Would you join a lawsuit to revert DVC's resale restrictions?

[Matty B13]

I’m also curious whether anything came of this?

As a resale owner, my question is quite basic : What happens when Riviera owners decide they would like to try a different resort after many years at Riviera, and there is a big number for them trading into O14 resorts? Because they will then take up X number of nights from the O14 resorts, but any resale owner can’t reciprocally trade into Riviera, and therefore there are more points in the system then there are nights available, thus putting money into Disney Corp’s back pocket, and leaving resale owners with useless points. This is where the issue of fairness arises. It seems that it shouldn’t be possible for non reciprocal trades, as it results in an oversold timeshare situation, which can’t be legal, right? I would think that at the very least, riviera owners should only be able to trade into O14 resorts in any given year to the extent that there are direct O14 owners seeking to trade into riviera in that same year?

This is why it is so important to Buy Where You Want to Stay and book your home resort at the 11 month mark.

 

[npatellye]

But it’s not actually reciprocal, because the pool of points are not even. What I mean is that if there are 40,000 points belonging to direct O14 members that wish to trade into Riviera in 2022, then direct Riviera owners should not be able to trade into O14 resorts for any more then 40,000 points. While right now the balance might tip the other way, it won’t forever, and then the excess of Riviera owners trading out vs O14 trading in will create an excess of points in O14 that Disney can sell at 100% profit (ie the riviera rooms that resale O14 can’t actually use their points to book) to them as breakage always maxes out. This is where I think it’s not quite right as an arrangement…..

I don’t quite understand this. You don’t want direct RIV buyers to be able to trade into the O14, even though the O14 resorts have far more direct and grandfathered resale points combined than RIV has points. I’m not sure if they can go back and change the contracts and sales documents now. So that brings me to this question: would you mind if any of the grandfathered resale owners at O14and all of the direct owners at O14 are unable to trade into Riviera unless owners want to trade out? Those direct and grandfathered O14 resale points far outnumber RIV points and will continue to do so for quite some time. Then what would you like to see happen with future resorts which may very well have similar restrictions (I’m not counting VGF2 because that is, IMO, an expansion of an O14 resort like the THV at SSR and not a new resort)? I honestly think the 11 month advantage is sufficient for anyone eligible to trade in to and out of RIV.

 

[KAT4DISNEY]

This is why it is so important to Buy Where You Want to Stay and book your home resort at the 11 month mark.

That is important but is a different point.

The question really gets into the POS that stated that resorts who joined DVC had to join with substantially similar resort agreements. Up until Riviera all owners followed the same trade agreement which was if the resort was part of DVC then at 7 months you could trade. The POS had obviously done some consideration of trades and had a clause that allowed BVTC to use different point charts at 7 months but there was nothing in it about restriction of any owners from trades and definitely not based on how they acquired their points. Then DVC decided they could ignore the requirement of substantially similar resort agreements. I think anyone would find it difficult to argue that restricting a key allowable component based on the way that ownership was acquired is not a substantial difference. The POS is also filled with references to DVC acting in the best interest of the membership. But allowing this to happen was acting only in the best interest of DVD in a hope it would assist in sales. Even if DVD asked to have Riviera join with these new rules DVC should have said no. However they are filled with the same people running both who did not separate out their duties to each division.

How it should have gone:
DVD - "may we please add Riviera to DVC but we want to restrict certain owners from trading?"
DVC - "I'm sorry, that is a substantial difference to the rest of our resorts and doesn't benefit our members whom we are required to look out for. You will need to form your own Club".

 

[KAT4DISNEY]

I don’t quite understand this. You don’t want direct RIV buyers to be able to trade into the O14, even though the O14 resorts have far more direct and grandfathered resale points combined than RIV has points.

DVD left themselves an out and included a new bit to allow Riviera resale buyers to become qualified. There's no outline what that means but DVD included an option for themselves to change it up.

 

[drusba]

I’m also curious whether anything came of this?

