DVC plans to target commercial renters

[JackosinDIS]

I would like to know why they aren’t enforcing ‘rentals cannot use banked/borrowed points’

Can you remind me where this wording is @Genie+

 

[Sandisw]

They can go and do that. But they still have to contend with These commercial operations that are clearly and egregiously breaking the rules.

Sure but that’s the whole point for me…while they can exist together, the specific rooms type as a rental when it is not accompanied by something that clearly means commercial enterprise does not work.

And the language regarding it not being an exhaustive list is true…but it doesn’t mean they get to include any criteria they want.

It just meant, and I agree, that the 20 reservations limit was just one way,,so it could be %x, it could change to be a 6 month period, it could change to a lot of different things, but only those that are evident that one could reasonably assume the commercial enterprise aspect.

 

[Genie+]

No one has said that you cannot rent a specific room. Just that if you do it multiple times and it falls into a pattern that DVC could reasonably think looks like a commercial enterprise, that they have the ability to do something about it. The most strict hypothetical under the current rules.

Basically the rooms/dates can add weight to the case, even if they are not the case by themselves. A contributing factor in pattern.

 

[JackosinDIS]

Have just seen on another thread that the rules concerning transfer of points have been significantly relaxed.
Interesting in the context of this thread perhaps.

 

[DonMacGregor]

"all reservations in excess of the first 20 reservations shall be presumed to be the use of Vacation Accommodations for commercial purposes in violation of the Declaration and the Membership Agreement"

"This policy is not intended, and shall not be deemed, either (i) to constitute an exclusive act or statement by the Association regarding any breach of the commercial activity prohibitions set forth in the Declaration of Condominium and Membership Agreement, or (ii) to be an exhaustive list of all activities that shall be deemed to be commercial activity. Accordingly, the Association reserves the right to promulgate such additional rules or to take such additional actions or measures as it deems appropriate with respect to any breach of such prohibitions."

Is that the extent of the 2008 "20-reservation rule" language (I know there is some text before the quote picks up, but I'm really talking about the second paragraph)? If so, wouldn't the bolded part sort of render the reservation count somewhat moot? I don't want to wade into the inclusive/exclusive/exhaustive debate, but it certainly seems like the bolded section gives DVC significant latitude.

I don't think it's really germane to how Disney will ultimately determine what is and isn't commercial use today, and I am squarely in the "small fish are perfectly safe to user their points as they have in the past" camp (though conversely I think larger players, including online brokers and third party listing sites should be looking over their shoulder), but it seems to me that Disney has always afforded themselves greater latitude than many would believe, either in the plain English reading of the contract or in a more nuanced legal analysis. Going back to at least 2008.

 

[Sandisw]

Basically the rooms/dates can add weight to the case, even if they are not the case by themselves. A contributing factor in pattern.

That’s what I have tried to say. they might add teeth to DVC claim against an owner, but DVC needs to be able to make the case without the type of room or dates, IMO.

It’s like any case out there…do we have a case to charge you with shoplifting? Yes. Do we have a better case if we have you on video.

So, do we have a case you are a commercial enterprise? Yes, we see a lot of reservations on your membership? do we have a better case if we see they are in a lot of different names? Yup

Is it even stronger if we notice you advertising all of them on a website? Yup.

 

[Tatebeck]

Is that the extent of the 2008 "20-reservation rule" language (I know there is some text before the quote picks up, but I'm really talking about the second paragraph)? If so, wouldn't the bolded part sort of render the reservation count somewhat moot? I don't want to wade into the inclusive/exclusive/exhaustive debate, but it certainly seems like the bolded section gives DVC significant latitude.

I don't think it's really germane to how Disney will ultimately determine what is and isn't commercial use today, and I am squarely in the "small fish are perfectly safe to user their points as they have in the past" camp (though conversely I think larger players, including online brokers and third party listing sites should be looking over their shoulder), but it seems to me that Disney has always afforded themselves greater latitude than many would believe, either in the plain English reading of the contract or in a more nuanced legal analysis.

I believe that is the end of that rule section. And yes it reads that basically they can do whatever they want with any of the other reservations if they think they violate a different part of the rules separate from the 20 reservation rule.

 

[Brian Noble]

t seems to me that Disney has always afforded themselves greater latitude than many would believe, either in the plain English reading of the contract or in a more nuanced legal analysis.

I'm in this camp as well. Disney is not new to the game of contract drafting and litigation. If they have tied their hands in ways some here believe, it would be a substantial failure on the part of the drafter, and probably a fireable offense. Such mistakes have happened---see, for example, Aulani dues---but they are rare for TWDC.

