Resale Values after 2042

[_auroraborealis_]

I believe they can have some restrictions in 2041 on the contracts expiring in 2042.

 

[Marionnette]

I also think it depends on what Disney decides to do with those 2042 expiring resorts for the people who own points there. I know the OKW extension didn't go as they had hoped, but they could decide to allow for some sort of extension. The other option is that these resorts will become newly named resorts and be part of the group that will include Rivera. Current owners there might be able to buy in first or for a bit of a cheaper price...the one thing I am sure of is that they will find a way to keep them DVC. So, depending on what they do, I think that will play a role in the value of the other resorts as if they are no longer classified as part of O14, then those resorts still left would have trading power into fewer resorts. Just my thoughts.

This is what I’m thinking as well. There are what? Six 2042 resorts: HHI, VB, BRV, BCV, BWV and part of OKW.

I just don’t think that DVC will assume all of them at once, and take on all of the maintenance fees and taxes associated with those resorts while they undergo renovations to make them worthy for sale as “new” resorts. They may want to get out of VB and HHI altogether and sell those properties to another company.

But the on-site properties are a different story. OKW will be a mess to sort out with 2042 and 2054 contracts both having an owner interest in the same units, DVC cannot break the resort into OKW (all 2054 contracts) and New Key West (all contracts that expired in 2042 and resold as a new resort). To make that change as easy as possibly for DVC, I can see the ROFRing a lot of 2042 contracts in the near future.

The remaining 3 resorts are all associated with hotels. The day that DVC ends at those resorts, DVC takes over full responsibility for the operating costs of the DVC side. And with 3 older buildings to renovate before selling new contracts, I don’t see them shutting all of them down at once to do it. I foresee them offering 5-10 year extensions on two of the resorts at an attractive price just to keep owners paying for the maintenance and taxes. The third DVC resort will end in 2042 and it will be completely redone, repackaged and sold as a new resort with a completely new points chart that is more in line with recently opened DVC resorts. I look to see BCV to be the one to go first. It’s the smallest of the 3 and would be the quickest to turn around for resale.

Of course, no one knows what DVC/DVD has up its sleeve. I’m only spitballing.

 

[stewart715]

My guess is OKW is sold as 'DVC Lite' or some marketing mix in 2042 at a really good price for a 15 year contract so they at least get the MF's taken on. And then resold in 2057.

 

[skier_pete]

So this is an interesting question - "what will happen to the other resorts as the 2042 expire?" I would think that you are going to see a lot of those resorts hold value - but you also have to remember, even in 2042 a resort like AKV will only have 15 years left of life so I don't see the values inflating very much at that point with so little life left.

The 2042 results will likely devalue as they approach their expiration. Disney will either extend them (I think OKW and BRV they will extend) or resell them (the rest). I think you will be given some VERY SMALL benefit to already own a contract - like a 10% discount or something.

However, 2042 is still a long ways away. Florida may be underwater by then.

 

[jlb727]

I read it this weekend as I was sifting through all the rules and regulations for a new AKV contract we are in the middle of closing on. I will pull it up and cite to the specific sections, but I do remember reading it and seeing a clear outline for how they can take this “to the next level.”

My resale contract says that they can increase or decrease the "Home Resort Priority Period" at their discretion, but that "the Home Resort Priority Period" will be at least one month (so 8 months at the minimum) [Section IV.6.a.3]. The 7 month open period is specifically written into the contract for all owners of record [Section IV.6.a.2].

Section VIII does say they can amend the rules and regulations at any time, which might be the part you are looking at.

The thing I don't understand is why I (and resale owners after January) can't book at Riviera. I don't see that anywhere in my contract. I get them amending the rules to take the benefits away, but this section seems to guarantee reservations at any future resorts.



A Club Member is anyone with an ownership interest of record. The language doesn't differentiate between resale and direct. Is Riviera not considered a DVC resort?

Contractually, all club members will have at least 8 months home resort booking priority. That's spelled out in Section IV. I really think they might be dipping their toes in with Riviera to see how far they can push new restrictions without incurring litigation. With the way Disney is going, I agree with the theory that once BCV or BWV are reissued after 2042, resale owners like me won't be able to use resale points to book there, but I will be able to book my home resort and the remaining resorts.