As a resale owner, my question is quite basic : What happens when Riviera owners decide they would like to try a different resort after many years at Riviera, and there is a big number for them trading into O14 resorts? Because they will then take up X number of nights from the O14 resorts, but any resale owner can’t reciprocally trade into Riviera, and therefore there are more points in the system then there are nights available, thus putting money into Disney Corp’s back pocket, and leaving resale owners with useless points. This is where the issue of fairness arises. It seems that it shouldn’t be possible for non reciprocal trades, as it results in an oversold timeshare situation, which can’t be legal, right? I would think that at the very least, riviera owners should only be able to trade into O14 resorts in any given year to the extent that there are direct O14 owners seeking to trade into riviera in that same year?

As to owners of the original 14 resorts, only those resale purchasers who purchased on or after Jan 19, 2019, are barred from reserving Riviera. Riviera owners who purchase from DVD can reserve the original 14 resorts, but all resale purchasers of Riviera are barred from reserving any DVC resort other than Riviera. Will that have an impact on the ability of owners of the original 14 resorts to reserve non-owned resorts in the original 14? Likely, but probably not a major impact for a number of years.

You possibly need to look about 15 years from now. This is not just an issue of Riviera. DVD's plan is for all new resorts to have the same rules as Riviera, meaning post-Jan-2019 resale purchasers of those original 14 resorts will be banned from reserving not just Riviera but also any new resorts DVD adds in the future, while the purchasers from DVD of all those new resorts will be able to reserve the original 14 resorts. How many new resorts that will be is an unknown, but just in the last 14 years, DVD has added 8 new resorts (AKV, Aulani, VGC, BLT, VGF, Poly, CCV, and Riviera). If you just assume 5 new resorts will be added in the next 15 years, you might project the following:

1. By 15 years from now, the original 14 resorts will have a huge number of post-Jan-2019 resale purchasers who will be able to reserve only the original 14 resorts:

2. There will also be an exponentially larger number of purchasers, than those that exist now, from DVD of Riviera and the 5 new resorts added in the future, who can reserve the original 14 resorts. Many of those will be attempting at 7-months out to reserve one of the original 10 WDW DVC Resorts, including because newly added resorts will likely have nightly point requirements that dwarf the nightly point requirements of most of those older WDW resorts.

3. Thus, 15 years from now, you could have a very large number of resale owners of those 14 original resorts who could be attempting to switch at 7-months out to get a room at WDW only at 10 WDW resorts, and also have a very large number of owners of Riviera and those five future resorts, who purchased from DVD, wanting to switch to those 10 WDW resorts at 7-months out. Under that scenario, one can possibly predict that,15 years from now, even SSR, Kidani and OKW may be difficult to get at 7-months out much of the year, much less all the pre-2019 near park resorts at WDW.

You mention the possibility that this could be illegal as an oversold timeshare situation, a reference I assume to the one-to-one rule that dictates that total ownership interests/owned-points at a resort cannot exceed the total it would take to fill all the rooms in a year. Likely, that rule is inapplicable to the 7-month reservation issue where owners are attempting to reserve non-owned DVC resorts. As long as the owners of each resort have a reservation advantage to reserve their home resort over owners of other resorts, that one-to-one reservation rule likely applies only to owners of each particular home resort being able to reserve their own resort.

The legal rule applicable to being able to reserve a non-owned resort in that situation would, at most, require that the manager of the applicable reservation system reasonably attempt to take measures to even out demand among the resorts at 7-months out. The designated manager of the reservation system applicable to making reservations of non-owned resorts at 7-months out, which system is officially named the "DVC Reservation Component," is the Buena Vista Trading Company (BVTC) which is in charge of the Disney Reservation Component. Under the DVC Resort Agreement, which is part of each DVC Resort POS, BVTC could create entirely new point charts applicable at 7-months out that differ substantially from the ones that exist now for home resorts at 11-months. And in doing so, it would not have to follow any one-to-one rule, but instead could just do something like significantly increase the nightly points needed at 7-months out for all rooms at the near park resorts, while lowering them for others like SSR.

