New Definition of Rental Activity?

[lowlight]

This appears to have been going on for at least a few months but Disney, so far, doesn’t appear to have done anything about it.

Years. Since early 22 that I first noticed, likely longer.

 

[Nabas]

Years. Since early 22 that I first noticed, likely longer.

12 months ago, I had only some difficulty getting the AKV Value and BWV Standard View reservations that I wanted at 11 months. Mostly just had to be ready to go at exactly 8 AM.

Before that, Covid still affected bookings - even BCV Studios were bookable during Covid at less than 7 months.

I’m guessing this started, at least to this degree, less than a year ago, after the vacation business started to seriously rebound.

Would greatly appreciate knowing if you have more information about this.

 

[drusba]

As to some points mentioned above:

1. Rental Companies.

Companies like the DVC Rental Store, that do a lot of rentals, generally do not make the reservations using the company's own points. The reservations are made by the members who contract with those companies. Those companies are rental brokers that have no contract with any DVC entity. DVC cannot go after those companies because it lacks a legal basis to sue them.

2. Changing Applicable Rental Rules

DVC cannot now create a rule prohibiting existing members from renting during the 11-month reservation period, and thus allow them only at 7-months out. Members have a right to rent. The stated rule is that all members can reserve their home resort at 11-months out and others at 7-months out, and reservations are all subject to a first come first serve rule. To restrict rentals to only 7-months out would be a material change to the POS's that would require the actual vote of all the members, including because a statute requires such an actual vote to make such a material change to the ability to rent, Fl. Stat. §718.110(13), which statute also says that even if enough members vote to approve the change, such change is inapplicable to the members who vote against it.

3. Improper DVC Resort Agreement

The changes to rental rules that are in the CFW DVC Resort Agreement (the only POS document that could arguably apply to pre-Riviera resort owners), should not apply to such owners. Those resorts all have DVC Resort Agreements that declare (e.g., BWV DVC Resort Agreement §5.1):

"In the event BVTC associates on or more additional resorts as DVC Resorts, the DVC Resort Agreement executed to effect such association shall be substantially similar to this Agreement in all material respects under the circumstances pertaining to each such additional DVC Resort."

The new stated rules do not appear in any of the pre-Riviera DVC Resort Agreements, and prior to the CFW agreement, BVTC never had any right to even address any issue concerning violation of the commercial purpose clause. Any attempt to apply those new rules, including the one that gives BVTC the unchallengeable right to determine any violation, would likely be defeated in a court case because claiming BVTC can engage in such activity is a breach of all those pre-Riviera Resort Agreements.

4. Actual Rules Applicable

The only actual rule that can legally be applied to pre-Riviera resort owners is the one contained in their POS's (e.g., BWV Declarations §12.1):

"Personal Use. Except for Units owned by DVD, which may be utilized as provided in this Declaration, each of the Vacation Homes may be occupied only as vacation accommodations. No Owner of an Ownership Interest may occupy a Unit or Vacation Home, or use any facilities of the Condominium at any time other than during the time that a Vacation Home is properly reserved in accordance with the Condominium Documents. Use of the accommodations and recreational facilities of the Condominium is limited solely to the personal use of Owners, their lessees, guests, exchangers and invitees and for recreational uses by corporations and other entities owning Ownership Interests in a Unit. Use of Vacation Homes and recreational facilities for commercial purposes or any purposes other than the personal use described in this Declaration is expressly prohibited. "Commercial purpose" includes a pattern of rental activity or other occupancy by an Owner that the Board, in its reasonable discretion, could conclude constitutes a commercial enterprise or practice. No Vacation Home may be divided or subdivided into a smaller Vacation Home. The provisions of this Section 12.1 do not apply to Commercial Units or DVD."

One needs to read the paragraph carefully to understand what it actually says, as many incorrectly believe that any member that rents even once could be found to be violating the commercial purpose language. Personal Use is defined in the first sentence as using the rooms "only as vacation accommodations." The third sentence says members' "use of the accommodations and recreational facilities of the condominium is limited to personal use," but specifically states that such personal use includes use by a member's lessees, i.e., people to whom the member has rented. Thus, "personal use" expressly includes a member's renting to others as long as the room is used as a vacation accommodation. The fourth sentence then states that "use" of vacation homes or recreation facilities for "commercial purposes or any purpose other than the personal use as described in this Declaration is expressly prohibited." That sentence is not referring to rentals, which are included in the definition of personal use. It prohibits the actual "use" of the room you are in, or recreational facilities at the resort, to conduct commercial activities while you are there.