 

[crvetter]

The thing I don't understand is why I (and resale owners after January) can't book at Riviera. I don't see that anywhere in my contract. I get them amending the rules to take the benefits away, but this section seems to guarantee reservations at any future resorts.

I'd have to look at the thread on where I discussed this in better detail. But essentially each resort is admitted to BVTC (the mechanism for trading at 7 months) under their own terms and conditions (something that your DVC Resort Agreement, document that defines those terms, does allow), which are laid out in a resort's DVC Resort Agreement. So Riviera dictated that if it were to join BVTC it would do so only if the current set of Resale Restrictions were put into place (Resale L14 can't book there and Riviera Resale can't book anywhere but Riviera); therefore, they exist solely within Riviera's DVC Resort Agreement. The only other resorts another resort was guaranteed access to was those that existed in BVTC at the time that resort joined (subject to any restrictions established in any of the resorts DVC Resort Agreement).

Some believe there are legal gray areas on what they did that simply stem from the legal reading of "substantially similar" (in that each resort needed a DVC Resort Agreement substantially similar to the others). Though, imo, if terms and conditions of admittance was allowed I'm personally not sure the restrictions violate the "substantially similar" qualification because I view the resale restrictions just as that. Though I did express to DVC management (as a couple others on the boards did) that I was unhappy with the changes. At first I didn't get how they introduced the Resale Restrictions and the first paragraph was their explanation, which honestly I follow but told them I disagreed with it as being a sound option for DVC to emply.

The important thing to note is nothing was contractually taken away from an owner. As technically speaking no one had a right to Riviera prior to it's admittance to the club. This is likely why no further resale restrictions were placed on the L14 as that would start messing with the contractual rights that everyone (direct and resale) bought with. Unlike the 2020 point reallocation, I'm going to guess DVC was a bit more prepared on this change (the conversations I had with the same people on both issues was night and day on their preparedness to defend their choice).

 

[katandmouse]

I have wondered about this as well, but then I look at it, and think well, if i bank my 2019 points then (albeit absurdly) there is no availability in 2020 whatsoever, my points expire and get lost. Is that DVC's problem? I do not think it is, I think its mine. Logistically it is 2 very different scenarios (as there will be a place to book in 2020), but legally it is the same concept. But I have no idea

Yeah, good point. Not sure that DVC really cares if we can use our points or not. But I think the legal stick is the FL Statute 721.05(25) “one-to-one use right to use night requirement ratio.” I don’t know enough about it though to guess how it might play out.
https://www.flsenate.gov/Laws/Statutes/2018/Chapter721/All

At any time, Disney has the discretion to restrict members to their home resort, and the POS allows for the booking window to be manipulated. Therefore, we can run into a situation where direct buyers are given first dibs on booking. That would destroy the resale market, and prevent people from being able to unload their resale contracts. Disney secures their MFs, and limits your ability to reserve rooms.

Yes, but only Riviera’s Agreement allows DVC to differentiate between resale and direct members, saying that resale members could have a different booking window or anything. If DVC were to change booking windows for any of the L14 resorts, it would have to be for all members of that resort. Which is why this restriction hurts Riviera more than any of the L14 resorts.
Not to say that DVC wouldn’t want to try something like this, but I think they would have legal trouble.

From the Multi-Site POS I have (Rev. 12/13/18): Section 11. “...Further, DVD has reserved the right, as set forth in the Membership Agreement and the DVC Resort Agreement, to prohibit or limit persons who do not purchase an Ownership Interest directly from DVD...” “...Club Members should refer to Exhibit ‘6’ of this public offering statement for a description of any restrictions or limitations...” which Exhibit 6 lists only Disney’s Riviera Resort.

My BCV POS (Rev. 12/30/13) does not distinguish between members, unless I’ve missed something. I’m interested to compare what you’ve found in your AKV docs. The more we know!

My resale contract says that they can increase or decrease the "Home Resort Priority Period" at their discretion, but that "the Home Resort Priority Period" will be at least one month (so 8 months at the minimum) [Section IV.6.a.3]. The 7 month open period is specifically written into the contract for all owners of record [Section IV.6.a.2].