 

[Tatebeck]

That’s what I have tried to say. they might add teeth to DVC claim against an owner, but DVC needs to be able to make the case without the type of room or dates, IMO.

It’s like any case out there…do we have a case to charge you with shoplifting? Yes. Do we have a better case if we have you on video.

So, do we have a case you are a commercial enterprise? Yes, we see a lot of reservations on your membership? do we have a better case if we see they are in a lot of different names? Yup

Is it even stronger if we notice you advertising all of them on a website? Yup.

So it sounds like may be very close to agreeing here, just that I think that in some fringe cases that it could also make the difference between two otherwise seemingly identical members and you think it can't?

Sometimes the teeth are needed to make it stick or seem more reasonable, which could put them in a position to discipline a member who did nothing different other than booking certain rooms, that another member (who they did not discipline) did not book

 

[Genie+]

Can you remind me where this wording is @Genie+

I sometimes return to this thread and keep seeing posts that generally indicate a lack of understanding of the rules relating to member rentals of the WDW DVC resorts, despite that I have mentioned those a number of times before.

For example, many keep saying that what is prohibited is any "commercial purpose," despite that all the pre-Riviera resorts have a stated restriction which provides that a member is prohibited from engaging in a pattern of rental activity that the association could reasonably find shows that the member is engaging in a "commercial enterprise," a term that has a different meaning than just "commercial purpose"; a commercial enterprise as used in statutes means a person or entity that is in the "business" of doing something. Doing rentals to offset dues, to use points when you cannot use them (even for a whole year), doing occasional rentals to gain a little profit are not activities that show a member is acting as a business to do rentals. DVC itself recognized that reality when it adopted a rule in 2008 that said a member would be presumed to be violating the rental rule if he did more than 20 reservations in a year, and even then the member could show the member was, in fact, not violating the applicable rental restriction.

And, among other things, members above assert, and others agree, that DVC could adopt rules limiting the number of times a member could rent to a low number; that it could further limit the right a member has to rent by limiting rentals to reservations made at 7-months out, or prohibit a member from ever changing the lead name in a reservation until 7-months out so the member could not do a rental of an already confirmed reservation until 7-months out; and that any of the new restrictions being suggested could easily be done because the actual Florida timeshare statute does not have terms specifically allowing rentals.

As I have noted before, such suggestions are not legally valid as to the WDW timeshares except arguably CFW, which itself actually has a lot of rental rules and restrictions in its POS that did not exist before. CFW is, like the other resorts, a timeshare resort. However, unlike all the other Florida DVC resorts, it is not a condominium resort, and. all the other Florida DVC resorts are condominium resorts to which the condominium law applies.

Under condominium law, there can be many restrictions created to limit an owner's ability to rent and those can be set out in the original declarations provided when the resort first goes on sale. However, the suggestions made by posters above to create new restrictions to rentals have a major problem under condominium law. The condominium statute prohibits adding restrictions that would further reduce the ability of an owner to rent after a resort has actually first been sold, absent having an actual vote of the owners on any such new restrictions, and then, even if the restrictions are adopted, all those who vote against the changes do not have to follow the changes made. Fl. Stat. §718.110(13). Moreover, DVC/DVD itself recognizes it cannot unilaterally make changes to the right to rent that is provided in the declarations, as the declarations provide, that, though DVD can make changes, it cannot make any changes to the material rights of the members absent a member vote.

Many speculate as to how major a problem rentals might be to members getting reservations. I do not know the answer. From what I have seen at a few major rental sites, like the DVC Rental Store, a sponsor of this site, the issue might be overblown. The "rental" problem would principally be one of members reserving at 11-months out rooms that can usually be difficult to get at 11-months out for the applicable times. Such rooms include a number of studios: (a) BWV view standard view year round and boardwalk view in the fall season, (b) AKV value and club level year round; (c) BLT standard view in the fall season and about 60% of the rest of the year; (d) Riviera tower and standard view number of times in the fall season and about 40% of the time the rest of the year; (e) VGF Deluxe Studios at times during the fall season and sometimes during the rest of the year, and Resort Studios during real high demand times in the fall season (not, however, the issue with resort studios appears to be getting better swith the existence of the Resort Studios); (f) CCV studios sometimes during the fall, season. Some have asserted BCV also has the issue, but it has been rare for it, only sometimes during the first two weeks of Dec and time around NYE and even that does not occur every year. Several months ago, I went through a list of confirmed reservations being offered for rental by the DVC Rental Store. Out of a list of many hundreds, I could find only about ten reservations that indicated rentals being offered for studios and times that are difficult to get at 11-months out. That may be partly due to the fact that even the renters cannot get them at 11-months out, but about 40% of the rentals offered were for rooms with times usually open at 7-months out, and almost all the others were for rooms with times that could usually be gotten by any owner of a resort at 11-months out.