The fifth sentence adds to "commercial purpose" an additional meaning that it would otherwise not have, in that the association's board can, based on "reasonable" discretion (which means one can challenge the conclusion made based on whether it is reasonable) find a commercial purpose violation if there is a "pattern of rental activity" which the Board can conclude "constitutes a commercial enterprise or practice." Disney lawyers undoubtedly drafted that language and those Disney lawyers knew that "commercial enterprise" is a legal term used in statutes and it means the person or organization is actually in the "business" of doing something.

Thus, personal use does not prohibit such things as doing rentals to offset dues, doing a rental of a confirmed reservation that you can no longer use, using a rental broker to do a few reservations for some profit, because none of those activities approach being in the business of doing rentals.

DVD itself demonstrated that it understood the meaning of commercial purpose in the prior POS's. The only additional interpretative rule it created was the one in 2008 which said, basically, that if a member made more than 20 reservations in a year, a presumption would arise that the commercial propose rule was being violated, and any reservations over 20 would be cancelled unless the member showed no violation. No one challenged the validity of that rule even though it had questionable validity. It was done as a rule because DVD knew making an amendment to the POS would be covered by the statute I mentioned above, which requires an actual vote of the members to add such a rental limitation to the declarations. Moreover, the members who would actually be affected by such a rule would most likely be professional renters since the vast majority of members who rent, including those renting to offset dues, do not do more than 20 reservations in a year.

Some assert that DVD could just interpret the prior Personal Use rule to mean something much more restrictive than I mention above. In a court case, DVD would face a usual rule of construction in contract cases. Big company DVD drafted the documents, and little guy purchaser had no power to change the language in the documents when making a purchase. In such a situation, if the clause can be both reasonably interpreted to mean DVD's more restrictive view, and reasonably interpreted to mean the purchaser's view of the clause, the purchaser wins.

 

[lowlight]

Would greatly appreciate knowing if you have more information about this.

Sorry, I mean I was personally asked by a site to make these hard to get reservations in low point rooms when I inquired about renting my points. They didn’t want my points, they wanted me to get them the confirmed reservations so they could list them at a far greater profit than 21-23 a point gets.

 

[JackosinDIS]

Thus, personal use does not prohibit such things as doing rentals to offset dues, doing a rental of a confirmed reservation that you can no longer use, using a rental broker to do a few reservations for some profit, because none of those activities approach being in the business of doing rentals.

100% agree with your interpretation of this section, although I suppose as an individual owner your power of recourse against DVD is very limited unless you are willing to actually spend the money to sue them. More likely they would just cancel the offending reservation and said owner would go quietly…

 

[drusba]

100% agree with your interpretation of this section, although I suppose as an individual owner your power of recourse against DVD is very limited unless you are willing to actually spend the money to sue them. More likely they would just cancel the offending reservation and said owner would go quietly…

There is one thing that DVD would have to consider if it attempted to have BVTC apply the new rules to pre-Riviera owners. A lawsuit brought by the member challenging any such act would not only assert BVTC cannot do what it is doing under the terms of the previous DVC Resort Agreements. The lawsuit would also assert that CFW cannot be a DVC Resort because its DVC Resort Agreement is not allowed by those prior Agreements. In other words, DVD could face the situation that a court could rule that CFW cannot be a DVC Resort, and thus its owners could not reserve any other DVC Resorts, leaving BVTC (and DVD) open to liability to all purchasers of CFW.

 

[DonMacGregor]

As to some points mentioned above:

1. Rental Companies.

Companies like the DVC Rental Store, that do a lot of rentals, generally do not make the reservations using the company's own points. The reservations are made by the members who contract with those companies. Those companies are rental brokers that have no contract with any DVC entity. DVC cannot go after those companies because it lacks a legal basis to sue them.

Purely hypothetical question: if a rental company also has, under the same corporate umbrella, a division that acts as a sales broker, and that broker also includes a "buy it now" option (which would suggest that the broker is stepping in as a buyer), if that broker were then to use those points purchased for rental purposes (buy, rent, flip), would that then change things?

 

[sndral]

…

1. Rental Companies.

Companies like the DVC Rental Store, that do a lot of rentals, generally do not make the reservations using the company's own points. The reservations are made by the members who contract with those companies. Those companies are rental brokers that have no contract with any DVC entity. DVC cannot go after those companies because it lacks a legal basis to sue them.

…

The lack of a contract between the parties is no barrier to an action brought under a tortious interference with contracts theory. In laymen’s terms, DVC could sue a broker for inducing an owner to breach their contract with DVC.
I have no opinion on whether such a suit would be successful, but there’s certainly a legal basis to proceed against the brokers should DVC chose to do so.

