Trading DVC deeds?

[lark]

Has anyone ever looked into the feasibility of two DVC owners trading their deeds? I own at a fairly high in-demand on site WDW property. As our needs are changing, I'd prefer my home resort to be a different property in a different location. (I'm not specifying the details, because I don't want this to be perceived as an ad or break any forum rules; think of the question in the abstract.)

I think there is actually some chance that well advertised, I might be able to find a person in a similar circumstance, the other direction. In fact, just looking at resales, I think my resort is a bit in higher demand. Selling resale and buying would be really inefficient. I would think that, instead, paying a closing company would be easier if there's a way to do it. It would be a simple exchange of deeds. Paying a closing company to handle it, I would think, would be less than paying commissions, closing costs, etc., of selling and buying resale.

Has anyone ever looked into this? I would think there would be a couple of hurldes. First, both timeshares would, I would think, need to be paid off. Second, I'm not sure how ROFR would work with a non-cash sale. Maybe it would have to be structured so that each side is paying the other the exact same amount, and having the closing company just take care of it. I'm not sure if disney allows non-cash resales. I would imagine they have to, but they probably have the ability to make a fair market determination for purposes of the cash required for ROFR. Third, my purchase was direct, and I expect that with a "trade," my new points would be resale points with the new restrictions that entails. That said, I'd be willing to do this, and pay some closing costs, for the 4 extra months of home resort priority.

Anyway, it's a tough issue to search for on these boards. Maybe there have been discussions about it before. I'm not in a rush -- we have a stay in July and our contract is stripped until my 2012 UY. I'm just trying to gather info.

 

[ilikedvc]

DVC would still have to approve any trasnfer (change) in the title. My guess is they would consider this a sale and you would be subject to the First Right of Refusal by DVC. I would call DVC and ask them beofre you go to far.

 

[lark]

DVC would still have to approve any trasnfer (change) in the title. My guess is they would consider this a sale and you would be subject to the First Right of Refusal by DVC. I would call DVC and ask them beofre you go to far.

I have little doubt it would have to pass ROFR. The question, though, is what the ROFR provisions are for non-cash sales.

I could just pull out my docs and figure it out. I'm sure there are provisions, and my expectations are they relate to the fair market value of the thing being offered. (For example, if I entered a contract to sell my deed in exchange for services, I would think DVD has the right to estimate the FMV for purposes of ROFR. Maybe not; maybe I'm obligated to sell for cash. Not sure.) Just thought I'd ask in case it's been covered here before or if anyone has any experience.

I don't think I'd do anything without talking to disney or to a closing company experienced with disney, but I don't want to do so until I have a decent sense of what my rights and opportunities are.

 

[marynvince]

with an inflated price for both. DVD passes and you make exchange through closing company.

 

[JimMIA]

DVC has a procedure for "gratuitious transfers," but those are usually between immediate family members like children, brothers, sisters, etc. So the process exists.

I think you would have to assign a reasonable value to each contract, and submit both for ROFR. You would also have to disclose any cash changing hands, who's paying what costs, etc. And I suppose Disney would have the option of stepping in and taking the part of either (or both) parties and completing the transaction themselves, but I have no idea how that would work.

I don't think you'd have any problems with ROFR, because the kind of transaction you're talking about would be valued high enough to clear ROFR on both sides. As long as you ascribed legitimate values to the two contracts (which I'm sure you would), I don't see why Disney would have any objection.

 

[JWG]

Also keep in mind (if it matters) that if this somehow happens outside of the "gratuitous transfer" guidelines both parties would lose "direct sale" rights and privileges.

So, if you can make it work, the cost is essentially loss of ability to outside of DVC unless through RCI.

 

[lark]

with an inflated price for both. DVD passes and you make exchange through closing company.

Yeah, that's probably the way to go, but I think it has to be an honest price so that it's not fraud. I guess we could just use the average price of listed deeds on timeshare store.

