations over the phone, which allowed them to confirm what was going on. Now they don't, were those savings passed back to members when that changed? If they can't have someone at least randomly auditing (may just pick out 1/20 stays to check in on and flag members with suspicious activity, the least they could do is an automated feature where the the owner is a primary guest. If the owner isn't on the reservation at all, it requires a click that starts tallying the number of reservations being made for others. Over years of use, it would immediately be obvious that I'm booking a room for my same daughter every Spring vs I never go myself and book for 15 different strangers every year.

Disney is tracking all sorts of things about us, you can't tell me nobody back there can tell which accounts change the name on every single reservation and they are all completely different people year after year.

I think the hard part for DVC, and maybe why the 2007 was written the way that it was (guessing here) is that its really simple for an owner to stay on a reservation, even when its a rental, until much later in the process.

By flagging accounts when all reservations reach a certain threshold (which can be done by a simple computer program), it allows DVC to then review those accounts, and not others...whether that should be 20 or lower is a matter of opinion.

When we used to have to call in, as you say, it was easy for a CM to review an account...with online booking, it has to be computerized in some way...and to answer your question, no, when they updated reservations to using an online system, no savings would be given back to owners because we agree to pay DVC a straight 12% fee, and they get to spend that however they want, and take whatever profit they make over expenses for themselves....

It really should come down to having a consistent rules that can be applied to every membership....regardless...because one thing that DVC has to account for is the ability of owners to rent.

Maybe DVC should consider taking the same rule from 2007 and update it to trigger review at 10 instead of 20....lots more owners will be flagged and contacted...but the enforcement can remain the same...you can't make an 11th reservation unless you have established to DVC's satisfaction, that the 10 you booked are for you, family or friends.

If any of those are rentals, then you can't hold any more, until the ones that are rentals are gone...that would limit all owners to no more than 10 rentals per membership per 12 month period... capped at 20 across any and all memberships in which someone is an owner...certainly seems like a policy that many could live with as being fair.

Then we don't have to get into rules such has what you can rent, how you can rent it, etc. It’s simple and straightforward. You want to spec rent, fine...you want to use a broker, FB, Disboards, or any other means to find a renter, fine. But, what you can't do is have more than 10 total in a 12 month period..if at least one of those is a rental.

And, what it would do for brokers who own contracts and rent their own points...and I am fine if a broker can't use their own website for their own points...similar to how families of Disney employees are not eligble for sweepstakes, etc....is stop them from renting tons of one or two night resevations they seem to grab in those high demand rooms.

Hopefully, I will get something from DVC in the next week or two with the actual document that states what the rules currently are, but more importantly what enforcement is in play.

 

[Sandisw]

My point was that commercial is a very legal term to the IRS, and kind of a wishy washy term to Disney. I’m not really sure what their goal was with the number 20, because if you have 50 points and rent 100% of them out every year in 1 reservation with no intention of staying, it’s commercial in my eyes.

I can take a guess.,,the contract says that personal use can include a renter. So, one rental a year, even if it all the points may not have been enough to be considered reasonable to say it should rise to the level of commercial purposes.

Why? Because if I have 1000 points and use 500 but rent 500, and you have 50 and you rent 50, who’s making more money of their DVC membership? Me or you?

So, by setting the threshold at what owners would view as a reasonable number , they came up with the 20..and because that 20 included both types,it probably at the time was enough to catch the owners who might try to make a business out of it.

I can’t imagine that anyone who bouts DVC to try to run it as a business is doing it with just one small contract.

Even the language today that says “to encourage personal use, you are capped at 8000” points… would seem to indicate that DVD purposefully set the bar high.

That is a lot of points and I am not saying it equates to DVC allowing a lot of rentals but it’s an interesting figure for them to have used.

 

[mistysue]

I can take a guess.,,the contract says that personal use can include a renter. So, one rental a year, even if it all the points may not have been enough to be considered reasonable to say it should rise to the level of commercial purposes.

Why? Because if I have 1000 points and use 500 but rent 500, and you have 50 and you rent 50, who’s making more money of their DVC membership? Me or you?