Section VIII does say they can amend the rules and regulations at any time, which might be the part you are looking at.

The thing I don't understand is why I (and resale owners after January) can't book at Riviera. I don't see that anywhere in my contract. I get them amending the rules to take the benefits away, but this section seems to guarantee reservations at any future resorts.

View attachment 419453

A Club Member is anyone with an ownership interest of record. The language doesn't differentiate between resale and direct. Is Riviera not considered a DVC resort?

Contractually, all club members will have at least 8 months home resort booking priority. That's spelled out in Section IV. I really think they might be dipping their toes in with Riviera to see how far they can push new restrictions without incurring litigation. With the way Disney is going, I agree with the theory that once BCV or BWV are reissued after 2042, resale owners like me won't be able to use resale points to book there, but I will be able to book my home resort and the remaining resorts.

Riviera was admitted as a DVC Resort, with a DVC Resort Agreement (and there is no indication of any kind of DVC 2, which some suspected might happen). But its Membership Agreement and Resort Agreement include clauses about restrictions and limitations for “certain members” and accessing the DVC Resort Component for “eligible members.” It also states that BVTC may admit new resorts under “substantially different” terms whereas the BCV Agreement had the “substantially similar” clause. I’ll try to pull up all my notes on it tonight, and find the related threads here. So the booking restrictions are only in Riviera’s contract (they’re not even mentioned online, unlike the restrictions on membership perks which are spelled out everywhere!), and I agree they’re trying to see how much they can push here, and I do think it’s gray and shady...

 

[jlb727]

I'd have to look at the thread on where I discussed this in better detail. But essentially each resort is admitted to BVTC (the mechanism for trading at 7 months) under their own terms and conditions (something that your DVC Resort Agreement, document that defines those terms, does allow), which are laid out in a resort's DVC Resort Agreement. So Riviera dictated that if it were to join BVTC it would do so only if the current set of Resale Restrictions were put into place (Resale L14 can't book there and Riviera Resale can't book anywhere but Riviera); therefore, they exist solely within Riviera's DVC Resort Agreement. The only other resorts another resort was guaranteed access to was those that existed in BVTC at the time that resort joined (subject to any restrictions established in any of the resorts DVC Resort Agreement).

Some believe there are legal gray areas on what they did that simply stem from the legal reading of "substantially similar" (in that each resort needed a DVC Resort Agreement substantially similar to the others). Though, imo, if terms and conditions of admittance was allowed I'm personally not sure the restrictions violate the "substantially similar" qualification because I view the resale restrictions just as that. Though I did express to DVC management (as a couple others on the boards did) that I was unhappy with the changes. At first I didn't get how they introduced the Resale Restrictions and the first paragraph was their explanation, which honestly I follow but told them I disagreed with it as being a sound option for DVC to emply.

The important thing to note is nothing was contractually taken away from an owner. As technically speaking no one had a right to Riviera prior to it's admittance to the club. This is likely why no further resale restrictions were placed on the L14 as that would start messing with the contractual rights that everyone (direct and resale) bought with. Unlike the 2020 point reallocation, I'm going to guess DVC was a bit more prepared on this change (the conversations I had with the same people on both issues was night and day on their preparedness to defend their choice).

Thanks for your explanations. It’s wild but not super surprising that they used kind of a back-door provision and labrythine legal reasoning to start DVC 2. Resale must really be picking up, or Disney data analysts know they are close to a breaking point in direct pricing and they are hedging bets.

Yeah, I’m not mad. I knew going in I wouldn’t be able to book Riviera. This thread just had me going back to my contract with a more critical eye, and the comparison between some of the language in there and what I know in terms of the restrictions struck me as shady.

 

[Lclark5678]

However, 2042 is still a long ways away. Florida may be underwater by then.
[/QUOTE]


Let’s hope not!! That certainly will not help out with resale value!

 

[Katie2]

Below, are some relevant provisions from the Multi-Site Public Offering Statement.

