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Florida USA Timeshare News: Sept. 23, 2017

It's Happy Hour at The GateHouse >> EASTERN USA TIMESHARE NEWS:

How much do you know or think you know about the resale issue for specific timeshare properties/programs? Probably not very much if you aren’t connected in some way with them. I was recently asked for my opinion about DVC resales vs other companies, and I didn’t know the answer so I had to look it up.

Therefore, let’s take a look at what I learned this week about Disney Vacation Club’s rules and regs on the subject. (With linked references.) How different or how similar are they compared to other major developers’ way of dealing with the resale market?

All DVC ownerships are a deeded interest in real estate, and each interest equates to a specific number of Disney Vacation Club points, which are awarded each year on the first day of the anniversary month. All memberships at DVC resorts are sold as either a ground lease or a term-for-years. This means that the timeshare ownerships have a specific expiration date, at which point the usage rights will revert back to Disney Vacation Development, Inc.

Disney includes a Right of first refusal clause (ROFR) in their membership contracts and uses a nonjudicial foreclosure process, which forces auction bidders to be present instead of allowing online bid submissions with the Orange County Clerk of Court’s office. The company has only two approved resale companies, Fidelity Resales and Vacatia. In addition, licensed brokers can sell Disney Vacation Club contracts. Disney also provides timeshare loans for the purchaser.

In May 2016, Sharket issued a 2015 resale value list (having a score based on resale volume and prices) which saw memberships in DVC locations crowd out its competitors. Saratoga Springs, Bay Lake Tower at the Contemporary, and Animal Kingdom Villas were the company’s timeshares near the top of the list.

When a contract is sold on the resale market, Disney retains the right of first refusal, meaning they have an opportunity to review each sale and if they choose, to step in as the purchaser for the price listed on the sale. In 2016, the buyback rate was around 4.4%, meaning Disney chose to purchase the resale accounts 4.4% of the time. However, in the month of January 2017, Disney exercised their ROFR on 23 contracts sold through the DVC Resale Market, representing roughly 9.5% of the contracts sold in that same month.

According to a 2016 article in the Orlando Sentinel the company announced in 2011 that it would no longer allow secondary market DVC points purchasers to use their points on Disney Cruise Line, Adventures by Disney, or the Concierge Collection luxury hotel group. In April 2016, Disney Vacation Development also ended the extension of Membership Extras benefits to those who purchase DVC contracts through secondary markets. ARDA says Disney was one of the last major timeshare companies to eliminate these benefits, and I don’t see any reason to doubt them.

Essentially Disney’s resale regulations don’t seem very different from most others so I assume the higher number of resales – and at higher prices – must be due to other factors. Amirite?

What am I missing?

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1 comment

  1. Anonymous

    I hope you consider making this article into a series. Perhaps explore the various rules and regulations of other developers when it comes to resale and rental. Maybe dive into the approved use and restrictions of resale, rental and exchange. Some may wonder why this is important. Resale owners and renters are specifically flagged in the developer’s reservation system – Some developers have internal policies that further restrict use for secondary market points purchasers. *Read the fine print.



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