DVC Rental Agreements, Language to Include/Exclude?

[IMMkXLVI]

As a DVC owner that will be renting points from time to time, I've been thinking of drafting an agreement that is fair and equal
to both us and our renter while covering most scenarios that can surface. I've read a few agreements online and while those were
drafted by agencies that have made a business out of assisting DVC members find renters, the language seems one sided.

I'd like to draft something closer to neutral yet comprehensive. An agreement will likely only ever need to come into enforcement
if there was a cancellation, either initiated by the renter, Disney or us. There could be a rarity like weather that impacts a planned trip
though it seems that is becoming less rare and more common.

I'd like to open a discussion into the different concerns a renter and an owner have so the agreement can cover both. For me, and this might be a narrow view, my concern centers around point loss or loss of point value ie; points in holding & points past the banking deadline.

One such scenario comes to mind, a reservation is made March 10th for a September 25th check in. For us, September is past our banking deadline. The renter cancels the reservation on August 21st. These points will have lost some value for us because the pressure to rent them means renting them for less per point than the original reservation. If we are unable to rent them out, they will be forfeit (provided we ourselves cannot use them) and at that point, have zero value. Because we aren't on the reservation, we cannot purchase any trip interruption coverage unlike the renter, who probably can buy a contract, just not from Disney (I don't think anyway, maybe they can?)

If the renter cancels within the 31 days prior to the reservation, the points are then placed into holding. I have no personal experience with points in holding but I have read about it and what I've read suggests it further devalues them and complicates using them with additional restrictions. I might be misinterpreting the rules but it seems like the probability of point forfeiture increases exponentially when points are in holding. An owner would have to discount the points substantially in order to rent them, quite possibly for a rate that is just about equal to the dues on those points which at least negates additional loss from the dues.

From the flipside, there are a number of equally disastrous scenarios if an owner cancels a reservation and the renter pays for travel to the resort only to be told that no reservation exists. I cannot imagine any reason, other than nonpayment, why an owner would do that and no reason why it would happen without communication with the renter beforehand. Disney could cancel a reservation if the owner is behind on dues or if their points are under a mortgage, if said mortgage isn't current. The onus to communicate this to the renter falls on the owner. Both Disney scenarios are not risks for me so I'm not concerned about a Disney cancellation. From what I have read, if Disney has building and maintenance issues that render the studio/suite unusable, Disney keeps others in inventory so the renter would still have an accommodation.

If I am over thinking it, tell me. I'm just looking to provide something that provides a degree of comfort and assurance to both sides of the equation.

I have a few pending reservations for renters and while those were done without a contract, I've done my best to be transparent about the things which might concern a renter, namely my DVC contract dues. I provided screen shots and forwarded emails. I gave my personal cell and email. Renters are helping me as much as I am helping them, to save over the Disney cash price. I'd like to think my rentals will always go smoothly and quite possibly they will but life happens. I don't share Sheldon Cooper's love of contracts but I can recognize when they are useful and when money changes hands, it seems like a good time for a contract!

Okay, so if you have some thoughts on the subject, lets talk about them.

 

[Sandisw]

Many owners have a clause that doesn’t allow cancellations, or modifications.

Some will include language that says the owner will try to reschedule but don’t guarantee it for the issues you mention…point expiration, holding, etc.

When I did rent to strangers, I had a no cancel and no change rule. Payment was due within 48 hours of getting the reservation booked.

In exchange for that, I charged about $4/point less than going rate.

I did not borrow points so it was no harm to book and cancel if payment in full was not received.

If I were to do it today, I’d allow a cancel any reasons for with $5/refund due. This would account for weather delays, etc.

If the resort actually closed….and physical check in wasn’t possible due to Disneys actions …I’d refund it all.

But, I have enough family and friend that I don’t need to do rentals to strangers.

You’ll get some good ideas though from those who do rent!

 

[JackosinDIS]

I do rent sometimes, and always include a clause which sets out specifically what happens if the guest has to cancel. If more than 45 days notice is given, I allow them to reschedule, subject to availability and prior to expiry of the points. Expiry may be at the end of the use year, or the next use year if the points can still be banked. However, I try never to make reservations which fall after my banking deadline.

If they cannot reschedule, I say that I will try and re-rent the points and provide a refund equal to the amount I get for re-renting (less an admin fee). If I can’t re-rent I would not provide a refund.

I also say that if there is a hurricane related closure and Disney refunds the points I will re-rent the points and provide a refund if they cannot be used by the guest. I also urge the guest to take out travel insurance that would cover them for this in case I cannot re-rent.

I have only rented a few times to get rid of banked points, but have had to deal with several cancellations due to hurricanes! Luckily I was able to do some last minute reservations and refund almost the full amount.

