DVC plans to target commercial renters

[Genie+]

I feel like a cave man marveling at fire when I look at legalese. The lawyers on here must get a kick out of this stuff.

Trying to keep track of all the pertinent layers and phrases sometimes feels like an incalculable math problem Somebody needs to invent a legal calculator that spits the answers out for us!

 

[DonMacGregor]

I am not a lawyer, but to me the language in 721 that states (which someone noted before)

IMPORTANT: Before signing this contract, you should carefully review your original timeshare purchase contract and other project documents to determine whether the developer has reserved a right of first refusal or other option to purchase your timeshare interest or to determine whether there are any restrictions or special conditions applicable to the resale or rental of your timeshare interest.

To me, that paragraph actually assigns the ultimate determination over rentals to the association or managing entity.

"Whether the developer has reserved a right... to determine whether there are any restrictions or special conditions applicable to the resale or rental of your timeshare interest" pretty much states that the state is NOT going to guarantee your right to rent your unit and that you should be cautious that the developer hadn't reserved their right to limit the rental of your timeshare unit.

The developer has the right to restrict the rental of your timeshare, so buyer beware. There's no language in there suggesting that you can opt out of the developer's reservation of rights. You can certainly argue that absent the developer restricting the use, you are free to rent, but that is far from some unalienable right, and the right to limit it is clearly one-sided and on the side of the developer.

I have the right until Disney says I don't. Now you can also argue that the contract you signed doesn't explicitly limit your rental use, but again it's a far cry from "Florida law guarantees that I can rent my timeshare".

 

[Sandisw]

To me, that paragraph actually assigns the ultimate determination over rentals to the association or managing entity.

"Whether the developer has reserved a right... to determine whether there are any restrictions or special conditions applicable to the resale or rental of your timeshare interest" pretty much states that the state is NOT going to guarantee your right to rent your unit and that you should be cautious that the developer hadn't reserved their right to limit the rental of your timeshare unit.

The developer has the right to restrict the rental of your timeshare, so buyer beware. There's no language in there suggesting that you can opt out of the developer's reservation of rights. You can certainly argue that absent the developer restricting the use, you are free to rent, but that is far from some unalienable right, and the right to limit it is clearly one-sided and on the side of the developer.

I have the right until Disney says I don't. Now you can also argue that the contract you signed doesn't explicitly limit your rental use, but again it's a far cry from "Florida law guarantees that I can rent my timeshare".

Maybe this is what people have used as the basis, given that the developer has included it in DVC?

Basically, FL law gives all owners the right to do it but a developer can eliminate the right when writing the contract and that is why it warns potential buyers to look for thst in a contract.

Since the POS has included the language already, they can’t change it now…as it’s a material change. Meaning, they upheld our right to rent when they created the POS.

I still think the clause implies that the right to rent is but the law also gives a developer, prior to developing a timeshare, the right to exclude it.

Which brings it back to DVC deciding what level of personal use renting counts and what actions constitute commercial purposes.

 

[wdw_explorer]

And again, I'm not arguing that rentals aren't allowed under the law, as they very clearly are. I'm simply asking where it says that if Don owns a timeshare, he has a guaranteed right under Florida law to use it as a rental property, and that that right can't be abrogated by the condominium association or any other entity.

Don,

I do get what you're saying, and that may or may not be there ( I have no idea). Does it not exist because it is not needed? I would say that unless you find a statute that gives a developer or condominium association the right to take away the ability to rent why would one think they could? (Not counting contractual limiting and maybe a vote of majority of owners??)

Clearly developers and associations are given enumerated powers. For example, no one (or few?) would argue that the developer may limit me bringing into my DVC room only food purchased at a Disney venue, even though there is no statute that food bought anywhere that may be brought into a room.

I am interested in what clause gives them the ability to limit renting beyond the commercial use limitation that was in the POS. I think it's incumbent upon them to show they have that power (and maybe they do, I don't know) to limit renting beyond that, not for us to prove that we have the right to rent.

Clearly the ability to rent is not absolutely protected (like a right) as the section I included earlier states a contract can restrict it.

