Yet Another Dues Question

[keishashadow]

Upon reading several of the recent posts regarding annual dues, and reimbursement thereof to sellers in Resale Contracts; I'm more confused than ever as to my obligation at closing.

As Buyer of an Oct UY, with all '04 points banked and all '05 coming due; Sales Contract states: "Buyer is responsible for Annual Dues on points for 2005 Allocation. Seller to be reimbursed for any prepaid portion".

Am a PA Realtor, my interpretation was that I owed for 3 months this year (Oct thru Dec) ;dues in January 2006 either upfront or monthly payments. Didn't think it was worthwhile to have my attorney review the contract, especially as I've seen tons of Sales Agreements - OOPS!

Even though the Sales Agreement specifies 'Annual Dues on ...2005 Allocation' I'm starting to think I might owe for all of 2004 (less the 3 months) plus all of 2005.

Although it's not a huge dollar difference in my very small contract, I'd would like clarification if anyone has the time to explain.

 

[cruise-o-matic]

Dues are paid on a Calendar Year basis. If you pay in full, I think you have until 2/15 to pay for the entire year OR you can set up a bank draft for 12 equal installments.

The only time dues are pro-rated are if you buy directly from Disney. So if you were to buy direct from Disney and have a Oct UY, you'd only pay 3 months of dues for that year. After that, it goes back to the calendar year basis, no matter whether you have a Dec or Jan UY.

More than likely, your seller is on a monthly draft and wants to be reimbursed for $ that has been drafted out of his bank account since January. The $ they paid b/n Oct-Dec '04 are for '04 dues. The $ paid since Jan '05 are for '05 dues even though you do not receive the allotment of '05 points until Oct.

Hope this makes sense.

 

[keishashadow]

Hope I've got it this time:

We'd reimburse Seller for (assumed monthly payments made based on "...prepaid portion" terminology) Jan thru closing date/month for '05.

Then, prepay the remainder of '05 calendar year (June thru Dec) directly to DVC.

In Jan '06 We'd owe 12 months of dues, at which time we could pay in full before 2/15 or get on monthly drafts if requested.

 

[RobDoc]

It sounds as though you have agreed to pay all of the 2005 dues (dues are based on calendar year). Since DVC will prorate dues, if you were buying direct, you would receive all 2004 points, would get all 2005 points on October 1 and would pay dues prorated for 7 months (May 1- December 31)- if you were buying today.

With the resale, it appears to me that you will get all 2004 points banked, all 2005 points on October 1 and have agreed to pay the 2005 (calendar year) dues. IMO, especially since you are getting all 2004 points, this should NOT be a deal breaker and is still a good situation. If there were no 2004 points, or if any 2005 points were borrowed, I would not be as excited about the maint fees.

I wouldn't worry too much about it, your agreed offer sounds fine.

Enjoy!

 

[cruise-o-matic]

Hope I've got it this time:

We'd reimburse Seller for (assumed monthly payments made based on "...prepaid portion" terminology) Jan thru closing date/month for '05.

Then, prepay the remainder of '05 calendar year (June thru Dec) directly to DVC.

In Jan '06 We'd owe 12 months of dues, at which time we could pay in full before 2/15 or get on monthly drafts if requested.

I think you have the gist of it. Upon closing, DVC will want the remainder of the '05 dues along with the transfer form. I'm not sure if you will be able to set it up on a bank draft. You will need to have your seller contact DVC about this before closing. It's kind of a Catch -22 situation. DVC will not recognize you until they process the transfer, but they may not process the transfer if the '05 dues are not paid in full.

We were able to set our '05 dues on draft, but we also closed in January, before the total '05 dues were due. We reimbursed the seller for the Jan payment that was drafted and were able to set up our draft to start in February.

 

[keishashadow]

I'm slowly starting to grasp these details - wonder who devised this system?

 

[Dean]

If you're getting the 2004 points and not reimbursing for past years dues, you are fine. IMO, the neutral position given the circumstances is paying all the 2005 dues. Were you only getting the 2005 points, it would have been 3 months of dues.

 

[mowog]

DVC is not like other property in that dues/maint fees are per point. I think that with a resale its customary that dues on any used/borrowed points are paid by the seller and any banked/unused points are paid by the buyer.

On a "real" piece of property, like your home, use is evenly distributed over 12 months. But with DVC an owner could use his entire alotment of points during the first week of his use year or bank them into the next year. So I think the dues are pro-rated by points instead of time. To confuse things more an exception could be if remaining points could not be banked- making them potentially less valuable.

If the seller isn't reimbursed for dues paid on unused or banked points it is a very good deal for the buyer.

We bought a BCV resale that had a few borrowed points. At settlement the seller paid the dues on the borrowed points. Since the dues were not actually due yet there was an adjustment of some sort to reflect the amount.

Bob

 

[keishashadow]

I will call my agent/closing co to determine whether I owe '05 or '04 & '05 dues at closing. Thanks.