What happens to Old Key West afterr 2042? I own a 2057 contract.

[CarolynFH]

@Mouseforward its important to recognize that when the documents refer to a “unit,” they mean a Residential Unit as defined in Florida’s statutes regarding condominium associations (and possibly timeshare resorts, I’m not sure). DVC owners are deeded a percentage of that unit - they own that much of the physical building. I don’t know what the percentages look like at OKW, but I can tell you that our ownership at BWV is well less than 1% of each of the two RU our two 150-point contracts come from.

At OKW, each building is a separate Residential Unit, and there are probably thousands of owners of each building. If some of them own 2042 contracts and some own 2057, in 2042 the former percentage will revert to DVC but the percentage owned by 2057 contracts will remain with those owners. As Sandi says, DVC can’t add a unit (RU) to the trust unless they own the entire unit, so at OKW it means DVC can’t add an OKW building to the trust unless they own the entire building.

DVD specifically reserves the right to increase or decrease the size of a given Unit in itssole discretion prior to adding the phase in which the Unit is located to the Lake Buena Vista Resort.

This quote pertains to when OKW was in initial sales and inventory was being declared into the condominium association in phases. It means that DVD could have changed the size of a given RU before it was declared into (added to) the condo association - but not after it was added. So in 2042, DVC can’t put the 2042 percentage of a given RU into the trust and leave the 2057 percentage in the condo association, because that would change the size of the RU.

 

[Mouseforward]

@Mouseforward its important to recognize that when the documents refer to a “unit,” they mean a Residential Unit as defined in Florida’s statutes regarding condominium associations (and possibly timeshare resorts, I’m not sure). DVC owners are deeded a percentage of that unit - they own that much of the physical building. I don’t know what the percentages look like at OKW, but I can tell you that our ownership at BWV is well less than 1% of each of the two RU our two 150-point contracts come from.

At OKW, each building is a separate Residential Unit, and there are probably thousands of owners of each building. If some of them own 2042 contracts and some own 2057, in 2042 the former percentage will revert to DVC but the percentage owned by 2057 contracts will remain with those owners. As Sandi says, DVC can’t add a unit (RU) to the trust unless they own the entire unit, so at OKW it means DVC can’t add an OKW building to the trust unless they own the entire building.


This quote pertains to when OKW was in initial sales and inventory was being declared into the condominium association in phases. It means that DVD could have changed the size of a given RU before it was declared into (added to) the condo association - but not after it was added. So in 2042, DVC can’t put the 2042 percentage of a given RU into the trust and leave the 2057 percentage in the condo association, because that would change the size of the RU.

I’m well aware of how the units are constructed.

1. Can a trust buy a contract in DVC? Yes

2. In 2042 does DVC get back approx 75% of the contracts. Yes

3. Can DVC sell the 75% of the now 2057 contracts to Palmetto Trust or one like it? Yes

Once this happens what is stopping them from selling them as points in the trust ?

 

[Sandisw]

I’m well aware of how the units are constructed.

1. Can a trust buy a contract in DVC? Yes

2. In 2042 does DVC get back approx 75% of the contracts. Yes

3. Can DVC sell the 75% of the now 2057 contracts to Palmetto Trust or one like it? Yes

Once this happens what is stopping them from selling them as points in the trust ?

The Palemtoo Trust is not set up to buy anything so it can’t buy the OKW inventory from DVD.

It is a vehicle set up to hold inventory that DVD, the developer, owns and wants to sell under a RTU plan vs the way they have always sold it.

That seems to be the part you are missing. The CFW cabins are are not owned by the Palmetto Trust.

They are owned by DVD and will remain owned by them.

Any inventory added as a component site to the trust must be defined…and there would be no way for DVD to add rooms that are owned by others, regardless of how much of the resort they own.

As I mentioned, the same inventory can not be part of two associations. They can only be declared to one.

So, to move rooms to the trust, they need to remove them from OKW because they are declared already into that association.

 

[AstroBlasters]

What will happen to Old Key West between 2042 and 2057? I understand that 20-30% of the resort's members have contracts that expire in 2057, while the rest end in 2042. How will DVC manage the resort over the next 15 years? Will DVC make an attractive last-minute offer to encourage everyone to extend their contracts to 2057? Is that even legal? Could Disney automatically change the end date of all contracts to 2057? After the 2042 contracts expire, would Disney sell new contracts with a 15-year life at a reduced price? What will happen to maintenance costs during this period? We don't know what DVC will decide, but I would like to understand what Old Key West resort, looks like, My contact which expires in 2057.