I guess the complication comes in if DVD were to exercise ROFR for one deed but not the other. Although, I suppose that point, the person who had ROFR exercised could simply use the cash to go through with the purchase to which it's commited by virtue of the other contract.

If they exercised for both, the number has to be one that both parties would be comfortable with taking the cash.

 

[Greysword]

If the price per point were at retail, it should pass ROFR easily.

 

[Dean]

There is no mechanism to trade deeds. It technically is each selling and buying another. I've done this non DVC timeshare for DVC points and I've had other deals going. One of the issues is that often one party either tries to take advantage of the other or they have unrealistic expectations as to the value. Technically it's pretty easy to account for different home resorts, UY, contract sizes and points accounting. IF you could find someone privately, the benefit to doing this is that you could do so without a lot of closing costs. Someone mentioned inflating the prices and you have to be careful. It's illegal to put one price and charge another but having a higher cash price for both that is reasonable would not be an issue. Just realize it's possible that one will get taken by ROFR and the other won't. Both would be required to complete the deal if this happened.

 

[ORD2KOA]

Has anyone ever looked into the feasibility of two DVC owners trading their deeds? I own at a fairly high in-demand on site WDW property. As our needs are changing, I'd prefer my home resort to be a different property in a different location. (I'm not specifying the details, because I don't want this to be perceived as an ad or break any forum rules; think of the question in the abstract.)

I think there is actually some chance that well advertised, I might be able to find a person in a similar circumstance, the other direction. In fact, just looking at resales, I think my resort is a bit in higher demand. Selling resale and buying would be really inefficient. I would think that, instead, paying a closing company would be easier if there's a way to do it. It would be a simple exchange of deeds. Paying a closing company to handle it, I would think, would be less than paying commissions, closing costs, etc., of selling and buying resale.

Has anyone ever looked into this? I would think there would be a couple of hurldes. First, both timeshares would, I would think, need to be paid off. Second, I'm not sure how ROFR would work with a non-cash sale. Maybe it would have to be structured so that each side is paying the other the exact same amount, and having the closing company just take care of it. I'm not sure if disney allows non-cash resales. I would imagine they have to, but they probably have the ability to make a fair market determination for purposes of the cash required for ROFR. Third, my purchase was direct, and I expect that with a "trade," my new points would be resale points with the new restrictions that entails. That said, I'd be willing to do this, and pay some closing costs, for the 4 extra months of home resort priority.

Anyway, it's a tough issue to search for on these boards. Maybe there have been discussions about it before. I'm not in a rush -- we have a stay in July and our contract is stripped until my 2012 UY. I'm just trying to gather info.

You're thinking what I had been thinking for some time. I'm looking forward to reading the feedback you'll get from the group. I always wondered about ROFR if no money changes hands, like in the case of inheritance.

 

[JWG]

You're thinking what I had been thinking for some time. I'm looking forward to reading the feedback you'll get from the group. I always wondered about ROFR if no money changes hands, like in the case of inheritance.

As stated above, a gratuitous transfer of a deed related to family and inheritance is still subject to ROFR but a different process. It usually takes less time and is automatic. There are specific forms you must complete that clearly stipulate it is indeed a gratuitous transfer and no money changed hands. We just did this a year ago (sort of). Added my wife and I to my parents contract as part of their estate planning.

I don't know if this would qualify or not under that methodology. I would guess it would quickly be changed if it did given a gratuitous transfer does not make your points "resale" and place those restrictions on them (or so Disney has said).

 

[lark]

I don't know if this would qualify or not under that methodology. I would guess it would quickly be changed if it did given a gratuitous transfer does not make your points "resale" and place those restrictions on them (or so Disney has said).

I doubt it would qualify as a gratutious transfer.

I guess the question I'm wondering is what would happen if it were a simple contract:

1) I will give you 160 points at xxx. You will give me 160 points at xxx.

2) We will use _______ escrow company, with each side to pay 50 percent of the cost.