 

[IMMkXLVI]

Many owners have a clause that doesn’t allow cancellations, or modifications.

Some will include language that says the owner will try to reschedule but don’t guarantee it for the issues you mention…point expiration, holding, etc.

When I did rent to strangers, I had a no cancel and no change rule. Payment was due within 48 hours of getting the reservation booked.

In exchange for that, I charged about $4/point less than going rate.

I did not borrow points so it was no harm to book and cancel if payment in full was not received.

If I were to do it today, I’d allow a cancel any reasons for with $5/refund due. This would account for weather delays, etc.

If the resort actually closed….and physical check in wasn’t possible due to Disneys actions …I’d refund it all.

But, I have enough family and friend that I don’t need to do rentals to strangers.

You’ll get some good ideas though from those who do rent!

I wanted to be less rigid in my approach than an outright prohibition on cancellations or modifications though, perhaps this approach is logical given the renter can, with a rental agreement, purchase trip protection whereas I have no such option. Still, I'd like to be flexible where feasible.

A flat fee for changes or cancellations would have to cover the worst-case scenario in order to insulate me from loss if the cancellation or change is not of my doing. I'd have to research the forum for past rentals which involved emergency points, meaning points in holding or points set to expire.

My own experience was rather grim. When our resale purchase of the Grand Floridian posted, there was something like 24 points set to expire in 2 months, by the end of November as I recall. At first I tried to rent them, deeply discounted or I may even have said make an offer. Then I offered them for free when it was down to the last few weeks. They ended up being forfeited. It highlighted the challenges when time is limited and accommodation availability is even more so.

If the resort closed, Disney would have made reservation holders aware long before unless it was a last-minute disaster. They would hopefully return all points without restriction or at a minimum, leave them with no less time to use than when the reservation was initially made.

I wonder, by show of hands, how many renters of owner points purchase trip coverage?

 

[IMMkXLVI]

I do rent sometimes, and always include a clause which sets out specifically what happens if the guest has to cancel. If more than 45 days notice is given, I allow them to reschedule, subject to availability and prior to expiry of the points. Expiry may be at the end of the use year, or the next use year if the points can still be banked. However, I try never to make reservations which fall after my banking deadline.

If they cannot reschedule, I say that I will try and re-rent the points and provide a refund equal to the amount I get for re-renting (less an admin fee). If I can’t re-rent I would not provide a refund.

I also say that if there is a hurricane related closure and Disney refunds the points I will re-rent the points and provide a refund if they cannot be used by the guest. I also urge the guest to take out travel insurance that would cover them for this in case I cannot re-rent.

I have only rented a few times to get rid of banked points, but have had to deal with several cancellations due to hurricanes! Luckily I was able to do some last minute reservations and refund almost the full amount.

I thought about that too, not renting past our banking date but that means no rentals past July 31st. That is 5 months of potential renters that I'd lose out on, probably forcing me to bank them which just kicks the can down the road. Or it means a trip where one wasn't planned. For the next few years it will be hard to do that because my wife is continuing her education with an extension course for an MBA, which means less time for vacations. It will probably take 3 years to earn the 48 credits needed and we can't bank points the entire time so renting is really the best option.

I was thinking of adding a clause and language for cancellations that stipulate refunds will be only if I can re-rent the points and will be less any negative difference between the two rental amounts. I just need to work on the language.

 

[DanCali]

My view is that I shouldn't generate an extra gain from a cancelation since nobody rents with the intention to cancel, so the renter is probably going through something unexpected that may be unpleasant already. No need to make things worse...

When I rent on occasion, I do use a contract and it offers a 75% refund if they cancel outside of 4+ months and 50% refund if at 6+ weeks out. However, in my mind that's a minimum - if I end up re-renting it for say 95% of the original contract I would subsequently offer an additional refund to try to make the first renter whole as much as possible. I may deduct something for the incremental advertising cost and hassle, but the result in this example would likely be 85%-95% refund. A happy renter is likely to come back and rent again.

I don't put anything about rescheduling in the contract but I'd always been willing to accommodate that instead of a partial refund. I had a renter during covid who rented one of my Vistana (now Marriott) timeshares for Spring break 2020 and ended up taking that same trip two years later with the same points I banked for her (according to the contract, she was entitled to no refund). She was a physician who was working during covid while we were all freaked out and "sheltering in place" - banking the points for up to 2 extra years (possible in that system) was the least I could offer...

I don't think the DVC banking deadlines would change anything about my refund policy. The 6+ weeks advance notice I require means I'm fully covered with reservations up to 2.5 months before the end of the use year. And if I had to do a fire sale with unbankable points, a $15/pt price should be a very quick rental with DVC if you have a confirmed reservation (see below).