So, by setting the threshold at what owners would view as a reasonable number , they came up with the 20..and because that 20 included both types,it probably at the time was enough to catch the owners who might try to make a business out of it.

I can’t imagine that anyone who bouts DVC to try to run it as a business is doing it with just one small contract.

Even the language today that says “to encourage personal use, you are capped at 8000” points… would seem to indicate that DVD purposefully set the bar high.

That is a lot of points and I am not saying it equates to DVC allowing a lot of rentals but it’s an interesting figure for them to have used.

The 8000 figure is so crazy when it's discussed as being a reasonable limit for personal use. I can't imagine there are many people staying in a poly bungalow for 8 weeks of the year... or they would be a little harder to book. That's the type of rule that sounds like it was made by someone commercially renting to suit their own needs. I could imagine that being the actual root of the problem, because anyone "on the inside" could see exactly how easy it would be to skirt the rules. Otherwise it seems like DVC would have a little more sympathy to say "you're right... it seems like something fishy is going on here"

ETA - that thing with an owner staying on the reservation until the last moment - that is why this rolling system of upcoming is not a practical way to monitor this. There needs to be a record of "huh - your last 68 reservations, none of them have involved the same people"

 

[Sandisw]

The 8000 figure is so crazy when it's discussed as being a reasonable limit for personal use. I can't imagine there are many people staying in a poly bungalow for 8 weeks of the year... or they would be a little harder to book. That's the type of rule that sounds like it was made by someone commercially renting to suit their own needs. I could imagine that being the actual root of the problem, because anyone "on the inside" could see exactly how easy it would be to skirt the rules. Otherwise it seems like DVC would have a little more sympathy to say "you're right... it seems like something fishy is going on here"

That number was set by DVD…it’s in the current multi-site POS…so, legally, they have stated that limit was set for the purpose of encouraging personal use.

It is a lot, and I have no idea who came up with it…but, it’s important because when these discussions happen, what DVD has legally included in the contracts play a role and only DVD has the power to lower that figure or define what it means when they say” not for commercial use”.

And, doesn’t the frustration really come down to that aspect..some simply don’t like or agree with how DVC defines it and want it changed…but we, as owners, have not power to dictate those rules.

All we can do is know them, and live within them, and then expect DVC to enforce the rules they themselves have state are the rules…

That is why I can wait to find out what the enforcement clause is today and if it’s any different than in 2007. While I know I can’t force DVC to prove they are doing what they say, but they do have to provide us with the rules since in order not to violate them, we have to be clear on what defines the violation.

ETA: I get what you are saying about the rolling 12 month and maybe there is a better way to do things, and I don’t know what it is but there is no rule DVC can put in place, that balances the rights to rent against the commercial use clause that is going to catch every situation or that every owner is going to agree is the right one.

It is why I personally would support thresholds that include all reservations, personal and rentals, on a yearly basis because for those of us who are not renting outside the norms, it won’t matter.

 

[mistysue]

That number was set by DVD…it’s in the current multi-site POS…so, legally, they have stated that limit was set for the purpose of encouraging personal use.

It is a lot, and I have no idea who came up with it…but, it’s important because when these discussions happen, what DVD has legally included in the contracts play a role and only DVD has the power to lower that figure or define what it means when they say” not for commercial use”.

And, doesn’t the frustration really come down to that aspect..some simply don’t like or agree with how DVC defines it and want it changed…but we, as owners, have not power to dictate those rules.

All we can do is know them, and live within them, and then expect DVC to enforce the rules they themselves have state are the rules…

That is why I can wait to find out what the enforcement clause is today and if it’s any different than in 2007. While I know I can’t force DVC to prove they are doing what they say, but they do have to provide us with the rules since in order not to violate them, we have to be clear on what defines the violation.

I feel like the more people write to them, there is a chance they consider changes or looking into it. Your response seems very " 'shrug' we have no power" - but lacking the power to legally force a change does not mean there is zero chance of anyone listening to member feedback. To me that is important.