Also, as I have noted before, DVC has available methods of greatly reducing the rental problem, if there is one, that would be valid methods without violating the existing laws or rules. Walking is something that may contribute to professional renters locking in difficult to get reservations. DVC could easily do away with walking as it currently exists by simply re-adopting the rule that existed before June 2008 -- a member could reserve 11/7 months out from date of "departure" from a DVC Resort.

Also, if the issue is that DVC does not have information from which it can determine whether a member is doing multiple rentals (rather than just multiple reservations), it could start enforcing an existing rule contained in the Home Resort Rules and Regulations, which actually requires any member who rents to inform DVC at the time of the reservation that it is a rental, Home Resort Rules and Regulations §V.3.b, which is apparently a rule ignored by almost every renter. Such information is needed to assure other rules are not being violated, such as the prohibition to using banked or borrowed points in a rental reservation, and, if transferred points are being used in the reservation, it could request the member to confirm that he paid no compensation to another member to get such points.. To enforce that rule, DVC could clarify that the failure to provide that a reservation is a rental will result in its cancellation if DVC learns it is a rental, with the member being prohibited from doing any more rentals for some stated period of time, and even thereafter being required in writing to confirm whether any reservation is a rental. Moreover, a member would have to think twice about ignoring the rule, i.e., if the member fails to tell the lessee that he needs to inform DVC of the rental to avoid possible cancellation, and cancellation does later occur, the lessee would have a case for fraud, with the possibility of collecting punitive damages.

As to particular times periods of high demand, e.g., Christmas week, Thanksgiving time, first two weeks of December, DVC could create Special Season Preference Lists (see §III.10. of the Home Resort Rules and Regulations)., under which it would allow members to apply for 11-month out reservations well before 11-months out, and then assign reservations to those who applied at about 12-months out in the order of the requests made until the rooms were filled, and any member would be limited to making only one requested reservation. That rule was actually applied in the 1990s to Christmas week.

It’s a lengthy post. This is the piece:

Also, if the issue is that DVC does not have information from which it can determine whether a member is doing multiple rentals (rather than just multiple reservations), it could start enforcing an existing rule contained in the Home Resort Rules and Regulations, which actually requires any member who rents to inform DVC at the time of the reservation that it is a rental, Home Resort Rules and Regulations §V.3.b, which is apparently a rule ignored by almost every renter. Such information is needed to assure other rules are not being violated, such as the prohibition to using banked or borrowed points in a rental reservation, and, if transferred points are being used in the reservation, it could request the member to confirm that he paid no compensation to another member to get such points.. To enforce that rule, DVC could clarify that the failure to provide that a reservation is a rental will result in its cancellation if DVC learns it is a rental, with the member being prohibited from doing any more rentals for some stated period of time, and even thereafter being required in writing to confirm whether any reservation is a rental. Moreover, a member would have to think twice about ignoring the rule, i.e., if the member fails to tell the lessee that he needs to inform DVC of the rental to avoid possible cancellation, and cancellation does later occur, the lessee would have a case for fraud, with the possibility of collecting punitive damages.

———

I did look it up and found prior mention. I don’t have a physical copy of all my documents but am scrubbing through them and the other pieces online now.

 

[lowlight]

After reading this thread, I’m now ready for my LSATs.

 

[ShaneDJ]

After reading this thread, I’m now ready for my LSATs.

The LSAT study guides are shorter!

 

[Sandisw]

So it sounds like may be very close to agreeing here, just that I think that in some fringe cases that it could also make the difference between two otherwise seemingly identical members and you think it can't?

Sometimes the teeth are needed to make it stick or seem more reasonable, which could put them in a position to discipline a member who did nothing different other than booking certain rooms, that another member (who they did not discipline) did not book

Yes! Let’s go back to the old rule for a second….if you had 20 and got flagged, you could overcome that by proving none of your reservations were rentals.

Let’s assume that same rule applies but now they say that it’s not just that you have 20, it is also because we see you advertising these regularly or notice that you only choose roomm that are in high demand, it going to be harder for the owner to deny it.