My own experience was rather grim. When our resale purchase of the Grand Floridian posted, there was something like 24 points set to expire in 2 months, by the end of November as I recall. At first I tried to rent them, deeply discounted or I may even have said make an offer. Then I offered them for free when it was down to the last few weeks. They ended up being forfeited. It highlighted the challenges when time is limited and accommodation availability is even more so.

I had an opposite experience. I "inherited" about ~30 points on a resale Aulani contract expiring within ~50 days. The day the points loaded, I ended up booking a couple of consecutive nights that happened to be available at Poly 3 weeks away (maybe I got lucky) and rented them for $15/pt on FB that same day. I literally got 5+ inquiries at that price within 4 hours, some wanted 1 nights, some wanted the other night, and some were ready to take both...

 

[IMMkXLVI]

My view is that I shouldn't generate an extra gain from a cancelation since nobody rents with the intention to cancel, so the renter is probably going through something unexpected that may be unpleasant already. No need to make things worse...

When I rent on occasion, I do use a contract and it offers a 75% refund if they cancel outside of 4+ months and 50% refund if at 6+ weeks out. However, in my mind that's a minimum - if I end up re-renting it for say 95% of the original contract I would subsequently offer an additional refund to try to make the first renter whole as much as possible. I may deduct something for the incremental advertising cost and hassle, but the result in this example would likely be 85%-95% refund. A happy renter is likely to come back and rent again.

I don't put anything about rescheduling in the contract but I'd always been willing to accommodate that instead of a partial refund. I had a renter during covid who rented one of my Vistana (now Marriott) timeshares for Spring break 2020 and ended up taking that same trip two years later with the same points I banked for her (according to the contract, she was entitled to no refund). She was a physician who was working during covid while we were all freaked out and "sheltering in place" - banking the points for up to 2 extra years (possible in that system) was the least I could offer...

I don't think the DVC banking deadlines would change anything about my refund policy. The 6+ weeks advance notice I require means I'm fully covered with reservations up to 2.5 months before the end of the use year. And if I had to do a fire sale with unbankable points, a $15/pt price should be a very quick rental with DVC if you have a confirmed reservation (see below).




I had an opposite experience. I "inherited" about ~30 points on a resale Aulani contract expiring within ~50 days. The day the points loaded, I ended up booking a couple of consecutive nights that happened to be available at Poly 3 weeks away (maybe I got lucky) and rented them for $15/pt on FB that same day. I literally got 5+ inquiries at that price within 4 hours, some wanted 1 nights, some wanted the other night, and some were ready to take both...

I agree, a cancellation shouldn't enrichen me and frankly, I'm not sure how a cancellation could even do that. I'd have to re-rent the points for a sum greater than the original reservation or for a sum equal to the cancelled reservation but disproportionally refund the renter of the cancelled reservation. One is unlikely and the other is unfair.

When you say "outside of four+ months", you mean if they cancel with greater than 4 months until the check-in date?
The 50% at 6+ weeks might be something I'd look to adopt, or a variation of it but I agree, if the points are re-rented, the cancelled reservation should only be penalized by the difference if any between the value of the initial reservation and the value of the subsequent reservation. I am on the fence about a fee to be associated with that scenario, it isn't something I'd be comfortable with.

The DVC banking policy and policy to place points in holding does factor into my thinking of how refund would be handled. Both can affect point values negatively which in turns, impacts their monetary value. How does a 6 week advance notice cover you 2.5 months before the end of the UY? I mean 6 weeks is a month and a half. Plus, if a reservation slated for 2 months before your end of UY is cancelled, even if not placed into holding, they can't be banked and resort availability will be minimal at best, depending on what your UY is. Mine is December, so two months before is October. Halloween, Thanksgiving and Christmas right there, in those few months. It could be why even for free, those points were forfeit.

---It just now hit me. You wouldn't cancel the reservation; you'd offer it as a confirmed reservation rental. Hmm, I hadn't thought of that. Food for thought.

 

[Sandisw]

I agree, a cancellation shouldn't enrichen me and frankly, I'm not sure how a cancellation could even do that. I'd have to re-rent the points for a sum greater than the original reservation or for a sum equal to the cancelled reservation but disproportionally refund the renter of the cancelled reservation. One is unlikely and the other is unfair.

When you say "outside of four+ months", you mean if they cancel with greater than 4 months until the check-in date?
The 50% at 6+ weeks might be something I'd look to adopt, or a variation of it but I agree, if the points are re-rented, the cancelled reservation should only be penalized by the difference if any between the value of the initial reservation and the value of the subsequent reservation. I am on the fence about a fee to be associated with that scenario, it isn't something I'd be comfortable with.