For purposes of ROFR, I wonder how disney would view this. I would think they could take the fair market value of the thing being offered by each side. I should just read the ROFR provisions and see what they say. I'll try to do that tonight.

The other way would be:

1) I will sell to you 160 points at xxx resort for $110 per point. In exchange, you will sell me 160 points at xxx resort for $110 per point.

2) We will use __________ escrow company, with each side to pay 50 percent of the cost.

3) If disney exercises ROFR for either contract, the other person is required to go through with the purchase at $110 per point.

I would think that in either case, both sides would then have a resale contract and thus subject to resale restrictions.

 

[Dean]

As stated above, a gratuitous transfer of a deed related to family and inheritance is still subject to ROFR but a different process. It usually takes less time and is automatic. There are specific forms you must complete that clearly stipulate it is indeed a gratuitous transfer and no money changed hands. We just did this a year ago (sort of). Added my wife and I to my parents contract as part of their estate planning.

I don't know if this would qualify or not under that methodology. I would guess it would quickly be changed if it did given a gratuitous transfer does not make your points "resale" and place those restrictions on them (or so Disney has said).

It's not just money but value and it has to be to a family member to get automatic ROFR. A trade certainly does not qualify. When we accomplished the "trade" I mentioned above, DVC forced us to put values on the items before they would consider it. I'm not sure they could have made that stand had I pushed it (and I considered it) but I wanted to get the deal completed so we did and moved on.

 

[Msteg]

I also have an interest in this concept of trading "similiar" DVC contracts. I would like to trade some points in one UY for points in another UY -both at the saame property.
Maybe I am missing something but I do not see why this discussion is so concerned about needing to put an actual $$ amount on the "value" of the trade for ROFR purposes.
ROFR to me means that Disney would have the first right to accept the negotiated deal as submitted. That deal is to trade one contract for another. Why should $$ be a concern? If Disney has the correct number of points in their inventory and they choose to exercise ROFR then they can. I still get want I want, I would just be getting it from Disney. Why won't that work?

 

[Dean]

I also have an interest in this concept of trading "similiar" DVC contracts. I would like to trade some points in one UY for points in another UY -both at the saame property.
Maybe I am missing something but I do not see why this discussion is so concerned about needing to put an actual $$ amount on the "value" of the trade for ROFR purposes.
ROFR to me means that Disney would have the first right to accept the negotiated deal as submitted. That deal is to trade one contract for another. Why should $$ be a concern? If Disney has the correct number of points in their inventory and they choose to exercise ROFR then they can. I still get want I want, I would just be getting it from Disney. Why won't that work?

In a way I agree that the value is the value, however, DVD will force you to submit a value in such a situation before they'll consider it. Been there, done that. Plus, while in your mind they may be linked events, they really aren't legally or to DVC. It's really each of you selling your interest to the other person and it's entirely possible that one could get taken by ROFR and the other one not.

 

[lark]

Maybe I am missing something but I do not see why this discussion is so concerned about needing to put an actual $$ amount on the "value" of the trade for ROFR purposes.
ROFR to me means that Disney would have the first right to accept the negotiated deal as submitted. That deal is to trade one contract for another. Why should $$ be a concern? If Disney has the correct number of points in their inventory and they choose to exercise ROFR then they can. I still get want I want, I would just be getting it from Disney. Why won't that work?

I believe the reason is that the agreements we have with DVC are not written that way. They are worried about people trying to circumvent ROFR, so they have the right to put a fair market cash value on what is being offered in exchange for your points. They don't need to match it exactly, but only need to give you the equivalent amount of $$.

For example, you could submit a contract that says, "I sell my points in exchange for window washing for the next 10 years." Disney, obviously, isn't going to wash your windows, but they also aren't just going to give up and let you trade your points for what they view as a low return. So I belive the documents give them the right to ascribe a fair market value to the services or non-cash goods that are being provided and exercise ROFR at that price.

