Tighter renting restrictions

[DisneyAl]

In my latest DVC newsletter it stated that tDVC monitors reservations and if they find renting for profit they can deny the reservation. Is this a new policy? Will this, in effect, eventually eliminate renting?

 

[bicker]

The policy has been in effect since the inception of DVC -- DVC has never been to be used for commercial purposes. What's new is the manner in which they're now enforcing it, with the closer monitoring.

 

[bpmorley]

I just read the last newsletter and I didn't see that.

 

[rinkwide]

Sometimes, despite holding a crappy hand, a good poker player will raise anyway.

 

[DisneyAl]

Has the closer monitoring actually resulted in canceling of some reservations?

 

[dumbo71]

The policy has been in effect since the inception of DVC -- DVC has never been to be used for profit. What's new is the manner in which they're now enforcing it, with the closer monitoring.

I disagree. Renting is clearly allowed in the POS. That little clause about not renting for profit is a state mandated clause for ALL Timeshares. It is there so people don't go into it believing they can rent and sell there Timeshare for a profit.

I haven't heard a single report of ressie being cancelled. This may very well be a scare tactic.

 

[RobDoc]

The policy has been in effect since the inception of DVC -- DVC has never been to be used for profit. What's new is the manner in which they're now enforcing it, with the closer monitoring.

I disagree. Renting is clearly allowed in the POS. That little clause about not renting for profit is a state mandated clause for ALL Timeshares. It is there so people don't go into it believing they can rent and sell there Timeshare for a profit.

I haven't heard a single report of ressie being cancelled. This may very well be a scare tactic.

Renting is specifically allowed in the POS - but the policy bicker refers to is regarding "Personal Use" (and is also in the POS).

The specific language is: " ... Use of Vacation Homes and recreational facilities for commercial purposes or any other purposes other than the personal use described herein is expressly prohibited. "Commercial purpose" shall include, but not be limited to, a pattern of rental activity by a Cotenant that the Association, in it's reasonable discretion, could conclude constitutes a commercial enterprise or practice. ... "

There is no mention of selling "for a profit" as any concern by Disney - only a "pattern of commercial activity" as a concern. The clause quoted above has been in the POS since the beginning, as well as other clauses specifically allowing renting accommodations. As bicker noted, the difference is that for the first time DVC has addressed the concept of "pattern of commercial activity". The lack of public knowledge does not mean that no steps have been taken against members who have been deemed to fit that description. In fact, many have recieved letters advising them that DVC is reviewing their reservation activity ( I believe you stated that you recieved such a letter and were concerned enough by the verbage to sell a portion of your ownership ?). If that is what you mean by a scare tactic, it sounds as though it worked. The fact that you "haven't heard a single report of ressie being cancelled" does not mean that reservations have not been cancelled or that some other action has not been taken against those deemed to violate the "commercial purpose" intent.

 

[dumbo71]

Renting is specifically allowed in the POS - but the policy bicker refers to is regarding "Personal Use" (and is also in the POS).

The specific language is: " ... Use of Vacation Homes and recreational facilities for commercial purposes or any other purposes other than the personal use described herein is expressly prohibited. "Commercial purpose" shall include, but not be limited to, a pattern of rental activity by a Cotenant that the Association, in it's reasonable discretion, could conclude constitutes a commercial enterprise or practice. ... "

There is no mention of selling "for a profit" as any concern by Disney - only a "pattern of commercial activity" as a concern. The clause quoted above has been in the POS since the beginning, as well as other clauses specifically allowing renting accommodations. As bicker noted, the difference is that for the first time DVC has addressed the concept of "pattern of commercial activity". The lack of public knowledge does not mean that no steps have been taken against members who have been deemed to fit that description. In fact, many have recieved letters advising them that DVC is reviewing their reservation activity ( I believe you stated that you recieved such a letter and were concerned enough by the verbage to sell a portion of your ownership ?). If that is what you mean by a scare tactic, it sounds as though it worked. The fact that you "haven't heard a single report of ressie being cancelled" does not mean that reservations have not been cancelled or that some other action has not been taken against those deemed to violate the "commercial purpose" intent.

Thanks Doc.

Yes, I do agree that "commercial" seems to be the focus not the casual renter.

Sorry Bicker if I misinterpreted your post.

Have you heard of any enforcement?