 

[DonMacGregor]

Don,

I do get what you're saying, and that may or may not be there ( I have no idea). Does it not exist because it is not needed? I would say that unless you find a statute that gives a developer or condominium association the right to take away the ability to rent why would one think they could? (Not counting contractual limiting and maybe a vote of majority of owners??)

Clearly developers and associations are given enumerated powers. For example, no one (or few?) would argue that the developer may limit me bringing into my DVC room only food purchased at a Disney venue, even though there is no statute that food bought anywhere that may be brought into a room.

I am interested in what clause gives them the ability to limit renting beyond the commercial use limitation that was in the POS. I think it's incumbent upon them to show they have that power (and maybe they do, I don't know) to limit renting beyond that, not for us to prove that we have the right to rent.

Clearly the ability to rent is not absolutely protected (like a right) as the section I included earlier states a contract can restrict it.

I don't disagree with any of that. The Statute very clearly assigns the right to limit rental activity to the developer. The issue is (and I also agree) whether or not the POS is sufficiently limiting in its language. As we've said all along, no one is saying DVC should (or even could) completely restrict all renting (at least under any contract signed to-date), but the reference to commercial renting is very vague and arguably ambiguous enough to give them (DVC) enough room to argue that they HAVE reserved the right to limit or stop any renting that they deem to be commercial, under whatever standard they have deemed to apply.

As I've said, my only real bone was with the incessant argument that the right to rent, without limit or exception, is guaranteed under Florida law.

 

[JackosinDIS]

I am not a lawyer, but to me the language in 721 that states (which someone noted before)

IMPORTANT: Before signing this contract, you should carefully review your original timeshare purchase contract and other project documents to determine whether the developer has reserved a right of first refusal or other option to purchase your timeshare interest or to determine whether there are any restrictions or special conditions applicable to the resale or rental of your timeshare interest.

appears to be the operative section. While not explicitly stating it, it warns buyers to be careful signing something that limits their ability to rent - implying they have one. Clearly there are no statute disallowing it in whole. Additionally, if the developer could add a limitation later there would be no reason to warn consumers to be careful not give away that ability as it could be limited anyway at the developer's discretion (and hence it being in the contract would be moot).

In that same section it talks about a right of first refusal. I do not believe a developer could add that after the contract was executed either as it impinges on my right of selling my contract. If I have signed a contract without a right of first refusal clause there may be nowhere explicitly in FL law that says that I may sell my contract to whomever I want at whatever price I want but unless the law explicitly bars certain types of sales (or allows the developer to) I certainly have that right.

I am positing that someone can rent what they own UNLESS they are explicitly barred by statute, ordinance, contractual agreement or allowed power of the developer. I would say it is incumbent on someone finding the statue that allows the developer to limit that right (post contract), not on finding a statute that guarantees it.

My two cents.

Again, not a lawyer, so I would love for one to chime in

I will chime in… as a real estate lawyer… in the UK but the real estate laws are related closely enough for me to give an educated opinion (on a strictly non-reliance basis!)

@wdw_explorer is closest to the mark here. There is an unfettered right to rent unless that right is limited in the POS. There is no express provision in the statute which spells out that right. It is a common law principle.

7.21.07(5)(p) states:

If there are any restrictions upon the sale, transfer, conveyance, or leasing of a timeshare interest, [the POS must include] a statement in conspicuous type in substantially the following form: The sale, lease, or transfer of timeshare interests is restricted or controlled. Immediately following this statement, a description of the nature of the restriction, limitation, or control on the sale, lease, or transfer of timeshare interests shall be included.

The POS does of course include the required statement in bold. Section 7(d) of the POS then goes on to set out the ‘nature of the restriction’ as follows:

No Owner may directly rent…. Without making a prior reservation of an available Vacation Home at [resort] on a first come, first served basis. DVDs approval of a rental by an Owner is not required after a reservation has been made in the renter’s own name.

If the relevant restriction has not be included in the POS then there is an unlimited right to rent or sell your timeshare. In this case, the only restriction is that you must first make a reservation.

This does not override the separate restrictions on use of vacation homes as a commercial enterprise. It is not however easy to marry the two principles.

 

[DonMacGregor]

I am interested in what clause gives them the ability to limit renting beyond the commercial use limitation that was in the POS. I think it's incumbent upon them to show they have that power (and maybe they do, I don't know) to limit renting beyond that, not for us to prove that we have the right to rent.