The DVC banking policy and policy to place points in holding does factor into my thinking of how refund would be handled. Both can affect point values negatively which in turns, impacts their monetary value. How does a 6 week advance notice cover you 2.5 months before the end of the UY? I mean 6 weeks is a month and a half. Plus, if a reservation slated for 2 months before your end of UY is cancelled, even if not placed into holding, they can't be banked and resort availability will be minimal at best, depending on what your UY is. Mine is December, so two months before is October. Halloween, Thanksgiving and Christmas right there, in those few months. It could be why even for free, those points were forfeit.

---It just now hit me. You wouldn't cancel the reservation; you'd offer it as a confirmed reservation rental. Hmm, I hadn't thought of that. Food for thought.

Just to add context to what I did. If the renter had asked to cancel, I made it clear I would not be renting the points and would not actually cancel as it was their reservation until check in.

This way, there was no enrichment on my part because I knew DVC would take the points when they didn’t show up…

It was also why I charged a much lower price than market average because it was non refundable.

 

[DanCali]

When you say "outside of four+ months", you mean if they cancel with greater than 4 months until the check-in date?

Yes - if they cancel 4+ months before the checkin date I offer a 75% refund in writing. Obvious we can rebook or, if re-rented, I may up the refund later on.

How does a 6 week advance notice cover you 2.5 months before the end of the UY?

Say my use year is June so the banking deadline is Jan 31 -

If the reservation is in early March (~3 months before the end of the use year) they would need to cancel before mid-January to get the 50% refund. That still leaves me time to bank if I want or rent it as a fire sale confirmed reservation.

If the reservation is after mid-March (less than 2.5 months before the end of the use year), I could get stuck with non-bankable points and still pay a 50% refund if they cancel after Jan 31 but still 6 weeks before the checkin date.

But, as I said, a confirmed DVC reservation is relatively much easier to rent and a low-ish price than just the points. So I don't think there is much risk of being out of pocket with a 50% refund at 6+ weeks and no refund at less than that. Worst case is I pay a 50% refund and rent again it for $12/pt and I'm probably still ahead of where I started.

 

[CraigInPA]

I require full payment once they get the reservation number and don't offer a refund. However, my contract says that I'll attempt to honor their request to change dates, with a notation that if the new reservation requires more points, they'll pay for those extra points. It also specifies the date the points expire, and explains that any use of the points must occur before that date. Over the years, I only had one person who needed to change dates. With everything spelled out in the contract, and availability for his requested dates, it was a seamless process.

 

[poohnpiglet3]

This is a wonderful discussion - i just wanted to thank you all for taking the time to spell out how you do it!

I haven't rented out my points in a long time so these things are great reminders and awesome perspectives.

 

[IMMkXLVI]

I've completed my base agreement form with help from suggestions posted here. I'll tailor it as needed for any reservations that deviate from the baseline, but it was helpful to have an idea what more experienced owners do.

 

[IMMkXLVI]

I would like some opinions weighed in on something.

I have a reservation for another forum member that hasn't replied to any direct messages since 12/17 and hasn't paid a deposit.

I have emailed this person directly to the email address given for the reservation stating if I don't receive word and
the deposit, the May reservation will be cancelled.

Am I overreacting? What would you do?

 

[pzw90]

I would like some opinions weighed in on something.

I have a reservation for another forum member that hasn't replied to any direct messages since 12/17 and hasn't paid a deposit.

I have emailed this person directly to the email address given for the reservation stating if I don't receive word and
the deposit, the May reservation will be cancelled.

Am I overreacting? What would you do?

Cancel it. If you have reached out multiple times and they haven’t responded then cancel. It isn’t fair to tie up your points that you could be using to reserve for someone else. They didn’t leave a deposit so they have no skin in the game either. Could be they are looking for a better deal and if they can’t find one, then they will come back to you

 

[IMMkXLVI]

I said I'd give until tomorrow so I will but yea, not feeling the love.

 

[pzw90]

Preface: So I have a negative outlook on things and try to find different scenarios where things can go wrong.

What is stopping someone (Party C) from brokering a deal and pocketing the cash? Say they see your (Party A) listing on this board, and find someone (Party B) on say Facebook looking for a reservation. Get someone’s name (B) for you (A) to book, get a confirmation from you (A) and share it with B who successfully links it. Person B then pays C as they may have a full payment within 24 hours of a confirmation requirement. C then has money, B has a confirmed trip, A is waiting to get paid. A then cancels the reservation and B has no recourse, flights booked, and most likely won’t be able to book rooms for the same dates the closer to the date it is, and no money.

This is all assuming B hasn’t done any due diligence (checking names vs deeds, asking for references, asking to spread payments, etc)

I may be missing something completely, simply a thought exercise