 

[Deb & Bill]

From the Winter 2006 Vacation Magic (page 28):

"In a continuing effort to maximize Members' personal enjoyment of their Membership, Disney Vacation Club would like to remind Members that policies limit the use of accommodations and recreational facilities solely to personal use and enjoyment of Owners, their lessees, Guests, exchangers and invitees and for recreational uses by corporations and other entities owning Ownership Interests in a Unit. To maximize the availability of reservations for these permitted purposes, Disney Vacation Club monitors reservations and may cancel reserved accommodations if a pattern of rental activity for profit is discovered. Additionally, current policies limit Vacation Point-transfer transactions to one transfer per Member or Membership, either as a transferee or transferor, during a given Use Year. Membership is designed to provide long-term personal enjoyment, and Members shouldn't purchase their Membership as an appreciable short-term investment. "

 

[JudyS]

From the Winter 2006 Vacation Magic (page 28):

"In a continuing effort to maximize Members' personal enjoyment of their Membership, Disney Vacation Club would like to remind Members that policies limit the use of accommodations and recreational facilities solely to personal use and enjoyment of Owners, their lessees, Guests, exchangers and invitees and for recreational uses by corporations and other entities owning Ownership Interests in a Unit. To maximize the availability of reservations for these permitted purposes, Disney Vacation Club monitors reservations and may cancel reserved accommodations if a pattern of rental activity for profit is discovered. Additionally, current policies limit Vacation Point-transfer transactions to one transfer per Member or Membership, either as a transferee or transferor, during a given Use Year. Membership is designed to provide long-term personal enjoyment, and Members shouldn't purchase their Membership as an appreciable short-term investment. "

Isn't this the same language that was discussed here intensely a few months ago? I thought most people on the DISboards decided that the problem was with renting out transferred points. Has anyone here heard of Disney objecting to someone who rented out their own points?

 

[RobDoc]

Isn't this the same language that was discussed here intensely a few months ago? I thought most people on the DISboards decided that the problem was with renting out transferred points. Has anyone here heard of Disney objecting to someone who rented out their own points?

It's possible that DVC is just as interested in those who purchased primarily to rent accommodations rather than use the membership personally. They have never spelled out what they might look for in a "pattern of rental activity", so it might not be limited to renting transferred points.

Just imagine what the outcome might be if those renting are contacted by the state of FL or the county asking for the appropriate hotel taxes for their rental activity. Disney does charge and pay the tax to the county/state - why shouldn't other renters be responsible for the same rental taxes?

 

[TCPluto]

Disney Vacation Club would like to remind Members that policies limit the use of accommodations and recreational facilities solely to personal use and enjoyment of Owners, their lessees, Guests, exchangers and invitees and for recreational uses by corporations and other entities owning Ownership Interests in a Unit.

This is funny, as in odd. This statement clearly allows for renting DVC. Seems they've reiterated quite clearly that renting is allowed. How else do you allow for them referring to the members "lessees"?

 

[bicker]

I disagree. Renting is clearly allowed in the POS.

Please read what I wrote again. I never said that renting wasn't allowed. I said that using DVC for commercial purposes by renting is prohibited. The rule is there. People may not like it, but they're obligated to comply with it.

 

[bicker]

This is funny, as in odd. This statement clearly allows for renting DVC. Seems they've reiterated quite clearly that renting is allowed. How else do you allow for them referring to the members "lessees"?

While the rules allow you to rent to make up for the occasional year you don't plan to visit yourself, what they prohibit is renting as routine commercial venture.

 

[Dean]

Please read what I wrote again. I never said that renting wasn't allowed. I said that using DVC for making profit by renting is prohibited. The rule is there. People may not like it, but they're obligated to comply with it.

As Doc wrote above, there is no mention in the POS of profit, only a reference to commercial renting, which isn't defined in the POS currently. The price received is not taken into account.

Uh. Wait. Members are "lessees" because we have a "lease hold" on the property. It's a form of property ownership. And the rules we're discussing have nothing to do with the members using the timeshare, but rather renting its usage to others. While the rules allow you to rent to make up for the occasional year you don't plan to visit yourself, what they prohibit is renting as routine profit-making venture.

As used in the POS, lessee clearly means a renter as it uses terms like "members, their lessees,"

 

[bicker]

Thanks for that correction about the wording in the POS. I'll update my messages to use the term "commercial" instead of "profit".