No one knows and anything that people write is just a guess. The people who will make that decision are likely not even out of college yet…

 

[zavandor]

@Mouseforward its important to recognize that when the documents refer to a “unit,” they mean a Residential Unit as defined in Florida’s statutes regarding condominium associations (and possibly timeshare resorts, I’m not sure). DVC owners are deeded a percentage of that unit - they own that much of the physical building. I don’t know what the percentages look like at OKW, but I can tell you that our ownership at BWV is well less than 1% of each of the two RU our two 150-point contracts come from.

At OKW, each building is a separate Residential Unit, and there are probably thousands of owners of each building. If some of them own 2042 contracts and some own 2057, in 2042 the former percentage will revert to DVC but the percentage owned by 2057 contracts will remain with those owners. As Sandi says, DVC can’t add a unit (RU) to the trust unless they own the entire unit, so at OKW it means DVC can’t add an OKW building to the trust unless they own the entire building.


This quote pertains to when OKW was in initial sales and inventory was being declared into the condominium association in phases. It means that DVD could have changed the size of a given RU before it was declared into (added to) the condo association - but not after it was added. So in 2042, DVC can’t put the 2042 percentage of a given RU into the trust and leave the 2057 percentage in the condo association, because that would change the size of the RU.

I don't know enough to have an opinion on this, but I think other systems have created Trusts and allowed individual owners to enroll their weeks or points into the trust individually. So it has been done before, but maybe those systems had differences in the contracts that allowed that (maybe they were already RTU vs Deeded).

 

[maui22]

What's interesting is what if a unit has points that expire in 2042 and 2057, I'd imagine that is fairly common. How does Disney reconcile that when the time comes.

This happens with every resort. For example, Riviera likely has another declaration in the next 6 months. When that unit is declared, 0% is sold. In fact, DVD has been declaring units when Riviera has roughly 800k of points that @wdrl of DVCNews sales data shows declared but unsold.

Meaning, Riviera right now has some units that are lower percentage owned by current contracts than OKW will have in 2042.

This sales pattern has happened at ALMOST resort since we first purchased in 2009. Others who have been around since the start of OKW have an idea on how deeds were filled by units. Thing is, back then none of this was available online, so we don’t have easily accessible public data from then.

Note: because CFW is a trust, they do not assign a unit to the contract. They still declare cabins …some number at a time. They can only sell enough points for those declared cabins.

A nice benefit to Disney with the trust model…
Today, Disney can only sell a contract for a unit with enough unsold points to fill it. Example, there was a recent 1000 point VGF contract sold. Disney had to ROFR or gather points from foreclosures, etc in a single unit. This is part of why ROFR is considered arbitrary. Units matter with the non-trust model.

If Disney likes this benefit, they could opt for the trust model with LSL and future resorts.

 

[Sandisw]

I don't know enough to have an opinion on this, but I think other systems have created Trusts and allowed individual owners to enroll their weeks or points into the trust individually. So it has been done before, but maybe those systems had differences in the contracts that allowed that (maybe they were already RTU vs Deeded).

Having read the trust documents quite a few times, I don’t see it set up to allow that type of situation, including DVD being able to add inventory that they do not have complete ownership.

Plus, in 2042, they will own all of BWV and BCV, which can immediately be added to the trust.

No need to attempt units at OKW, especially since those units would still have a 2057 end date because as long as they are part of OKW condo association, they are tied to its expiration.

 

[CarolynFH]

I don't know enough to have an opinion on this, but I think other systems have created Trusts and allowed individual owners to enroll their weeks or points into the trust individually. So it has been done before, but maybe those systems had differences in the contracts that allowed that (maybe they were already RTU vs Deeded).

Yes, Marriott converted to a trust model, but I don’t know the details, and back when they did it (2010?) I wasn’t a TUG reader. (I’m sure the entire process is reported there.) All I know is that Marriott approached my dad, then a recent widower, to sell back his Marriott weeks to them, and he did, because none of his kids were in position to take them over. Marriott then deposited those weeks into their trust.

@Brian Noble, do you know? Did Marriott allow weeks owners to enroll their weeks into the trust when it was created? All I know is that someone buying resale Marriott weeks now can enroll them in the trust and get points, at a price.

BTW I believe a current DVD executive is a former Marriott executive who was deeply involved with their trust.

 

[Brian Noble]

Marriott owners can elect their weeks for points, but that is a year-by-year decision, not a permanent one. I also think there are two flavors of points---one for weeks that are elected, and the other is the pure points product, but I am not clear on the details.

I believe Wyndham's trust includes specific deposited weeks (fixed or floating), and I know that owners of fixed/floating weeks at Wyndham resorts can assign their usage rights to the Club in exchange for points.

I suspect there are fewer constraints on what DVC could do than we think, but I also suspect a lot of the more convoluted use cases are not going to happen.

 

[CarolynFH]

Could Disney automatically change the end date of all contracts to 2057?