Nevertheless, there is a different legality issue to the resale restrictions created with the addition of Riviera, and it is basically a legal action waiting to happen. As I have noted before, the POS's of all 14 of the pre-Riviera resorts likely prohibit what DVC did by adding Riviera as a DVC Resort to the DVC Reservation Component with its resale restrictions. Those POSs, including the definitions, terms, and applicable agreements attached as exhibits, such as the DVC Resort Agreement, likely prohibited the addition of Riviera as a DVC Resort with its resale restrictions, mainly because: (a) the POS's of the pre-Rivera resorts all define a Club Member to be any owner of the DVC Resort; (b) such owners and club members expressly include those who purchase their interest from an existing DVC Member in a resale transaction; (c) those club members are entitled to use the DVC Reservation Component to reserve any DVC Resort, including one added as a DVC Resort; (d) the original 14 DVC Resort Agreements provide that club members (again defined in the POS as including resale purchasers) can use the DVC Reservation Component to make reservations of any DVC Resort they do not own; and (e) BVTC, deemed a fiduciary of the owners/members by statute, is the only entity empowered to add a DVC Resort to the DVC Reservation Component, and under the terms of the DVC Resort Agreements of the original 14 DVC Resorts, it can add a new DVC Resort if, and only if, the DVC Resort Agreement with the new DVC Resort has the same material terms as the DVC Resort Agreements of the original 14 resorts, which terms include allowing all club members, defined as including resale purchasers, to be able to reserve any DVC Resort through the DVC Reservation Component.

That potential lawsuit to determine that Riviera's resale restrictions were improper, prohibiting it from being added as a new DVC Resort able to use the DVC Reservation Component, likely did not happen in 2019, when Riviera became a DVC Resort, because DVD/DVC cleverly avoided it by: (a) not highlighting the issues by just ignoring the terms of the existing POS's and failing to do what was actually necessary to allow those resale restrictions -- amending all the POS's of the previous 14 resorts, which attempted amendment would have required an actual vote of the members; and (b) DVD/DVC, when it added Riviera as a DVC Resort in early 2019, exempted from the resale restrictions all existing owners, including resale owners, of the original 14 resorts, thus taking away any incentive those existing owners at the time had to sue.

 

[Sandisw]

But it’s not actually reciprocal, because the pool of points are not even. What I mean is that if there are 40,000 points belonging to direct O14 members that wish to trade into Riviera in 2022, then direct Riviera owners should not be able to trade into O14 resorts for any more then 40,000 points. While right now the balance might tip the other way, it won’t forever, and then the excess of Riviera owners trading out vs O14 trading in will create an excess of points in O14 that Disney can sell at 100% profit (ie the riviera rooms that resale O14 can’t actually use their points to book) to them as breakage always maxes out. This is where I think it’s not quite right as an arrangement…..

It doesn't have to be even. As of January 2019, all resale points have restrictions with them. Resale RIV are for RIV only, and resale O14 are for O14 only. The points prior to that have rights to all resorts.

Direct points and grandfathered resale points are still given the same rights as before. So, those buying now go in knowing the rules of the game. As already mentioned, the trading in no way impacts home resort priority with is what we are guaranteed when we buy our points so as long as someone is booking within their home resort priority, the restrictions are not in play.

At 7 months, it is still based on first come, first serve, even with the restrictions. The fact that the odds are less now doesn't change that. We were never guaranteed to have the same level of options to trade to non home resorts.

 

[Matty B13]

How it should have gone:
DVD - "may we please add Riviera to DVC but we want to restrict certain owners from trading?"
DVC - "I'm sorry, that is a substantial difference to the rest of our resorts and doesn't benefit our members whom we are required to look out for. You will need to form your own Club".

I completely agree.......... but unfortunately it will take a Class Action Lawsuit by a group of owners to get this whole mess corrected.

 

[RoseGold]

This makes sense to me conceptually as a resale VGF buyer. Why should Reflections or whatever future property benefit from my property when I get nothing from theirs?