 

[drusba]

Purely hypothetical question: if a rental company also has, under the same corporate umbrella, a division that acts as a sales broker, and that broker also includes a "buy it now" option (which would suggest that the broker is stepping in as a buyer), if that broker were then to use those points purchased for rental purposes (buy, rent, flip), would that then change things?

As to any DVC ownership interests that the company actually owns, it would be deemed to be covered by the same rules as all regular owners of the applicable DVC Resort. So yes, rental restrictions applicable to all owners of a resort would apply to the company's using those points and DVD could enforce those rules as to those ownership interests, and not just the personal use rule.

The company's ownership of interests would also be limited to 4,000 points any one resort and 8,000 combined resorts, and to the rule that "any corporation or other business entity" that owns DVC interests is limited to using them "solely for the recreational use by their directors, officers, and employees." See, e.g., BWV POS, Public Offering Statement Text, §5(1)(a), that appears before the Declarations. That limitation appears to preclude business entities from renting their points, except to their directors, officers, and employees, and DVD could enforce that rule against the company.

 

[DonMacGregor]

The lack of a contract between the parties is no barrier to an action brought under a tortious interference with contracts theory. In laymen’s terms, DVC could sue a broker for inducing an owner to breach their contract with DVC.
I have no opinion on whether such a suit would be successful, but there’s certainly a legal basis to proceed against the brokers should DVC chose to do so.

"Tortious interference" is such sexy lawyer talk...

 

[drusba]

The lack of a contract between the parties is no barrier to an action brought under a tortious interference with contracts theory. In laymen’s terms, DVC could sue a broker for inducing an owner to breach their contract with DVC.
I have no opinion on whether such a suit would be successful, but there’s certainly a legal basis to proceed against the brokers should DVC chose to do so.

Correct but question becomes whether the kind of act amounts to tortious interefernce. For example, if the rental company suggests to an owner that he should make a fixed reservation because it can be sold at higher amounts, the issue then becomes whether that violates anything in the member's contracts with DVD, i.e., such a tortious interference claim would require showing that the broker is getting the owner to do something he is not otherwise allowed to do. If the member is not prohibited from making a reservation and then renting it, the rental company's suggestion may not be interfering with anything in the member's contract with DVD.

 

[Nabas]

Correct but question becomes whether the kind of act amounts to tortious interefernce. For example, if the rental company suggests to an owner that he should make a fixed reservation because it can be sold at higher amounts, the issue then becomes whether that violates anything in the member's contracts with DVD. If the member is not prohibited from making a reservation and then renting it, the rental company's suggestion may not be interfering with anything in the member's contract with DVD.

But if a rental company is proactively inducing many DVC members to book reservations that are then sold as “guaranteed reservations”, it could be argued that the rental company and multiple DVC owners are collectively colluding together to violate the terms of the contract they signed when becoming DVC members.

In the past, Florida courts have looked very favorably on Disney when it comes to these sorts of cases. Historically, it’s tough to beat Disney in Florida courts.

To fight this in court, a rental company and group of DVC owners would have to band together. For an individual DVC owner, it’s just not going to be financially worth it. Just find another DVC rental company who seems to be playing by the rules.

If I’m renting out 1000 points per year, do I really want to be dragged into what could be a multi year legal battle, or do I simply switch to a less controversial rental company?

 

[drusba]

"Tortious interference" is such sexy lawyer talk...

Lawyers and doctors are somewhat similar. Both use huge amounts of words and terms that no one else can understand. Those words and terms were all created by lawyers and doctors over a long period of time with one major purpose in mind: job security.

 

[tidefan]

Lawyers and doctors are somewhat similar. Both use huge amounts of words and terms that no one else can understand. Those words and terms were all created by lawyers and doctors over a long period of time with one major purpose in mind: job security.

And I thought it was just Statisticians!

 

[DonMacGregor]

Lawyers and doctors are somewhat similar. Both use huge amounts of words and terms that no one else can understand. Those words and terms were all created by lawyers and doctors over a long period of time with one major purpose in mind: job security.

Oh, I get it, trust me. I've been working as an expert witness for almost 30 years now. At this point I'm almost bilingual.

 

[zavandor]

There is one thing that DVD would have to consider if it attempted to have BVTC apply the new rules to pre-Riviera owners. A lawsuit brought by the member challenging any such act would not only assert BVTC cannot do what it is doing under the terms of the previous DVC Resort Agreements. The lawsuit would also assert that CFW cannot be a DVC Resort because its DVC Resort Agreement is not allowed by those prior Agreements. In other words, DVD could face the situation that a court could rule that CFW cannot be a DVC Resort, and thus its owners could not reserve any other DVC Resorts, leaving BVTC (and DVD) open to liability to all purchasers of CFW.

