Aggressive anti-rental email response from MS

[tom1944]

It says in the contract that Disney can limit “commercial” rentals. That could be interpreted as any rental that generates profit.

I would take the stance that commercial purpose is any rental that you report the income on your tax return

 

[crvetter]

I would take the stance that commercial purpose is any rental that you report the income on your tax return

Given that legally all rentals should be reported on your tax return (US Federal at least) this would suggest all rentals would be banned by that definition. You can choose not to report the rental because you don't receive a 1099 but that doesn't mean you shouldn't be reporting it, just less likely to be caught. You can rent below cost, but that doesn't mean you shouldn't be reporting it (just you report it and your costs which means you had no income).

The POS and Declarations for each resort specifically state you can rent but just not for commercial purposes. They also state they will only change the definition of "commercial" so DVC is unlikely to ever get rid of renting 100%, which by its definition does mean for a fee else it isn't renting. The question is what is commercial, which currently sits at the 20 rentals in a 12 month window. They also limit the amount any individual/entity can own of a Resort and total DVC interest to specific amounts (I think 4k for a resort and 8k across all DVC) unless DVC gives specific permissions. Though LLC are an easy way around this, but not for long if DVC decides to ask who the owners of the LLCs are, and they would need to say anonymous LLCs are ineligible to purchase

 

[ShablamE]

I would take the stance that commercial purpose is any rental that you report the income on your tax return

That's a little too strict to me. I rented points out this year for the first time ever because I had banked 2021 points with the thought that I could possibly get a VGC reservation at the 7 month window, little did I know. That left me in a position where I had almost a full year of points that would have gone to waste because my plans of going to DL aren't changing and I couldn't use those points otherwise. So I listed them on a rental site and booked a reservation for someone else. But by your definition there I'm now a commercial rental despite doing this once in 11 years of ownership.

 

[DonMacGregor]

They also limit the amount any individual/entity can own of a Resort and total DVC interest to specific amounts (I think 4k for a resort and 8k across all DVC) unless DVC gives specific permissions. Though LLC are an easy way around this, but not for long if DVC decides to ask who the owners of the LLCs are, and they would need to say anonymous LLCs are ineligible to purchase

Well, we "know" that that some brokers own dozens and dozens of contracts, many bought, stripped (points rented), and re-sold, so there are clearly readily available workarounds.

 

[crvetter]

Well, we "know" that that some brokers own dozens and dozens of contracts, many bought, stripped (points rented), and re-sold, so there are clearly readily available workarounds.

I never said there wasn't I specifically said there was and DVC (which needs to be for the best interest of the members) could make a change by not allowing anonymous LLCs from purchasing and requiring all LLCs to disclose their owners. Which would prevent that from happening.

But I still maintain this is probably not a huge problem and won't fix the availability issues we see with the highly sought after rooms. It's just millions of points chasing rooms that amount to thousands of points. Removing a handful won't do much to impact (but I'm willing to be proven wrong if DVC makes a change) remember the difference between 1,000 and 1,000,000 is still about 1,000,000 so if it is a significant number but compared against the total points it could be meaningless.

 

[jennypenny]

It says in the contract that Disney can limit “commercial” rentals. That could be interpreted as any rental that generates profit.

I'd define commercial rentals as any rental where a third party gets a fee.

Reasonably certain that absolutely no one on this thread has suggested eliminating rentals completely, or even restricting non-commercial rentals.

Agree. Getting rid of rentals that generate a fee would still allow for members to rent/gift stays to friends and acquaintances, and probably even allow for things like the rent and trade board here.

 

[crvetter]

Agree. Getting rid of rentals that generate a fee would still allow for members to rent/gift stays to friends and acquaintances, and probably even allow for things like the rent and trade board here.

Who gets this fee? Why should there be a fee for gifting a stay? Are there timeshare systems that require a fee for having a family member use your unit? I do know of a few that say they have to attend a timeshare presentation, but do we want DVC to turn into the standard timeshare system? I agree go after commercial rentals but how.

I'd define commercial rentals as any rental where a third party gets a fee.

The brokers would just pivot to an "escrow" type agency that simply holds the funds until the booking is completed to guarantee both parties are safe in the transaction. They wouldn't facilitate the transaction just offer a service to protect your purchase (say no different than PayPal merchant, etc) so it would really become a payment processing system. They could then setup a board for people to solicit and offer rentals, which is really no different than what DVC Resale Market currently does nor different in essence than this board itself.

 

[Sandisw]

I'd define commercial rentals as any rental where a third party gets a fee.


Agree. Getting rid of rentals that generate a fee would still allow for members to rent/gift stays to friends and acquaintances, and probably even allow for things like the rent and trade board here.

So, if I as an owner, am willing to pay someone e to help me find a renter vs doing it on my own would all of a sudden make it using my member for a commercial purpose?

Even if it’s just one rental a year? No matter what is done, the definiton of using it for a commercial purpose has to apply to everyone and I don’t see how one finds a renter matters vs how often one is renting reservations on the membership.