So, absolutely, having the teeth behind the enforcement makes it easier for DvC…

But I think DVC has to be able to make the case first, before they add the teeth to it….if there is no case, then the teeth are meaningless.

It’s why I go back to the room not mattering when they set up the initial criteria to make the case because all owners should be held to the same standard and by treating the views differently, you are indirectly giving owners a way to avoid the commercial enterprise threshold….just rent less popular rooms.

Or, buy SSR because they won’t scrutinize those owners as closely because it’s not a popular resort…

 

[tx911]

After reading this thread, I’m now ready for my LSATs.

Either that or a padded room.

 

[JackosinDIS]

Either that or a padded room.

Blame @tjkraz… he started it

 

[Tatebeck]

Yes! Let’s go back to the old rule for a second….if you had 20 and got flagged, you could overcome that by proving none of your reservations were rentals.

Let’s assume that same rule applies but now they say that it’s not just the number, it is also because we see you advertising these regularly or notice thst you only choose roomm that are in high demand, it going to be harder for the owner to deny it.

So, absolutely, having the teeth behind the enforcement makes it easier for DvC…

But I think DVC has to be able to make the case first, before they add the teeth to it….if there is no case, then the teeth are meaning.

It’s why I go back to the room not mattering when they set up the criteria to make the case first because all owners should be held to the same standard and by treating the views differently, you are indirectly giving owners a way to avoid the commercial enterprise threshold….just rent less popular rooms.

Hmm. But the bare minimum that would be required to "make a case" AKA establish a pattern is just 2 reservations in the most strict hypothetical application of the rules.

So lets try an example with that. 2 members, both BWV owners with the same number of points:

Both members rented out 100% of their points the last two years in 2 reservations. 1 for last year, 1 for this year.
Member 1: rented out P/G view both times at different times of the year.
Member 2: rented out Std view both times for the first two weeks of December.

Are these 2 members probably both okay because it is relatively a fairly small amount of points? Realistically I think they probably are safe from anything major for now.

But is there a noticeable difference between the two members? I think so, one could have easily rented their reservation for$15 more per point than the other, even in DVC doesn't know for sure that they did. So there could be a small chance that they look at member 2 closer but don't look at member 1. And that difference would only grow more profound as the pattern continues for 5, 10 years etc like that.

Even after 10 years you say that they can't investigate member 2 unless they also investigate member 1? That would just be a waste of resources. If once faucet leaks in your house you don't replace them all or investigate all of them equally. You find where the problem is and fix it.

My point is that they CAN choose to start looking as soon as 2 reservations make a pattern according to the rules, even if they aren't likely to. And then the rooms types and times you have rented CAN matter, if DVC decides it does.

Basically you are correct at first that a single reservation doesn't matter, but as soon as a second makes a pattern, it can make a difference.

 

[Sandisw]

Hmm. But the bare minimum that would be required to "make a case" AKA establish a pattern is just 2 reservations in the most strict hypothetical application of the rules.

So lets try an example with that. 2 members, both BWV owners with the same number of points:

Both members rented out 100% of their points the last two years in 2 reservations. 1 for last year, 1 for this year.
Member 1: rented out P/G view both times at different times of the year.
Member 2: rented out Std view both times for the first two weeks of December.

Are these 2 members probably both okay because it is relatively a fairly small amount of points? Realistically I think they probably are safe from anything major for now.

But is there a noticeable difference between the two members? I think so, one could have easily rented their reservation for$15 more per point than the other, even in DVC doesn't know for sure that they did. So there could be a small chance that they look at member 2 closer but don't look at member 1. And that difference would only grow more profound as the pattern continues for 5, 10 years etc like that.

Even after 10 years you say that they can't investigate member 2 unless they also investigate member 1? That would just be a waste of resources. If once faucet leaks in your house you don't replace them all or investigate all of them equally. You find where the problem is and fix it.

My point is that they CAN choose to start looking as soon as 2 reservations make a pattern according to the rules, even if they aren't likely to. And then the rooms types and times you have rented CAN matter, if DVC decides it does

Actually drusba has said it can’t be that low because the definition of a commercial enterprise and commercial use or purpose in relation to renting your ownership interest in the condo…has a much different meaning and requirement.

So, no, I definitely don’t agree that it can be just 2…the cases she posted yesterday I think are a good example.

We the the right to rent…and that right is only limited when it’s a pattern as a business.

Now, DVC can review our accounts whenever they want…you could have one reservation and they have the right to look at it.