It would seem that the one you quoted does just that:

IMPORTANT: Before signing this contract, you should carefully review your original timeshare purchase contract and other project documents to determine whether the developer has reserved a right of first refusal or other option to purchase your timeshare interest or to determine whether there are any restrictions or special conditions applicable to the resale or rental of your timeshare interest.

That would suggest their power to restrict use is relatively broad (as long as it's in the original contract of course). That whole paragraph is one huge, screaming, buyer beware. But again, who has suggested DVC should or is planning on limiting renting beyond the commercial use limitation? That's literally the sole purpose of this thread.

 

[DonMacGregor]

I will chime in… as a real estate lawyer… in the UK but the real estate laws are related closely enough for me to give an educated opinion (on a strictly non-reliance basis!)

@wdw_explorer is closest to the mark here. There is an unfettered right to rent unless that right is limited in the POS. There is no express provision in the statute which spells out that right. It is a common law principle.

I don't think there's any argument there. I was never suggesting there was any express provision. I was, however, asking those who claimed there was, to simply identify it. We're getting deep in the weeds here, but folks have been saying for a good long while that its specifically guaranteed under the Statutes (and not their or someone else's interpretation of common law) and blithely ignoring the existence of the clause which affords a developer the right to restrict those common law rights.

 

[wdw_explorer]

I don't think there's any argument there. I was never suggesting there was any express provision. I was, however, asking those who claimed there was, to simply identify it. We're getting deep in the weeds here, but folks have been saying for a good long while that its specifically guaranteed under the Statutes (and not their or someone else's interpretation of common law) and blithely ignoring the existence of the clause which affords a developer the right to restrict those common law rights.

Don,

I think we got to the point of violently agreeing. There is an implied ability to rent (as eloquently pointed out by the real estate attorney) even if not guaranteed by statute, and that ability may be limited by the developer at the time of the contract, but not after.

And I clearly state for the record that I have no idea what constitutes or does not constitute commercial activity and renting.

 

[DonMacGregor]

And I clearly state for the record that I have no idea what constitutes or does not constitute commercial activity and renting.

Well THAT'S clearly a lie. You're not allowed on the DVC forums without an opinion (always the only correct one) regarding what constitutes commercial renting...

 

[wdw_explorer]

Well THAT'S clearly a lie. You're not allowed on the DVC forums without an opinion (always the only correct one) regarding what constitutes commercial renting...

Hahaha!!! Fair enough- I will formulate an opinion for you: Clearly whatever I am doing cannot constitute commercial renting ;-)

 

[Genie+]

This does not override the separate restrictions on use of vacation homes as a commercial enterprise. It is not however easy to marry the two principles.

You would know better than me…

But doesn’t the commercial use prohibited come first and foremost? An owner would need to be able to defend their point rentals are not ‘a pattern of activity’ that shows they are using the points as a business. An owner can rent excess points IF the contract(s) are normally for personal use. If I buy 2 contracts, only ever use one and always rent out the points on the other, that seems like my membership is engaged in a pattern of commercial use. That brings the legitimacy of my rentals into question.

Going by the ‘20+’ clarification from c2009 it looks like DVC can put the onus on the owner to prove their reservations aren’t illegit. That clause makes owners have to prove none of the 20 reservations are outside personal use. So couldn’t they say, “Hey, all 15 reservations you’ve made on your SSR contract were not in your own names, so we want you to prove the 3 new existing reservations are not rentals, or we will cancel them.”

 

[Sandisw]

You would know better than me…

But doesn’t the commercial use prohibited come first and foremost? An owner would need to be able to defend their point rentals are not ‘a pattern of activity’ that shows they are using the points as a business. An owner can rent excess points IF the contract(s) are normally for personal use. If I buy 2 contracts, only ever use one and always rent out the points on the other, that seems like my membership is engaged in a pattern of commercial use. That brings the legitimacy of my rentals into question.

Going by the ‘20+’ clarification from c2009 it looks like DVC can put the onus on the owner to prove their reservations aren’t illegit. That clause makes owners have to prove none of the 20 reservations are outside personal use. So couldn’t they say, “Hey, all 15 reservations you’ve made on your SSR contract were not in your own names, so we want you to prove the 3 new existing reservations are not rentals, or we will cancel them.”