Thank you for your analysis and explanation!

This is the same reason why a big question mark hungs over the resale restrictions. I'm surprised no resale purchaser has sued DVC yet to have them removed.

 

[Bearval]

As to some points mentioned above:

1. Rental Companies.

Companies like the DVC Rental Store, that do a lot of rentals, generally do not make the reservations using the company's own points. The reservations are made by the members who contract with those companies. Those companies are rental brokers that have no contract with any DVC entity. DVC cannot go after those companies because it lacks a legal basis to sue them.

2. Changing Applicable Rental Rules

DVC cannot now create a rule prohibiting existing members from renting during the 11-month reservation period, and thus allow them only at 7-months out. Members have a right to rent. The stated rule is that all members can reserve their home resort at 11-months out and others at 7-months out, and reservations are all subject to a first come first serve rule. To restrict rentals to only 7-months out would be a material change to the POS's that would require the actual vote of all the members, including because a statute requires such an actual vote to make such a material change to the ability to rent, Fl. Stat. §718.110(13), which statute also says that even if enough members vote to approve the change, such change is inapplicable to the members who vote against it.

3. Improper DVC Resort Agreement

The changes to rental rules that are in the CFW DVC Resort Agreement (the only POS document that could arguably apply to pre-Riviera resort owners), should not apply to such owners. Those resorts all have DVC Resort Agreements that declare (e.g., BWV DVC Resort Agreement §5.1):

"In the event BVTC associates on or more additional resorts as DVC Resorts, the DVC Resort Agreement executed to effect such association shall be substantially similar to this Agreement in all material respects under the circumstances pertaining to each such additional DVC Resort."

The new stated rules do not appear in any of the pre-Riviera DVC Resort Agreements, and prior to the CFW agreement, BVTC never had any right to even address any issue concerning violation of the commercial purpose clause. Any attempt to apply those new rules, including the one that gives BVTC the unchallengeable right to determine any violation, would likely be defeated in a court case because claiming BVTC can engage in such activity is a breach of all those pre-Riviera Resort Agreements.

4. Actual Rules Applicable

The only actual rule that can legally be applied to pre-Riviera resort owners is the one contained in their POS's (e.g., BWV Declarations §12.1):

"Personal Use. Except for Units owned by DVD, which may be utilized as provided in this Declaration, each of the Vacation Homes may be occupied only as vacation accommodations. No Owner of an Ownership Interest may occupy a Unit or Vacation Home, or use any facilities of the Condominium at any time other than during the time that a Vacation Home is properly reserved in accordance with the Condominium Documents. Use of the accommodations and recreational facilities of the Condominium is limited solely to the personal use of Owners, their lessees, guests, exchangers and invitees and for recreational uses by corporations and other entities owning Ownership Interests in a Unit. Use of Vacation Homes and recreational facilities for commercial purposes or any purposes other than the personal use described in this Declaration is expressly prohibited. "Commercial purpose" includes a pattern of rental activity or other occupancy by an Owner that the Board, in its reasonable discretion, could conclude constitutes a commercial enterprise or practice. No Vacation Home may be divided or subdivided into a smaller Vacation Home. The provisions of this Section 12.1 do not apply to Commercial Units or DVD."

One needs to read the paragraph carefully to understand what it actually says, as many incorrectly believe that any member that rents even once could be found to be violating the commercial purpose language. Personal Use is defined in the first sentence as using the rooms "only as vacation accommodations." The third sentence says members' "use of the accommodations and recreational facilities of the condominium is limited to personal use," but specifically states that such personal use includes use by a member's lessees, i.e., people to whom the member has rented. Thus, "personal use" expressly includes a member's renting to others as long as the room is used as a vacation accommodation. The fourth sentence then states that "use" of vacation homes or recreation facilities for "commercial purposes or any purpose other than the personal use as described in this Declaration is expressly prohibited." That sentence is not referring to rentals, which are included in the definition of personal use. It prohibits the actual "use" of the room you are in, or recreational facilities at the resort, to conduct commercial activities while you are there.

The fifth sentence adds to "commercial purpose" an additional meaning that it would otherwise not have, in that the association's board can, based on "reasonable" discretion (which means one can challenge the conclusion made based on whether it is reasonable) find a commercial purpose violation if there is a "pattern of rental activity" which the Board can conclude "constitutes a commercial enterprise or practice." Disney lawyers undoubtedly drafted that language and those Disney lawyers knew that "commercial enterprise" is a legal term used in statutes and it means the person or organization is actually in the "business" of doing something.

