What Happens When Contracts Expire?

[Dean]

It was staggered. Earlier in the UY you could bank 100% then it would decrease with closer dates to the end of the UY.

IIRC for OKW the initial POS only allowed one to bank 50% of their points.

 

[CarolMN]

I wonder if those holding contracts in good standing at the end will get a proportionate share of the reserves. To me, that is a far more interesting question than banking, borrowing and who gets to stay during the last years.

Will they reduce dues leading up to the end? Do a complete refurb, which only benefits them? Have a blow out party? Any other guesses?

 

[Unit3875]

For the contracts that end in 2042, I believe the end date is January 31, 2042.
Does that mean that the last point allocation will be the 2041 one? And if so, will you potentially only have limited time to use them? (what if you have an october or december use year?)

 

[sky2823]

IMO they we do whatever they can to get those owners into a new resort including discounts etc...

I think they will start offering some sort of buyout with about 10 years left where owners can transfer equity into a new resort.

Probably stop selling direct before that time and start buying as much as they can on the resale market.

Those that opt out and not move into a new resort contracts will simply end.

I don’t think it will be a dramatic cliff

 

[BGparadise]

I keep questioning the capital reserves portion as expiration comes. Will this component be limited as we will not be responsible for the property past expiration? What will happen with any monies remaining? For 2019 AKL, there is roughly $5.30 accumulated reserves per point.

 

[Dean]

I wonder if those holding contracts in good standing at the end will get a proportionate share of the reserves. To me, that is a far more interesting question than banking, borrowing and who gets to stay during the last years.

Will they reduce dues leading up to the end? Do a complete refurb, which only benefits them? Have a blow out party? Any other guesses?

I think it's a certainty that they will limit dues in some way late in the course. They really can't refurb at the expiring owners expense for their benefit.

For the contracts that end in 2042, I believe the end date is January 31, 2042.
Does that mean that the last point allocation will be the 2041 one? And if so, will you potentially only have limited time to use them? (what if you have an october or december use year?)

That's why I said there are not enough villas to handle all of the points. Plus if they do limit borrowing, it makes it even more problematic. I could see them cutting off points after the 2040 UY or the Feb 2041 UY.

 

[CarolMN]

I........

That's why I said there are not enough villas to handle all of the points. Plus if they do limit borrowing, it makes it even more problematic. I could see them cutting off points after the 2020 UY or the Feb 2021 UY.

You meant 2040 or 2041, right? Those 2042 resorts still have more than 20 years left.

 

[Dean]

You meant 2040 or 2041, right? Those 2042 resorts still have more than 20 years left.

Yes, I corrected it, trying to multitask.

 

[Disneybuckeye]

I expect they will do a major refurb with VWL and BWV. Some of the common areas at VWL (ok BRV) will get changed into extra rooms, a couple of grand villas will be added, the soaker tubs removed and a few other changes. They will rent some rooms via cash and do it in phases.
Same with BWV except they will add some dedicated two bedrooms as they already have grand villas and no "wasted" space they can convert .

They will resell these points and they will start at about $400 per point. Current owners get first digs at $375 per point to pay for the refurb. Obviously the points charts will be raised at BWV is way low for the location. I am planning on needing about $160k to buy back in and I know I will if I am still around.

Sorry Beach Club people but I think the whole place becomes a hotel with suites.

Will be interesting to see what happens

 

[KAT4DISNEY]

That's why I said there are not enough villas to handle all of the points. Plus if they do limit borrowing, it makes it even more problematic. I could see them cutting off points after the 2040 UY or the Feb 2041 UY.

And what would they do for compensation? The contracts I bought came with points including 2041 points.

 

[Dean]

And what would they do for compensation? The contracts I bought came with points including 2041 points.

I think you're reading too much into the "contract", it doesn't guarantee 2041 points. It came expiring in Jan, 2042. But the reality is simply and absolutely, there are not sufficient points for all to use in the end. I can't say how they'll handle but I can come up with a lot of ways they could. My guess is it'll be some combination of voluntary opt out, lottery and cutting of the UY points before late in 2041. With some variation of reduced dues based on the points one is able to use.

 

[crvetter]

I think you're reading too much into the "contract", it doesn't guarantee 2041 points. It came expiring in Jan, 2042. But the reality is simply and absolutely, there are not sufficient points for all to use in the end. I can't say how they'll handle but I can come up with a lot of ways they could. My guess is it'll be some combination of voluntary opt out, lottery and cutting of the UY points before late in 2041. With some variation of reduced dues based on the points one is able to use.

Each year there is a sufficient number of points released (just over different use years) and points available for booking. I took it to mean if January 31, 2068 (CCV for example) was the expiration, 2067 would be the last year I received points (in fact I asked as much during sales and Quality Assurance and was told this is exactly it). What I was told was that those available points are spread across all the Use years (but are the points required to book the entire resort for the calendar year) and released that way. What they said they aren't sure about is Banking/Borrowing limitation leading into the final years and if they would be allowing everyone to use their final use year earlier (as October, December for example would be at a disadvantage).

Also the resorts expire the end of January which there is no January use year so no points given out in the expiration year.

 

[Dean]

Each year there is a sufficient number of points released (just over different use years) and points available for booking. I took it to mean if January 31, 2068 (CCV for example) was the expiration, 2067 would be the last year I received points (in fact I asked as much during sales and Quality Assurance and was told this is exactly it). What I was told was that those available points are spread across all the Use years (but are the points required to book the entire resort for the calendar year) and released that way. What they said they aren't sure about is Banking/Borrowing limitation leading into the final years and if they would be allowing everyone to use their final use year earlier (as October, December for example would be at a disadvantage).