That was how it was supposed to work. You could have 20 but if you wanted more, then you had to show the first 20 were not rentals. If not, all above 20 would be canceled.

The other language that gives insight where the initial thinking was in regards to this is that it say “to encourage for personal use” we are capping you at 8000 points.

That is a pretty high threshold so at one time, they seemed to define it very loosely.

Now, my guess is that they want to tighten it up because it is so easy to rent.

I didn’t get the sense from the board that they see the average owner renting as an issue…it’s the large point owners who are the target.

As I mentioned earlier, I don’t even think we will get any new rules…but rather that they know who they are targeting and will do it behind the scenes especially when they mentioned something to the effect this wasn’t a large portion of reservations.

 

[JackosinDIS]

You would know better than me…

But doesn’t the commercial use prohibited come first and foremost? An owner would need to be able to defend their point rentals are not ‘a pattern of activity’ that shows they are using the points as a business. An owner can rent excess points IF the contract(s) are normally for personal use. If I buy 2 contracts, only ever use one and always rent out the points on the other, that seems like my membership is engaged in a pattern of commercial use. That brings the legitimacy of my rentals into question.

Going by the ‘20+’ clarification from c2009 it looks like DVC can put the onus on the owner to prove their reservations aren’t illegit. That clause makes owners have to prove none of the 20 reservations are outside personal use. So couldn’t they say, “Hey, all 15 reservations you’ve made on your SSR contract were not in your own names, so we want you to prove the 3 new existing reservations are not rentals, or we will cancel them.”

Does it come first and foremost? I really don’t know. The restrictions on leasing as set out in the POS do not include a restriction on commercial lettings or any mention of commercial use in the obligatory statutory disclosures. That is in separate sections of the contract.

The contracts are ambiguously drafted and are not clear on what constitutes personal vs commercial use. On the one hand, personal use explicitly includes use by ‘lessees’ (the person renting the points from the owner) so I find it difficult to reconcile how something which is expressly included in the definition of personal use can then be deemed commercial.

The POS goes further and says that to ‘encourage personal use’ owners are limited to 4000 points (or 8000 across resorts) - which implies that anything below this is presumed non-commercial.

A bit like saying to discourage dangerous driving you can only have 2 units of alcohol and get behind the wheel. Any less than that and no DUI, although some would argue that you are still drunk driving although can be prosecuted.

To be deemed commercial use it would need to go much further than just renting a handful of times, whether confirmed spec reservations or otherwise, and DVC would have to show that the owner has established a commercial enterprise from their ownership of the contract in my view. DVC has an obligation to act reasonably in determining whether use is commercial (for pre-RIV resorts only), which under normal contractual principles would put the onus on DVC. I think the requirement for owners to show that the first 20 reservations were friends / family probably fell within the bounds of DVC acting ‘reasonably’.

However, as many have said before, good luck to anyone trying to mount a legal challenge against Disney’s decision and whether or not their discretion has been exercised ‘reasonably’. They have the upper hand in terms of being able to simply lock you out of the contract and/or cancel reservations. What ya gonna do if that happens?!

 

[Sandisw]

Does it come first and foremost? I really don’t know. The restrictions on leasing as set out in the POS do not include a restriction on commercial lettings or any mention of commercial use in the obligatory statutory disclosures. That is in separate sections of the contract.

The contracts are ambiguously drafted and are not clear on what constitutes personal vs commercial use. On the one hand, personal use explicitly includes use by ‘lessees’ (the person renting the points from the owner) so I find it difficult to reconcile how something which is expressly included in the definition of personal use can then be deemed commercial.

The POS goes further and says that to ‘encourage personal use’ owners are limited to 4000 points (or 8000 across resorts) - which implies that anything below this is presumed non-commercial.

A bit like saying to discourage dangerous driving you can only have 2 units of alcohol and get behind the wheel. Any less than that and no DUI, although some would argue that you are still drunk driving although can be prosecuted.