But at this rate, whatever property that will be is a long time coming, and I'll probably be out of the system before it matters. My solution will be to sell.

But the trend is obvious over time. More and more white card buyers paying for resorts that are being used by owners of resorts that offer nothing to the aging O14.

 

[New Mouse]

But the trend is obvious over time. More and more white card buyers paying for resorts that are being used by owners of resorts that offer nothing to the aging O14.

And in theory devaluing the resale value as original resorts fall out of the system.

Disney is ultimately using this as a way to reset the system as resorts fall off their original contract. Their first plan to just reenroll everyone ala OKW was a failure, so they needed to figure out a way how to skew things in their favor.

Oddly enough I dont know if its a smart long play as resale value is one of the reasons I was ok buying DVC.

 

[RoseGold]

Oddly enough I dont know if its a smart long play as resale value is one of the reasons I was ok buying DVC.

Then it becomes a question of scale and the escalating charts and the mediocre locations. If Disney slaps up 900 room Reflections/RIV things with huge charts, the legacy charts/locations look better and better, like the 2042s do right now.

With how hard that chart was working at RIV, I expect all future resorts to pass VGF, without VGF's location.

 

[katie3008]

DVD/DVC, when it added Riviera as a DVC Resort in early 2019, exempted from the resale restrictions all existing owners, including resale owners, of the original 14 resorts, thus taking away any incentive those existing owners at the time had to sue.

This answers my question really, as to the fairness issue. Disney side stepped it by grandfathering in all owners at the time of the change, and all subsequent resale buyers knew exactly what restrictions they were agreeing to, so while there is a very obvious imbalance in what they’ve done, and this gets bigger with every new resort they may build, they ensured that a class action wouldn’t arise by grandfathering the potential largest body of the class so they wouldn’t be impacted by it, and just hoping future buyers would say “well I knew when I bought in, so it’s not an issue”.

 

[Nabas]

This makes sense to me conceptually as a resale VGF buyer. Why should Reflections or whatever future property benefit from my property when I get nothing from theirs?

I never had considered this.

It does seem that, over time, there will be a growing imbalance.

Perhaps it's possible that starting in 2042, Disney will reissue points at expired at resorts like VB, BCV, BWV, BRV, etc. under the "new" policy, making the problem even worse?

 

[Sandisw]

I never had considered this.

It does seem that, over time, there will be a growing imbalance.

Perhaps it's possible that starting in 2042, Disney will reissue points at expired at resorts like VB, BCV, BWV, BRV, etc. under the "new" policy, making the problem even worse?

Except direct buyers of all resorts get full trading. So, in the example of a VGF owner, they still get to trade into the nee resorts if they buy their points from DVD.

So, in theory, it’s not just grandfathered, it’s all new direct buyers. Those buying VGF direct when new sales go on sale will be trading into RIV and new resorts as those owners trade out.

I have no opinion on the legality of it, so not responding to that, but just that every L14 DVC resort continues to have new owners who have the same trading rights as RIV owners do as long as the points are bought direct.

 

[Nabas]

Except direct buyers of all resorts get full trading. So, in the example of a VGF owner, they still get to trade into the nee resorts if they buy their points from DVD.

So, in theory, it’s not just grandfathered, it’s all new direct buyers. Those buying VGF direct when new sales go on sale will be trading into RIV and new resorts as those owners trade out.

I have no opinion on the legality of it, so not responding to that, but just that every L14 DVC resort continues to have new owners who have the same trading rights as RIV owners do as long as the points are bought direct.

Right but if someone (for example) buys resale at AKV in 2030, they can book at (for example) BCV in 2041? Will they be able to book at BCV in 2043? And will someone buying resale at AKV in 2043 be able to book at BCV?

In the past, Disney has always grandfathered in resale buyers. Will this continue forever?

At this point, it's more of an academic question.

 

[Sandisw]

Right but if someone (for example) buys resale at AKV in 2030, they can book at (for example) BCV in 2041? Will they be able to book at BCV in 2043? And will someone buying resale at AKV in 2043 be able to book at BCV?