II-A. DVD Disclosures

"Finally, there will be no accrual or carry-over of unused time from one year to subsequent years except to the limited extent permitted by certain banking and borrowing privileges. If a Club Member is unable to make satisfactory reservations, the Club Member is not relieved of the obligation to pay all assessments, taxes, and purchase money indebtedness associated with the Club Member's Ownership Interest."

"Further, DVD has reserved the right, as set forth in the Membership Agreement and DVC Resort Agreement, to prohibit or limit persons who do not purchase an Ownership Interest directly from DVD, or from an approved seller, from participating in other aspects of Club membership or benefits, including prohibiting or limiting access to other DVC Resorts through the DVC Reservation Component or restricting, limiting, or changing certain Home Resort Reservation Component or DVC Reservation Component Reservation features. Such prohibitions, restrictions, limitations, or changes may adversely affect a Club Member's ability to resell the Club Member's Ownership Interest or at a value that the Club Member might seek."

Section V (Use Attributes and Restrictions):

"The Central Reservation System. The Club "central reservation system" is the vehicle through which the exclusive use of your Ownership Interest is managed. The central reservation system is comprised of two component parts: the Home Resort Reservation Component and the DVC Reservation Component."

"Your ability to make a reservation at your Home Resort is subject to the priorities, restrictions, and limitations of the Vacation Ownership Plan for your Home Resort, as set forth in the Membership Agreement and the Home Resort Rules and Regulations. The Management Company for your Home Resort may, without your consent, change these reservation rules and priorities from time to time in accordance with the terms of these documents."

"The DVC Reservation Component serves as the means through which eligible Club Members reserve the use of Vacation Homes at other DVC Resorts. The ability to make a reservation is subject to the priorities, restrictions, and limitations set forth in the DVC Resort Agreement for each DVC Resort and the Disclosure Guide issued by BVTC from time to time. BVTC may, without your consent, change these reservation rules and priorities from time to time in accordance with the terms of these documents."

"Although DVCM and BVTC plan to take steps to attempt to spread demand among DVC Resorts in order to avoid demand imbalances, there can be no assurance that these steps will ultimately prevent demand imbalances among DVC Resorts."

Section VII (Sale and Rental Limitations)

" You should not purchase an Ownership Interest with any expectation that you will be able to rent, sell, or refinance your Ownership Interest."

"DVD has also reserved the right to prohibit or limit persons who do not purchase an Ownership Interest directly from DVD, or from an approved seller, from participating in other aspects of Club membership or benefits, including, prohibiting or limiting access to other DVC Resorts through the DVC Reservation Component or restricting, limiting, or changing certain Home Reservation Component or DVC Reservation Component reservation features."

 

[Lclark5678]

Below, are some relevant provisions from the Multi-Site Public Offering Statement.

II-A. DVD Disclosures

"Finally, there will be no accrual or carry-over of unused time from one year to subsequent years except to the limited extent permitted by certain banking and borrowing privileges. If a Club Member is unable to make satisfactory reservations, the Club Member is not relieved of the obligation to pay all assessments, taxes, and purchase money indebtedness associated with the Club Member's Ownership Interest."

"Further, DVD has reserved the right, as set forth in the Membership Agreement and DVC Resort Agreement, to prohibit or limit persons who do not purchase an Ownership Interest directly from DVD, or from an approved seller, from participating in other aspects of Club membership or benefits, including prohibiting or limiting access to other DVC Resorts through the DVC Reservation Component or restricting, limiting, or changing certain Home Resort Reservation Component or DVC Reservation Component Reservation features. Such prohibitions, restrictions, limitations, or changes may adversely affect a Club Member's ability to resell the Club Member's Ownership Interest or at a value that the Club Member might seek."

Section V (Use Attributes and Restrictions):

"The Central Reservation System. The Club "central reservation system" is the vehicle through which the exclusive use of your Ownership Interest is managed. The central reservation system is comprised of two component parts: the Home Resort Reservation Component and the DVC Reservation Component."

"Your ability to make a reservation at your Home Resort is subject to the priorities, restrictions, and limitations of the Vacation Ownership Plan for your Home Resort, as set forth in the Membership Agreement and the Home Resort Rules and Regulations. The Management Company for your Home Resort may, without your consent, change these reservation rules and priorities from time to time in accordance with the terms of these documents."