 

[jennypenny]

@crvetter -- I think you misunderstood me. I didn't mean that DVC would charge a fee. I meant that I'd personally define 'commercial' renting (which DVC has purposely left vague), is any rental where a third party is involved for a fee, like Davids, brokers, etc. It sounds harsh, but I'd be ok with DVC dropping the hammer on those types of rentals. Sure, they may try to pivot to something else to skirt the new rules, or they may find that legally it's too much trouble.

I realize it might mean the resale market takes a hit when 'extra' points get dumped, but that would depend on the volume of commercial rental points out there. Disney always has ROFR as an option. And if the volume turns out to be higher than we think and the resale market is flooded with contracts ... that's important to know too, right? It could mean that DVC has overbuilt (which would explain their reluctance to go after renters thus far).

@Sandisw -- Yes, to my mind it would then qualify as commercial renting. It might not flag you personally as a commercial renter, but I would consider the transaction a commercial rental. (I'm viewing this from the POV of the transaction, not the owner.)

 

[GoingSince1990]

I was interested to read about the restrictions Wyndham has imposed that some have mentioned previously in the thread. It seems that Wyndham now defines certain time periods as "peak", during which owners are only allowed to book 2 stays per year where they are not on the reservation themselves. For Club Wyndham Bonnet Creek in 2023 these dates are May 26-28 (Memorial Day weekend), Jun 1 - Aug 15, Sep 1-3 (Labor Day weekend). Nov 22-25 (Thanksgiving) and Dec 21-31. If a member books more than 2 reservations during peak periods without being physically on the reservation, the extra reservations are liable to be canceled. I found a thread on Redweek.com where a lot of members complained about the introduction of this policy. One person actually had to fly to Orlando and back simply to sign his son and his son's family into the resort, so the "just keep the owner's name on the reservation" trick does not exist.

We had this experience and I actually had to go to Bonnet Creek to sign my son and his family in at the resort. They had cancelled prior reservations in his (guest) name. This happened 3 times in the process. It was a real mess and at minimum cost me a round trip airfare to Orlando to execute their Disney vacation staying at Bonnet Creek. Frustrated and concerned about a future reservation that I plan to convert to a Guest Reservation at Wyndham Clearwater Beach for next spring.

https://www.redweek.com/resources/ask-redweek/wyndham-guest-cancellations

Lots of grumbling in this thread (which is from 2021) and talk of class action lawsuits (which as far as I can see never actually happened). One of the biggest complaints is that the salespeople used the ability to rent out unused points as a significant benefit during the sales spiel (not certain but I think DVC does this too?) and now that ability has been restricted after the fact.

 

[Sandisw]

@crvetter -- I think you misunderstood me. I didn't mean that DVC would charge a fee. I meant that I'd personally define 'commercial' renting (which DVC has purposely left vague), is any rental where a third party is involved for a fee, like Davids, brokers, etc. It sounds harsh, but I'd be ok with DVC dropping the hammer on those types of rentals. Sure, they may try to pivot to something else to skirt the new rules, or they may find that legally it's too much trouble.

I realize it might mean the resale market takes a hit when 'extra' points get dumped, but that would depend on the volume of commercial rental points out there. Disney always has ROFR as an option. And if the volume turns out to be higher than we think and the resale market is flooded with contracts ... that's important to know too, right? It could mean that DVC has overbuilt (which would explain their reluctance to go after renters thus far).

@Sandisw -- Yes, to my mind it would then qualify as commercial renting. It might not flag you personally as a commercial renter, but I would consider the transaction a commercial rental. (I'm viewing this from the POV of the transaction, not the owner.)

Except that is not how the POS is worded. It says we can use our membership for personal use which includes renting.

We simply can’t be running a commercial business with our memgerhsip. So, one rental is one rental.

Based on this, someone who does 18 or 19 reservations every year is not in it for a commercial reason simply because they choose to do it themselves?

 

[tjkraz]

I'd define commercial rentals as any rental where a third party gets a fee.


Agree. Getting rid of rentals that generate a fee would still allow for members to rent/gift stays to friends and acquaintances, and probably even allow for things like the rent and trade board here.

I don't see how DVC could ever enforce that. They cannot directly force David's out of business. If they and other rental brokers choose to continue to operate, it puts DVC in the position of using anecdotal evidence to deem each non-member reservation as either friend/family member, commercial rental or non-commercial rental. In my mind, that's basically impossible, especially if we're proposing that some sources like the DIS still be allowed.

There is no measure that can be applied to every reservation to determine where it was sourced. David's isn't going to share his client list with anyone, and neither members nor renters are going to draw attention to the fact that it's a paid rental.

 

[Phatscott25]

Yes. Honestly, yes. I want the product I paid for and was contracted to get. Which includes no commercial rentals. I don't want to be competing for rooms at eleven months with people who are spec renting. And if that causes some members some pain, well, I believe it will relieve some pain for people like me.