Thus, personal use does not prohibit such things as doing rentals to offset dues, doing a rental of a confirmed reservation that you can no longer use, using a rental broker to do a few reservations for some profit, because none of those activities approach being in the business of doing rentals.

DVD itself demonstrated that it understood the meaning of commercial purpose in the prior POS's. The only additional interpretative rule it created was the one in 2008 which said, basically, that if a member made more than 20 reservations in a year, a presumption would arise that the commercial propose rule was being violated, and any reservations over 20 would be cancelled unless the member showed no violation. No one challenged the validity of that rule even though it had questionable validity. It was done as a rule because DVD knew making an amendment to the POS would be covered by the statute I mentioned above, which requires an actual vote of the members to add such a rental limitation to the declarations. Moreover, the members who would actually be affected by such a rule would most likely be professional renters since the vast majority of members who rent, including those renting to offset dues, do not do more than 20 reservations in a year.

Some assert that DVD could just interpret the prior Personal Use rule to mean something much more restrictive than I mention above. In a court case, DVD would face a usual rule of construction in contract cases. Big company DVD drafted the documents, and little guy purchaser had no power to change the language in the documents when making a purchase. In such a situation, if the clause can be both reasonably interpreted to mean DVD's more restrictive view, and reasonably interpreted to mean the purchaser's view of the clause, the purchaser wins.

Here is a section of a reply I just received concerning a question I sent to DVD about what constitutes prohibited renting of points/reservations.

"While Members of Disney Vacation Club do have the ability to rent out Disney Vacation Club accommodations through their Membership on an occasional basis, use of Disney Vacation Club accommodations for commercial purposes is expressly prohibited. Commercial purposes include a pattern of rental activity. We view rentals of Disney Vacation Club accommodations over the Internet as a pattern of rental activity, which is prohibited under the Membership rules. Please note that we do observe the online activity and handle as necessary internally. "

 

[mamaofsix]

Here is a section of a reply I just received concerning a question I sent to DVD about what constitutes prohibited renting of points/reservations.

"While Members of Disney Vacation Club do have the ability to rent out Disney Vacation Club accommodations through their Membership on an occasional basis, use of Disney Vacation Club accommodations for commercial purposes is expressly prohibited. Commercial purposes include a pattern of rental activity. We view rentals of Disney Vacation Club accommodations over the Internet as a pattern of rental activity, which is prohibited under the Membership rules. Please note that we do observe the online activity and handle as necessary internally. "

Woah. So anything rented over the internet is possibly prohibited?

 

[Bearval]

Woah. So anything rented over the internet is possibly prohibited?

It appears so, the email was a reply to my comment about the massive number of confirmed reservations on a particular website. Like I have stated in a earlier post I do not believe that when DVC was started they could foresee the impact the internet would have on their business model. Below is the full reply I received concerning my question.


Welcome Home Bearval,

Thank you for contacting us at Disney Vacation Club.

We appreciate you taking the time to share your thoughts regarding your observations into what may be viewed as questionable online activity by some of our Members.

While Members of Disney Vacation Club do have the ability to rent out Disney Vacation Club accommodations through their Membership on an occasional basis, use of Disney Vacation Club accommodations for commercial purposes is expressly prohibited. Commercial purposes include a pattern of rental activity. We view rentals of Disney Vacation Club accommodations over the Internet as a pattern of rental activity, which is prohibited under the Membership rules. Please note that we do observe the online activity and handle as necessary internally.

The feedback we receive from our Members is very important to us. As we continuously strive to improve the benefits and services we provide to our Members and enhance the overall Member experience, we are constantly evaluating our operation. You may be assured your comments and observations have been shared with the appropriate areas of Leadership within the Disney Vacation Club community, as it is paramount to our success.

Should you have any additional comments or concerns as it relates to your Membership or have concerns with Resort availability given the information you shared, please contact Member Services at 800-800-9800. Vacation Advisors are available to assist you Monday through Friday from 9:00 a.m. to 9:00 p.m. and on weekends from 9:00 a.m. to 7:00 p.m. ET.

Thank you again, Bearval, for reaching out to us.

Please know that you will receive a survey invitation in the next 24 hours regarding the service I have provided you today and I would value your feedback.

We hope to welcome you back to your home away from home again soon.

Kindest regards,

Patrick Sandberg
Member Relations
Disney Vacation Club
407-934-6182

 

[CarolMN]

Woah. So anything rented over the internet is possibly prohibited?

Maybe, but I'm inclined to believe that they will still look for patterns / volume and a few rentals using the internet to advertise won't be an issue. If that isn't true, IMO, we will hear about it very soon.