There were/are attorneys who contend that because Disney had to extend the ground lease to 2057 before DVD could extend anyone’s ownership, that automatically extended all owners to 2057 right then and there. That contention, never tested in court, was one factor that caused DVD to stop pushing owners to convert. It’s also the reason that when someone sells a 2042 contract, they’re required to sign a document releasing their claim on the extension.

 

[Lumpy1106]

The ground lease for OKW was extended until 2057. That means that all declared inventory is available for booking by OKW owners until 2057.

All that happens in 2042 is that DVD becomes the owner of more of that inventory but it doesn’t leave the association.

So, there are about 7.7 million points of declared inventory in OKW and in 2042 there will still be 7.7 million points of declared inventory in OKW.

DVD can certainly book rooms with their points and offer them to cash guests,,,but owners with 2057 contracts will have access to the same number of rooms to book as they do today.

It’s not the same as what happens when resorts are new…DVD declares in phases and rooms that haven’t yet been declared are not part of DVC until they do.

So, that is a different type of inventory offered for cash.

So they can't tear down any of the buildings - but they also don't need to make them available for stays on points. It would be like if you had enough points to book a whole building - you would be under no obligation to let anyone else stay there.
IOW, you will have the same availability to book then as you do now.

 

[Mouseforward]

including DVD being able to add inventory that they do not have complete ownership.

No DVC resort at WDW has any ownership- they are all leases and since WDW and DVC are both under the same umbrella there is no issue changing the length of a lease.

The lease has no tie to us other than it must exist and per the contract DVC and its members have to follow the conditions of the lease. But we already have 2042 contracts on a 2057 lease so it is not an absolute tie. In the cabin contract they have the same language divorcing the lease length from the DVC contract length. They can extend the lease to another 40 years and it does not extend the cabin contract.

 

[zackiedawg]

For me the only big question is whether they offer a re-purchase to existing DVC members as the end of the contract nears. I'm Boardwalk not OKW, but I am hoping DVC will give us a first-right or early purchase opportunity to re-up at Boardwalk for a new contract - I'm sure at a significantly higher price based on current point value...but to just tell loyal DVC owners that their contract is over and goodbye doesn't seem likely both from a relationship and financial standpoint. I'm certainly willing to buy in again - but I would absolutely want Boardwalk again as a location (or an Epcot resort area DVC, regardless of the name), not one of the other resorts...so I'm curious to see how that works.

 

[Tatebeck]

So they can't tear down any of the buildings - but they also don't need to make them available for stays on points. It would be like if you had enough points to book a whole building - you would be under no obligation to let anyone else stay there.
IOW, you will have the same availability to book then as you do now.

They DO need to make them available for stays on points. That's part of the documents/contracts. DVD/DVC will just own more of those points themselves once the 2042 contracts revert back to them. Then they can sell them as OTUP, resell them to members again, or they can use the points to book those rooms like members can, and then rent the rooms for cash stays if they want.

You can think of it as basically the same situation that would happen at any resort if a large percentage of members stopped paying their loan payments and/or dues and a bunch of points get repo'd back to DVC. The rooms still exist, the units are declared, and they have to be made available for any eligible member to book. Then DVC can choose to use/sell those points if they wish

 

[Tatebeck]

No DVC resort at WDW has any ownership- they are all leases and since WDW and DVC are both under the same umbrella there is no issue changing the length of a lease.

The lease has no tie to us other than it must exist and per the contract DVC and its members have to follow the conditions of the lease. But we already have 2042 contracts on a 2057 lease so it is not an absolute tie. In the cabin contract they have the same language divorcing the lease length from the DVC contract length. They can extend the lease to another 40 years and it does not extend the cabin contract.

Every unit is declared into the OKW use plan, and cannot be removed or have the units sizes changed until 2057 when the association expires. Then they could add it into the Trust to resell if they wanted.

Trying to do anything with partial units in the trust would be useless anyway. As of right now, it would have no difference compared to just reselling the points direct as part of the current use plan. Direct points can book all the resorts in the trust model (just CFW right now), and any Direct points purchased as part of the Trust model (again, just CFW for now) can use their points to book at the other resorts as well.

Why try to tear an arm off just to sew it back on...

 

[Sandisw]

So they can't tear down any of the buildings - but they also don't need to make them available for stays on points. It would be like if you had enough points to book a whole building - you would be under no obligation to let anyone else stay there.
IOW, you will have the same availability to book then as you do now.

They can’t tear down but they also can’t take them out of the booking either.

DVD can book rooms at 11 months just like all other owners but the number of rooms that are available to will not change.

Now, when it comes to actual stays, they can cluster.

All units that have been declared into a condo association remain as eligible for any owners to book.

That is why DVD being an owner doesn’t give them the ability to move rooms from the OKW association to the trust association.

It would mean the same rooms were part of two home resorts.