In the past, Disney has always grandfathered in resale buyers. Will this continue forever?

At this point, it's more of an academic question.

The newest restrictions prevent all resale from new resorts so no more grandfathering will be needed, From this point forward, resale is limited to the L14. As those drop off, the choices for resale buyers declines,

A resale buyer who buys AKV in 2030 gets to book BCV until it ends in 2042 but won’t be able to book it in 2043 assuming DVD does what we all expect..make it a new resort

Someone buying resale at AKV in 2043 won’t be able to book BCV any longer because it will be a new resort which is no longer allowed.

As time goes on, direct will be the way to go to get access to more resorts. If you think about it, it’s not even with trading even now.

VGF, for example, is small. So a lot more VGF owners will have success trading out than the owners of all the other resorts would have trading in, simply because there are very few rooms…though that will change next year.

 

[New Mouse]

I also question the legality of how Disney can buy back points and then resell them as new.

 

[achinforsomebacon]

I also question the legality of how Disney can buy back points and then resell them as new.

Aren't they just reselling them as "direct" and not necessarily "new"? Everything always mentions buying directly from DVC vs buying resale from third party.

 

[achinforsomebacon]

I really appreciate all of the great information in this thread. So what are the possible outcomes if a change were to somehow actually happen (is it a be careful what you wish for scenario?)? I think it might also be different for RIV vs future resorts since RIV has already been selling for a while.

1. Resale restrictions are completely removed from RIV and it works the same as the L14 resorts.
This opens up a few possibilities for future resorts:
a. No resale restrictions and all owners have access to future resorts.
b. DVC2 is created with the next resort and is completely separate from DVC1 (i.e. no trading between the two groups).

2. RIV is somehow modified to be the start of DVC2. I don't know if this is legally possible, but I wouldn't think it would be an actual option, given that everyone who has purchased RIV direct would no longer have access to the L14 resorts.

3. The POS of all L14 resorts are somehow modified to allow what happened with RIV. This seems like it would be an extremely difficult and lengthy process. But if this were to happen, does this mean the outcome could be that future resales (assuming grandfathering) would only be able to book at the home resort?

I'm not nearly as knowledgeable as the others posting in this thread so I'm sure I'm missing something.

 

[New Mouse]

Aren't they just reselling them as "direct" and not necessarily "new"? Everything always mentions buying directly from DVC vs buying resale from third party.

Correct, but I do not see how its possible to give yourself the benenfit above other members of the club when its literally the same product.

 

[Sandisw]

I really appreciate all of the great information in this thread. So what are the possible outcomes if a change were to somehow actually happen (is it a be careful what you wish for scenario?)? I think it might also be different for RIV vs future resorts since RIV has already been selling for a while.

1. Resale restrictions are completely removed from RIV and it works the same as the L14 resorts.
This opens up a few possibilities for future resorts:
a. No resale restrictions and all owners have access to future resorts.
b. DVC2 is created with the next resort and is completely separate from DVC1 (i.e. no trading between the two groups).

2. RIV is somehow modified to be the start of DVC2. I don't know if this is legally possible, but I wouldn't think it would be an actual option, given that everyone who has purchased RIV direct would no longer have access to the L14 resorts.

3. The POS of all L14 resorts are somehow modified to allow what happened with RIV. This seems like it would be an extremely difficult and lengthy process. But if this were to happen, does this mean the outcome could be that future resales (assuming grandfathering) would only be able to book at the home resort?

I'm not nearly as knowledgeable as the others posting in this thread so I'm sure I'm missing something.

From what I have read, the agreement with BVTC has a clause for modification of terms and conditions.

So, IM9, the question would then becomes if the changes made fall within their legal rights to amend since owners were grandfathered into the old rules so no changes impact the terms they agreed to?

As I mentioned earlier, I am not taking any stance or opinion on what was done and whether it is legally allowed.

I have not studied it or researched it enough to do that.