To be deemed commercial use it would need to go much further than just renting a handful of times, whether confirmed spec reservations or otherwise, and DVC would have to show that the owner has established a commercial enterprise from their ownership of the contract in my view. DVC has an obligation to act reasonably in determining whether use is commercial (for pre-RIV resorts only), which under normal contractual principles would put the onus on DVC. I think the requirement for owners to show that the first 20 reservations were friends / family probably fell within the bounds of DVC acting ‘reasonably’.

However, as many have said before, good luck to anyone trying to mount a legal challenge against Disney’s decision and whether or not their discretion has been exercised ‘reasonably’. They have the upper hand in terms of being able to simply lock you out of the contract and/or cancel reservations. What ya gonna do if that happens?!

And I honestly believe that they are still going to have a more favorable policy for owners vs a strict one.

 

[wdw_explorer]

I know this may be clear to most, but can someone clarify what a reservation is?

We have a family trip in April. We reserved two rooms in the home resort priority period. At 7 months we switched to a split stay at two different resorts and then when one of the hotels we wanted (but wasn't available originally) opened up we changed it again. Did I make 8 reservations ( 2 original, 4 at 7 months, 2 to switch a resort soon after) or just 4 ( the original 2, then modifying those and adding two more, then modifying again)?

Aside - doing split stay for water park.

When you modify a reservation is that added to the reservation count or just "new" reservations are. If I add/remove a day is that a new reservation? Change resorts via waitlist? Add/remove guests? Walk a ressie (not my thing, but curious)

Is what a reservation is for the count of 20 defined or ambiguous?

With several families using our points (us and our two daughters with their families) we do get over 10 (counting all changes) pretty quick for sure.

Would hate to get to 20 and have 1 I rented out so all future ressies are locked out.

Thanks for the education.

 

[Sandisw]

I know this may be clear to most, but can someone clarify what a reservation is?

We have a family trip in April. We reserved two rooms in the home resort priority period. At 7 months we switched to a split stay at two different resorts and then when one of the hotels we wanted (but wasn't available originally) opened up we changed it again. Did I make 8 reservations ( 2 original, 4 at 7 months, 2 to switch a resort soon after) or just 4 ( the original 2, then modifying those and adding two more, then modifying again)?

Aside - doing split stay for water park.

When you modify a reservation is that added to the reservation count or just "new" reservations are. If I add/remove a day is that a new reservation? Change resorts via waitlist? Add/remove guests? Walk a ressie (not my thing, but curious)

Is what a reservation is for the count of 20 defined or ambiguous?

With several families using our points (us and our two daughters with their families) we do get over 10 (counting all changes) pretty quick for sure.

Would hate to get to 20 and have 1 I rented out so all future ressies are locked out.

Thanks for the education.

Under those rules, the 20 reservations were ones actually still booked. Modifications of the same dates to a different resort would not result in more reservations, but a split stay would....

When you look at your dashboard, and count how many reservations you see (they have their own reservation number) that is what we are talking about. Changing, modifiying, etc. doesn't add to the count unless you end up with a new reservation.

I know how fast things can add up....I currently have four different reservations booked for a trip in March that I am waiting on DVC to combine because I snagged them at different times between stalking and waitlists. Add up all the other ones I have booked currently, and I am at 12....though, they are spread across two of my three memberships.

 

[nalababybear]

Under those rules, the 20 reservations were ones actually still booked. Modifications of the same dates to a different resort would not result in more reservations, but a split stay would....

When you look at your dashboard, and count how many reservations you see (they have their own reservation number) that is what we are talking about. Changing, modifiying, etc. doesn't add to the count unless you end up with a new reservation.

I know how fast things can add up....I currently have four different reservations booked for a trip in March that I am waiting on DVC to combine because I snagged them at different times between stalking and waitlists. Add up all the other ones I have booked currently, and I am at 12....though, they are spread across two of my three memberships.

They can add up really fast; especially for local folk who constantly add/subtract, stalk, combine, do split stays.

I highly doubt Disney would want to sweep all these owners into whatever dragnet they are implementing.

 

[AstroBlasters]

The Snark is strong in this one. Well done my young Padwan, your training is progressing...

That one is definitely Sith….

 

[DonMacGregor]

That one is definitely Sith….

When I read his post, I felt a great disturbance in the Force, as if millions of voices suddenly cried out in terror and were suddenly silenced.