 

[Mouseforward]

Trying to do anything with partial units in the trust would be useless anyway. As of right now, it would have no difference compared to just reselling the points direct as part of the current use plan. Direct points can book all the resorts in the trust model (just CFW right now), and any Direct points purchased as part of the Trust model (again, just CFW for now) can use their points to book at the other resorts as well.

Why try to tear an arm off just to sew it back on...

Valid point , however attempting to resell the 75% of 2024 contracts is probably not going to go over well unless they are priced well below market. That is why you would need a admittedly more convoluted plan.

If they could structure a new lease from 2057 to 2093 for the trust and sell the points as a full new contract in 2042 then they could add on the remaining 25 % in 2057.

It is also not as easy as it sounds to say they can " rent OKW for cash" as they are not designed to be desirable to the cash renter they are designed as the " true timeshare units". The effect of hundreds of cash units of OKW going into inventory for 15 years could result in renting them at a loss.

All units that have been declared into a condo association remain as eligible for any owners to book.

We have no clause or "right" to a specified unit that I can see.

However the plan I ( well some of the articles I read )outlined would not change the availably of the unit for the 2057 owners. It would be the same as if I owned 2 % of a RIV unit and you purchased the other 98% ( ignoring the point limit for owners) I would not gain or lose any rights . This is important since if I have no gain or loss in usage or rights than I can not really take legal action.

 

[Sandisw]

No DVC resort at WDW has any ownership- they are all leases and since WDW and DVC are both under the same umbrella there is no issue changing the length of a lease.

The lease has no tie to us other than it must exist and per the contract DVC and its members have to follow the conditions of the lease. But we already have 2042 contracts on a 2057 lease so it is not an absolute tie. In the cabin contract they have the same language divorcing the lease length from the DVC contract length. They can extend the lease to another 40 years and it does not extend the cabin contract.

The ground lease is what guides the expiration of the condo association.

It ends when the ground lease expires. That is why everyone’s contract ends when it does at the resorts.

The trust doesn’t have a ground lease because it’s not a leasehold condo association.

DVD remains owner of the property and then just sells RTU to it.

The big difference with the trust is that they can put in and take out inventory because no one buys into a specific set. They can replace it with comparable accommodations.

So, rooms declared to OKW belong to the OKw condo association and available for owners there for the term of the association…which is 2057.

The reason that DVD can sell OKW with that expiration is because DVD extended it for al

No DVC resort at WDW has any ownership- they are all leases and since WDW and DVC are both under the same umbrella there is no issue changing the length of a lease.

The lease has no tie to us other than it must exist and per the contract DVC and its members have to follow the conditions of the lease. But we already have 2042 contracts on a 2057 lease so it is not an absolute tie. In the cabin contract they have the same language divorcing the lease length from the DVC contract length. They can extend the lease to another 40 years and it does not extend the cabin contract.

The ground lease is what defines the length of the condo association and why the contracts end when they do.

When DVD extended the ground lease to 2057, the condo association extended for all.

Those who didn’t want to pay for the extension, signed a quit claim basically giving it back to DVd early.

Those that did neither, are told the contract ends then but some think they could have a case since DVd acted unilaterally.

So, the property in OKW is declared to be part of that association and therefore it has to remain their until 2057, since that is the end date of the association.

DVD, owner of interests or not, can’t remove it and move it to another association. It’s as simply as that!

 

[Mouseforward]

They DO need to make them available for stays on points

Why do they have to make them available? They can really do as they please with the points they own since they can simply "book " the rooms to themselves and keep them vacant if they wanted. They also have clauses that DVC can commercial rent the points they own ( unlike us) which is where I think they can draw the right to lease them to the trust. And since they own apx 75% of the association at that point, the only thing that would stop them is Florida timeshare laws.

 

[Tatebeck]

Valid point , however attempting to resell the 75% of 2024 contracts is probably not going to go over well unless they are priced well below market. That is why you would need a admittedly more convoluted plan.

If they could structure a new lease from 2057 to 2093 for the trust and sell the points as a full new contract in 2042 then they could add on the remaining 25 % in 2057.

It is also not as easy as it sounds to say they can " rent OKW for cash" as they are not designed to be desirable to the cash renter they are designed as the " true timeshare units". The effect of hundreds of cash units of OKW going into inventory for 15 years could result in renting them at a loss.

They have 17 years to ROFR, and resell 2042 contracts as 2057 contracts. I imagine that will be their primary plan instead of waiting until 2042 and selling them as points or using them as cash reservations then. It would be much easier, especially if they offer them at firesale prices like they did last spring. That deal was very popular.

Any points that revert to them at that point I could see them just using as their primary source of OTUP points and running OTUP specials if they can't sell the points or sell enough cash reservations. They could also just use that as the primary source of deposits into the Interval International portal (or whatever they will use at that time). Heck they could even offer a Free* small OKW contract (*with minimum purchase of the current featured resort at that time)