I want to preface this by saying I acknowledge that we have differing opinions so my intent here isn't reiterate my point nor argue further. But I am, in all honesty, genuinely curious. Do you (or have you) had trouble booking the rooms you want? Your post suggests that you must've, or worse, that it's a consistent problem for you. I guess I've just been lucky perhaps but I don't seem to have those issues and I've been able to score the following reservations (in addition to many other "regular" bookings) without much effort between 2017 and through this year:

BLT standard view studio the first week of December at 11 months
BWV standard view 1 bedroom during Food & Wine (late Oct - early Nov) at 7 months
AKV value studio and 2 bedroom at 11 months (not peak times though)
VGC 2 bedroom dedicated at 7 months (more than once - mid August both times)

I've actually had the most trouble booking RIV standard view and tower studios. However, I was still able to get the dates I wanted, thankfully, because I did "walk" them. I say "walk" like that because for any booking, I always try at 11 months plus 3 days for what I want because I don't like the idea of just one chance to get my dates. I then walk the 3 days to my preferred dates. It's often not necessary so I admit I'm probably compounding and/or creating a problem that doesn't exist.

I mention it though because I would not have have received the SV RIV studio last November nor a Tower studio this coming January without that method. But I still ultimately got what I wanted.

 

[jennypenny]

We can disagree on this, but I think all DVC would need to do is go after one commercial renter using a broker of some kind (in volume). If they could win that case and establish that broker rentals go against the POS, then they could threaten everyone else out of the business. Businesses like Davids could be forced to turn over their client lists.

DVC probably has other options besides taking legal action. If I were them, I'd quietly make offers to the rental whales to buy back their points to clear out some of the rental market and avoid public scrutiny.

I'm ok that we don't agree about this. I offered my opinion because I think there's a bias towards rentals and the brokers who support many disney websites, and I thought another viewpoint might be helpful. And even though it appears difficult, I think DVC could find ways to make rentals much less desirable.

 

[jennypenny]

@Phatscott25 -- yes, it's harder to book now. There was a time when there was always some surplus in the system. There are more renters now but there are also more rooms available to book, yet it's harder than ever to book. Some of that is due to the lowering of point buy-ins, which I think DVC has realized. Some is due to the imbalance cause by the point-heavy bungalows and cabins. A pretty big part of it, I'm guessing, is that many 'extra' points are immediately monetized with dummy bookings, removing most of the surplus.

I'd love to know the actual numbers. I hate all the guessing and speculation.

 

[GoingSince1990]

Businesses like Davids could be forced to turn over their client lists.

No, this is the US, not China or North Korea (and David's is based in Canada), and there is no question of criminality. Any judge would give very short shrift to Disney demanding that a broker hand over its client list.

 

[Phatscott25]

@jennypenny, I believe you, but I guess I just haven't seen/felt it myself. As I mentioned, I've been able to get some bookings that many consider "hard" to get that weren't really that hard, for me anyway, at all. However, I've only been a member since 2015 so perhaps I don't have a good experience comparison. Meaning maybe it was much easier than it is now, but since I wasn't around back then, I don't know the difference and am just used to the current situation. But I still don't feel like I can't vacation when/where I want.

 

[LYSE]

It says in the contract that Disney can limit “commercial” rentals. That could be interpreted as any rental that generates profit.

But that's my point it's too loose and open to interpretation, generally to be enforceable things have to be very clear. I can draft up my numbers anyway I want, does profit only count on the individual points..so basically anyone makes a profit on any normal rental on a per point basis Or is it over the life of the contract, year, quarter UY? Who and how is cost basis determined?

 

[GoingSince1990]

@jennypenny, I believe you, but I guess I just haven't seen/felt it myself. As I mentioned, I've been able to get some bookings that many consider "hard" to get that weren't really that hard, for me anyway, at all. However, I've only been a member since 2015 so perhaps I don't have a good experience comparison. Meaning maybe it was much easier than it is now, but since I wasn't around back then, I don't know the difference and am just used to the current situation. But I still don't feel like I can't vacation when/where I want.

I just took a look at 7-11 month VGF studio availability and it is excellent. Even most of Christmas week is still available (for a Resort Studio, every night except for NYE). Looking at this kind of availability, I think the claim that commercial renters are making it too hard for people to book is a tough argument to make.

 

[GoingSince1990]

But that's my point it's too loose and open to interpretation, generally to be enforceable things have to be very clear. I can draft up my numbers anyway I want, does profit only count on the individual points..so basically anyone makes a profit on any normal rental on a per point basis Or is it over the life of the contract, year, quarter UY? Who and how is cost basis determined?

It's hard to imagine a judge going along with Disney claiming that because Bob had a hip replacement, can't travel, and used David's to rent out his unused points a few times, Bob is engaging in "commercial renting". Which is why I suspect Disney has no desire to put this question in front of a judge.