 

[Doctor P]

As Doc wrote above, there is no mention in the POS of profit, only a reference to commercial renting, which isn't defined in the POS currently. The price received is not taken into account.

I disagree with the last statement. Most definitions of "Commercial purposes" DO generally take into account the price which is received. For example, an affirmative defense to whether one is engaged in a business or a commercial endeavor is that there is no profit motive as evidenced by the price being charged.

 

[RobDoc]

I disagree with the last statement. Most definitions of "Commercial purposes" DO generally take into account the price which is received. For example, an affirmative defense to whether one is engaged in a business or a commercial endeavor is that there is no profit motive as evidenced by the price being charged.

Since DVC has never published whatever threshhold they use to define "commercial purpose", as stated in the POS, we don't really know whether "profit" is included in the equation. In most cases they would have no way of knowing what was charged for a rental or what specific economic factors were involved to determine what, if any, "profit" was there. I expect that they are not more concerned with a $15 per point rental than with a $10 per point rental- depending on the other factors involved with the situation. Again- they really have no way to determine, in advance, whether any money exchanged hands at all - so I believe the "pattern of rental activity" definition has other components that are considered rather than price.

My opinion is that DVC's definition for "commercial purpose" may be a fairly broad concept made up of a number aspects. Certainly "profit" could be one of those aspects, but I can see how other factors could be a more significant concern for DVC. IMO, those using transferred points to make reservations would be suspect when considering a "patern of rental activity" as well as those members who make many reservations in the name of other people with few (or none) for themselves. I also recognize that there are circumstances where a member may honestly use his/her membership by providing accommodations for others without receiving any payment in return (I have provided many such trips for my office staff over the years) - so DVC must also be able to discern the difference, hopefully without placing the member in a compromised position.

Without more definition from DVC, we can only speculate as to the limits of the actual guidelines used in defining "pattern of rental activity" or "commercial purpose".

.02

 

[Doctor P]

Since DVC has never published whatever threshhold they use to define "commercial purpose", as stated in the POS, we don't really know whether "profit" is included in the equation. In most cases they would have no way of knowing what was charged for a rental or what specific economic factors were involved to determine what, if any, "profit" was there. I expect that they are not more concerned with a $15 per point rental than with a $10 per point rental- depending on the other factors involved with the situation. Again- they really have no way to determine, in advance, whether any money exchanged hands at all - so I believe the "pattern of rental activity" definition has other components that are considered rather than price.

My opinion is that DVC's definition for "commercial purpose" may be a fairly broad concept made up of a number aspects. Certainly "profit" could be one of those aspects, but I can see how other factors could be a more significant concern for DVC. IMO, those using transferred points to make reservations would be suspect when considering a "patern of rental activity" as well as those members who make many reservations in the name of other people with few (or none) for themselves. I also recognize that there are circumstances where a member may honestly use his/her membership by providing accommodations for others without receiving any payment in return (I have provided many such trips for my office staff over the years) - so DVC must also be able to discern the difference, hopefully without placing the member in a compromised position.

Without more definition from DVC, we can only speculate as to the limits of the actual guidelines used in defining "pattern of rental activity" or "commercial purpose".

.02

I agree, but profit is the general trigger for the tax laws (including many sales taxes since they are actually, in many states, really a retailer's occupation tax and don't apply to non-commercial transactions). I won't disagree, however, that this is just one of many factors and that this one may not be the main one of interest. In addition, there appears to be some definitions of commercial activity in Florida statutes and administrative rules that do have language relating to profit motives in them.

 

[Dean]

I agree, but profit is the general trigger for the tax laws (including many sales taxes since they are actually, in many states, really a retailer's occupation tax and don't apply to non-commercial transactions). I won't disagree, however, that this is just one of many factors and that this one may not be the main one of interest. In addition, there appears to be some definitions of commercial activity in Florida statutes and administrative rules that do have language relating to profit motives in them.

Nothing I've seen in the Timeshare or Condo rules would address this issue other than the rule to include that one should not expect a profit from resale. And I do believe it is applicable here and is clearly aimed at preventing sellers from using the idea to buy now and make a profit later as a sales tactic. And as Doc mentioned above, there would be no way for DVC to realistically monitor the price charged, much less the profit since there are more variables than simply price. Plus for the minimal glimps of info we've gotten from those directly affected, there has been no mention of price or profit, only number of rentals per year with the number of 20/yr being mentioned.