 

[Dean]

I believe the reason is that the agreements we have with DVC are not written that way. They are worried about people trying to circumvent ROFR, so they have the right to put a fair market cash value on what is being offered in exchange for your points. They don't need to match it exactly, but only need to give you the equivalent amount of $$.

For example, you could submit a contract that says, "I sell my points in exchange for window washing for the next 10 years." Disney, obviously, isn't going to wash your windows, but they also aren't just going to give up and let you trade your points for what they view as a low return. So I belive the documents give them the right to ascribe a fair market value to the services or non-cash goods that are being provided and exercise ROFR at that price.

I don't believe that's the case. What I stated was the reality of how DVC approaches it. There is nothing about the contractual situation that gives them the power to require a dollar amount. I considered forcing it on the one trade I did do but decided I wanted to get the deal done more than I wanted to test the issue (though I did consider it). While there MAY be a state statute or rule that would give that power, I'm not specifically aware of it. Add to that the reality is that DVC doesn't legally have to release the ROFR. All that is required is that one give DVC a 30 day advance notice over closing to match the deal. So if they didn't match the deal, as I read it, one could go ahead and close without ROFR. Obviously that creates issues and complications but technically that is the situation as I understand it.

 

[lark]

I don't believe that's the case. What I stated was the reality of how DVC approaches it. There is nothing about the contractual situation that gives them the power to require a dollar amount. I considered forcing it on the one trade I did do but decided I wanted to get the deal done more than I wanted to test the issue (though I did consider it). While there MAY be a state statute or rule that would give that power, I'm not specifically aware of it. Add to that the reality is that DVC doesn't legally have to release the ROFR. All that is required is that one give DVC a 30 day advance notice over closing to match the deal. So if they didn't match the deal, as I read it, one could go ahead and close without ROFR. Obviously that creates issues and complications but technically that is the situation as I understand it.

Yup. I finally pulled my docs and you're exactly right. I'm not sure why this isn't a loophole that could be tested. For example just add a requirement that buyer also gives me a personally signed hand drawn picture. Disney can't match that. And if I regard it as invaluable who is Disney to question my value? The documents say they have to match the same terms.

 

[Dean]

Yup. I finally pulled my docs and you're exactly right. I'm not sure why this isn't a loophole that could be tested. For example just add a requirement that buyer also gives me a personally signed hand drawn picture. Disney can't match that. And if I regard it as invaluable who is Disney to question my value? The documents say they have to match the same terms.

As I tried to note, there are 2 sides to this issue. There may very well be some real estate issue that goes beyond the contractual. And it really comes down to whether you want to test the issue or complete the deal. If you or the other party (whoever is the DVC owner) has assigned a value to some item or items worthy of parting with a DVC contract, it's really simple to assign a dollar value appropriate to be reasonable but high enough to ensure passage of ROFR.

I mentioned the one I had above as a trade for DVC points using a non DVC timeshare. In addition, I sold 3 OKW contracts including that 50 pointer involved in the swap. DVD took one under ROFR but they tried to add additional language to the deal that I was uncomfortable with. I called them on it and they backed down, likely because they had no legal right to add to the deal. What they tried to do was add a requirement that I not communicate the price with others, I wasn't comfortable and had actually already done so by the time I got that info from DVD. I was willing to lose the sale over the issue. I don't know if they're still trying to add that in to ROFR.

 

[dvcbrad]

It's interesting that lark posted the message that they did, as I was getting curious about the very same issue last week when reading about the OKW resale values on another thread. I'm somewhat interested in contemplating a similar, but opposite exchange that lark is thinking ... in general, as for disclosure purposes, I have not (yet) made any direct contact via PM with lark to see if just by coincidence our two properties matched.

Anyway, one question that came into my mind in reading through this thread, though, is couldn't the points of one contract (i.e. the deed) be the 'consideration' exchanged for the other? Both are assets, and the requirement for the sale, or exchange of an asset, is consideration. Consideration is generally cash, but in this case, couldn't the condiseration be the other point contract?