When will i need to pay for Annual Dues?

[RobynPrincess]

Please bare with me as I am still learning

I am looking to buy resale, there is a particular contract that I am looking at that has a UY of October. The 2012 points have been used, I would get the next set of points on 1st Oct (but i realise i can borrow if need be).

I thought you paid annual dues in Jan, so how would that work for this particular listing? Would I need to pay in Jan for the ones that become available in October?

Thanks for your help!

[CarolMN]

Dues are paid based upon calendar year, not use year. They are due in January, but DVC allows members to pay monthly at no extra charge. Direct purchasers pay prorated dues for the first year - from date of purchase agreement to the end of the year.

All that said, dues are one of the negotiable items for those who purchase via the resale market. What you have posted about the October use year contract isn't exactly clear - I think you may be confusing use year with calendar year.

The points you get on October 1, 2012 are your 2012 use year points. The 2012 dues (which were due in January, 2012) cover 9 months of 2011 use year points and 3 months of 2012 use year points.

The current owner will already be paying (or have have paid 2012) dues.

Whoever owns the contract in January 2013 will be liable for the 2013 calendar year dues. For a resale, the current owner may ask the buyer to reimburse 2012 dues or perhaps the two parties may adjust the price per point. There are many ways to negotiate to an agreement. It can be a bit tricky if there are borrowed points or less than a full complement available. Many brokers do not understand exactly how Disney looks at dues and think if you get points in the current year, you should pay the dues. But again, it's all negotiable.

Understanding Use Year

[RobynPrincess]

Thank you so much for taking the time to reply. I would be buying the contract with no 2012 points, just 2013 (Oct 2013 is when they would start from).

I hope that makes sense!

So as I understand it, if I buy now I will pay the dues in Jan (I will be paying in lump sum as I am in the UK and they dont allow monthly repaments outside of US) for the points that start in Oct 2013. Is that right?

[CarolMN]

Originally Posted by RobynPrincess

Thank you so much for taking the time to reply. I would be buying the contract with no 2012 points, just 2013 (Oct 2013 is when they would start from).

I hope that makes sense!

So as I understand it, if I buy now I will pay the dues in Jan (I will be paying in lump sum as I am in the UK and they dont allow monthly repaments outside of US) for the points that start in Oct 2013. Is that right?

Yes, if you buy now and the deal closes before January, you will be responsible for the dues billed in January 2013. It's more likely that the deal will not close until after that, so the current owner may be the one responsible. He/She may ask to be reimbursed for 2013 dues in the agreement. Whatever you decide, it should be specified in your offer and then in the agreement.

FWIW, I would not want to pay more than 25% of the 2013 dues since I would not actually get points until October, 2013. I would estimate the amount of dues that will be charged in January 2013 (2012 rate plus an amount for inflation) and adjust my offer accordingly. To me, this contract would be worth less than one that had the full complement of points from 2012. Others (and you) may have a different opinion on that, though.

Good luck with your negotiations.

P.S. It is quite unlikely that a resale purchase could be completed before the 2013 dues are billed. That's especially true because of the Holidays. We should know the amount of the dues for 2013 by the end of December.

[RobynPrincess]

Thank you for your opinion, I didnt think of it that way! I have since seen another contract that looks a bit more desirable to me that has a UY of March. Slightly higher per point but I would still be making an offer a couple of $ less (not much) so I think that one is the way to go at the moment. Just need to work out if we can afford it first!

[drusba]

If you buy now it is virtually certain that all of the 2013 dues will be due at time of closing because that will be true of all closings that take place Dec 15 or after. Unless you negotiate otherwise, it will be assumed that you will be paying those dues at closing. Your options on 2013 dues is to either negotiate some split of them with the current owner as part of the sale or offer a lower price per point if you agree to pay all of the 2013 dues. In any event, make sure you decide what to do with the issue before you make an offer so it can be part of the offer you make.

[bighoo93]

Originally Posted by RobynPrincess

Please bare with me as I am still learning

I am looking to buy resale, there is a particular contract that I am looking at that has a UY of October. The 2012 points have been used, I would get the next set of points on 1st Oct (but i realise i can borrow if need be).

I thought you paid annual dues in Jan, so how would that work for this particular listing? Would I need to pay in Jan for the ones that become available in October?

Thanks for your help!

As others have indicated, I would try to negotiate something with respect to the annual fee. Since they are on a calendar basis that does not correlate with use year, it is entirely typical that they simply prorate them by the months remaining in the year. This doesn't make practical sense to me, but I think you should still think of it that way. For example, I recently closed on a purchase of 250 SSR points, with an August use year. 195 of the 2012 points were still on the contract (i.e., usable through July 2013). That is 80% of the points, but I only paid 1 month of the 2012 annual fees (~$99). I didn't argue since it was to my benefit, but I felt like they were basically giving me those points on the cheap.

So if you are going to buy now, pay a full year of annual fees, but not have access to points until October, you might want to negotiate the annual fees down to at least a split.

But maybe the seller won't go for that, because the agent will say that a split by calendar month is typical. Fine. Money is money, just adjust your offer price accordingly. This is where having some framework for comparative value of contracts is useful (discussed in several other threads). You may not be able to peg the precise value of a contract, but you can compare the value of one with or without the points loaded in. And it would be crazy to pay the same price with that difference.

[Dean]

Most resale companies take the incorrect stance that you get the points you pay the dues so they would be thinking that you'd be responsible for all of the dues coming up in Jan. However, as noted above, dues are on a Calendar year basis and thus the dues in Jan would be for 9 months of the 2012 points and 3 months of the points you're getting. If you paid the full dues, you'd be overpaying by 3/4 of a years worth of dues. While this is negotiable as indicated, you'll be swimming up stream with the major DVC resale companies. You're likely better off looking for a different contract that has more points available than trying to get this contract at a truly fair price. No harm in trying though, make an offer. Do realize that some companies are more willing to pass on offers appropriately than others, esp ones they see as low ball offers.