But, DVCs main reason and responsibility to monitor is for the purpose to ensure owners are not using it as a commercial enterprise.

Do you really believe that two reservations in the name of others, even in a high demand room can be considered a business?

I get that you are trying to say that DVc has a very wide latitude in setting rules and can take a very strict and narrow approach to what determines a commercial enterprise or purpose.

But from what I have read and has been posted, they can’t because there are standards in place already that support they can’t.

It’s why I used the example earlier about actions the 900 points.

Again, if we want to discuss what situations might be more prevalent for someone who is renting a business, we could but that is a different topic.

It’s whether in the context of DVC is whether high demand rooms, simply because one can earn more, indicates you must be someone who is only doing it because you are a commercial renter

Maybe it’s someone who wants to rent to offset some dues but doesn’t have enough points every year to rent more than just a few reserverations and why they choose the cheapest one?

And that is where I think DVC needs to be a bit blind because one, they have no idea who much you are making, and two there are many reasons that an owner could be renting the rooms they are and as soon as give DVC the discretion to make that level of subjective decisions, you may as well give up your expectation that any renting is safe.

 

[DougEMG]

Let's simplify this. Look at these 2 examples you just made. Yes your actions are what matter, none of us are saying they aren't.

1. A member renting 50% of their points per year. Total point number can be whatever you want.

• If it is a VGF or SSR owner renting SSR or VGF rooms at around a pretty standard rate of around $20 or just over double their dues per point. They are earning around enough to pay off all their dues and still use their other points. Great for them, and may be could be allowed under personal use, even though some here may argue it may not be.
• Now take a BWV owner, renting out the same number and percentage of their points. But this time it is all BWV standard rooms at very popular times booked and instantly listed for rentals that regularly can bring in around $35 per point or almost 4x dues! This member has now paid for all of their dues for the year, used all of their points, AND has an extra $15 per point in profit.
• Which of these members is more likely to be running a commercial enterprise? I think it is the second. While you seem to think there is no difference???

2. You rent out all of your 900 points the first year, and a few hundred each year for the next 3 years. 1800 points total

• You own at SSR and rent out rooms that usually rent for $20 per point at SSR. Bringing in around $36,000 over the course against $30,744ish in dues for ALL of your points (the ones you use and the ones you rented). A slight profit, less if you include your yearly cost from the up front purchase. And you went on some vacations. Nice!
• You own at BWV and rent out Standard View Studios during the most popular times that regularly can rent at around $35 per point. Bringing in around $63,000 over the course against around $32,616 in dues for all of your points, both rented and used.
• Which of these members would you investigate and mark as being more likely to be running a commercial enterprise? The one who made a few thousand dollars over a few years or the one who likely brought in around $30,000 in profit on the same number AND percentage of points? I would 100% be more likely to suspect the second member more than the first member. But you think that they are equally likely to be running a commercial enterprise? Really?

In summary, room types and reservation dates absolutely can matter in determining a pattern of rentals that may be indicative of a member running a commercial enterprise. And Disney can look at that as one of their factors if they wish to.

One little problem with your examples is how is DVC going to know what price something was rented out at. All they know is that the reservation does not have the owners name on it.

P.S. I own at BWV, please send those $35/point renters my way as the last time I rented BWV points out I did it at around $20/point.

 

[Tatebeck]

One little problem with your examples is how is DVC going to know what price something was rented out at. All they know is that the reservation does not have the owners name on it.

P.S. I own at BWV, please send those $35/point renters my way as the last time I rented BWV points out I did it at around $20/point.

Just make yourself a rental site, walk some BWV standard studios to a popular time and profit, as that is what they regularly go for on the third party sites. (or don't, as that may put you on DVC's radar )

But being serious now, they don't ever have to know or prove at what price anything was rented. If DVC simply THINKS that the reservations were made to increase profit as part of a commercial enterprise, then that is enough according to the rules.

 

[Sandisw]

Just make yourself a rental site, walk some BWV standard studios to a popular time and profit, as that is what they regularly go for on the third party sites. (or don't, as that may put you on DVC's radar )

But being serious now, they don't ever have to know or prove at what price anything was rented. If DVC simply THINKS that the reservations were made to increase profit as part of a commercial enterprise, then that is enough according to the rules.

Can you please show me where in the rules it states or even implies that? I have not seen the word profit used anywhere.

Are you really saying you believe that DVC can simply make up rules like that?

But honestly, I think the use of room type as the teeth to enhance DVC case once it’s been reasonably established to be a commercial enterprise is as close as we are going to get!!!