"The DVC Reservation Component serves as the means through which eligible Club Members reserve the use of Vacation Homes at other DVC Resorts. The ability to make a reservation is subject to the priorities, restrictions, and limitations set forth in the DVC Resort Agreement for each DVC Resort and the Disclosure Guide issued by BVTC from time to time. BVTC may, without your consent, change these reservation rules and priorities from time to time in accordance with the terms of these documents."

"Although DVCM and BVTC plan to take steps to attempt to spread demand among DVC Resorts in order to avoid demand imbalances, there can be no assurance that these steps will ultimately prevent demand imbalances among DVC Resorts."

Section VII (Sale and Rental Limitations)

" You should not purchase an Ownership Interest with any expectation that you will be able to rent, sell, or refinance your Ownership Interest."

"DVD has also reserved the right to prohibit or limit persons who do not purchase an Ownership Interest directly from DVD, or from an approved seller, from participating in other aspects of Club membership or benefits, including, prohibiting or limiting access to other DVC Resorts through the DVC Reservation Component or restricting, limiting, or changing certain Home Reservation Component or DVC Reservation Component reservation features."

It seems like a lot of members are unaware of this, even though it is written plainly. I am waiting for ROFR, and have not signed my actual contract yet, so this is the first I’m hearing of this. I explicitly asked the agent (at one of the 2 main brokers that shall remain nameless) if it was possible to impose new restrictions after signing, and I was told no. I was told that if new restrictions were put in place, owners who previously had signed would be grandfathered in and exempt from new restrictions.

How many resale members are aware of this clause?

 

[Katie2]

It seems like a lot of members are unaware of this, even though it is written plainly. I am waiting for ROFR, and have not signed my actual contract yet, so this is the first I’m hearing of this. I explicitly asked the agent (at one of the 2 main brokers that shall remain nameless) if it was possible to impose new restrictions after signing, and I was told no. I was told that if new restrictions were put in place, owners who previously had signed would be grandfathered in and exempt from new restrictions.

How many resale members are aware of this clause?

I hadn’t heard of that, but I had the same concern and I was going to reach out to my resale broker about it also. We just passed ROFR but have a delayed closing. Im concerned that between now and the closing we can have another wave of restrictions and I lose the ability to make reservations at the other 14 resorts, because while it has not been done yet it is explicitly provided for in these documents.

 

[stewart715]

I hadn’t heard of that, but I had the same concern and I was going to reach out to my resale broker about it also. We just passed ROFR but have a delayed closing. Im concerned that between now and the closing we can have another wave of restrictions and I lose the ability to make reservations at the other 14 resorts, because while it has not been done yet it is explicitly provided for in these documents.

It would be an unprecedented move by them but they absolutely can do it. Will they? My guess is almost certainly no. But when purchasing something this expensive, it’s worth considering.

 

[jarestel]

The only thing that makes resale contracts attractive to potential buyers as 2042 approaches is a declining price per point. I'm sure all of the spreadsheet gurus in 2030 will provide plenty of data showing the financial nonsense of buying a 200 point contract for 10 years at an expiring resort versus purchasing a 200 point contract at a resort that has many decades of use left to enjoy.

It's also quite possible that in the last 10 years or so, many owners of the expiring resorts will decide to sell their contracts in order to get something back rather than wait till expiration when they get nothing back. This may provide a glut of contracts on an already declining resale market, furthering the downward spiral in resale prices.

 

[stewart715]

The only thing that makes resale contracts attractive to potential buyers as 2042 approaches is a declining price per point. I'm sure all of the spreadsheet gurus in 2030 will provide plenty of data showing the financial nonsense of buying a 200 point contract for 10 years at an expiring resort versus purchasing a 200 point contract at a resort that has many decades of use left to enjoy.

It's also quite possible that in the last 10 years or so, many owners of the expiring resorts will decide to sell their contracts in order to get something back rather than wait till expiration when they get nothing back. This may provide a glut of contracts on an already declining resale market, furthering the downward spiral in resale prices.

In 2030, the contracts that have many decades remaining will be far more than $200pp.