Also the resorts expire the end of January which there is no January use year so no points given out in the expiration year.

Yes assuming each has a rolling year to use the points. But the last year that won't be the case. You'll have roughly one and a half years worth of points to use in a year ignoring banking/borrowing. Think of getting points 1 Dec but having to use them by the end of Jan. Either they haven't decided how to end the resorts (likely) or they have and haven't shared. Even when they decide they likely won't share until a few years out but the 2042 resorts will give those to follow a clue as to expectations. Personally I think it presents challenges but is very useful but mathematically there simply aren't enough Villas * time to use all the points.

 

[crvetter]

Yes assuming each has a rolling year to use the points. But the last year that won't be the case. You'll have roughly one and a half years worth of points to use in a year ignoring banking/borrowing. Think of getting points 1 Dec but having to use them by the end of Jan. Either they haven't decided how to end the resorts (likely) or they have and haven't shared. Even when they decide they likely won't share until a few years out but the 2042 resorts will give those to follow a clue as to expectations. Personally I think it presents challenges but is very useful but mathematically there simply aren't enough Villas * time to use all the points.

Technically there is enough villas it might be they don’t release the points in time to have enough use days to use them. But technically everyone is entitled to those points so they won’t be taking them away. Which is why I suggested they maybe give the points earlier. Or they tell people if you want to use them borrow them for your final use year thus removing the limitation your highlighted.

 

[miTnosnhoJ]

I would expect that DVC would allow banking and borrowing to continue as normal for the final year of the resort. This would mean that it would be possible to bank in to the year after your home resort was closed. This will work as long as long as the resorts stay full each week. Any banking into the following year would be offset by other people borrowing into the last year at the 7 month mark to stay there “one last time.”

It would be somewhat risky to bank into the next year, because you may have to take what you can get at the seven month mark. There would be no home resort priority.

 

[Frederic Civish]

Either they haven't decided how to end the resorts (likely) or they have and haven't shared. Even when they decide they likely won't share until a few years out but the 2042 resorts will give those to follow a clue as to expectations.

Oh, I think they have an End Game planned out. I think that is one of the things they planned from the very beginning. But one reason you probably won't hear about it is because it is probably 'Tentative.' In other words, they have some real plans. How could they build such resorts involving millions and millions of dollars of property that will be coming back to them, and not plan on the best way to get it to 'return' to them. BUT, they also have the expectation that they may decide to 'Change the Plan' (Switch the Flip?) depending on other circumstances and changes that might happen before then.

 

[Dean]

Technically there is enough villas it might be they don’t release the points in time to have enough use days to use them. But technically everyone is entitled to those points so they won’t be taking them away. Which is why I suggested they maybe give the points earlier. Or they tell people if you want to use them borrow them for your final use year thus removing the limitation your highlighted.

if you look at say the last full year starting February 2041, there simply are not enough villas to use all the points that could be given that year. It’s simply a mathematical equation that does not add up. Talking about what one deserves or what was promised really doesn’t apply here.

 

[crvetter]

if you look at say the last full year starting February 2041, there simply are not enough villas to use all the points that could be given that year. It’s simply a mathematical equation that does not add up. Talking about what one deserves or what was promised really doesn’t apply here.

I’m still not getting why you think there won’t be enough. There are but not sure why you think there isn’t. They expire the end of January 2042 thus all use years in 2041 will be available with the resort being available from 2/1/2041 to 1/31/2042 (all the 2041 points made all use years are exactly the amount to book the resort in totality). You’ll be able to use your points with proper planning (they have to allow borrowing from the final year or release the points earlier for booking that final year); plus under Florida law Disney has to and I’m sure has it planned for part of getting the licensing with Florida.

In either case I’m talking about the fact that the one to one rule being applied, what we are contractually promised, and what the law requires Disney to do. All are in agreement when I look at the numbers.

This is precisely why the first use year is February and the ground lease expires 1/31 for all the resorts.

 

[Dean]

I’m still not getting why you think there won’t be enough. There are but not sure why you think there isn’t. They expire the end of January 2042 thus all use years in 2041 will be available with the resort being available from 2/1/2041 to 1/31/2042 (all the 2041 points made all use years are exactly the amount to book the resort in totality). You’ll be able to use your points with proper planning (they have to allow borrowing from the final year or release the points earlier for booking that final year); plus under Florida law Disney has to and I’m sure has it planned for part of getting the licensing with Florida.

In either case I’m talking about the fact that the one to one rule being applied, what we are contractually promised, and what the law requires Disney to do. All are in agreement when I look at the numbers.

This is precisely why the first use year is February and the ground lease expires 1/31 for all the resorts.

I know there will not be enough points for the last year. If you take 1 Feb, 2041 through the Dec UY and you assume they sold 98% and the remainder is not available for reservations, that fills the entire resort ignoring the lockoff premium. But don't forget the previous UY's overall to a degree. Looking at the variables I'd estimate that there will potentially be 50% more points than available units without any banked points coming into play. Obviously there are variables we don't know and some of those may help these numbers if they allow borrowing late, you consider the default rates will likely rise, some will allow points to expire and consider the lockoff premium. But the point is simply a mathematical one.

As for what was promised and the contract, it doesn't address the ending. I think you're reading far more options and protections in that are technically present.

Likely the best way to come up with a fair estimate ignoring the lockoff premium is to see how many months would be left at the end of each UY. They didn't sell an equal number of points in each UY and that will skew it some as well but for sake of discussion and overview, if you assume the % of points sold for each UY are roughly the same, it'll give you a good estimate. You lose 1 month for March, 2 for April, and so on down to 10 for Dec.

 

[crvetter]

I know there will not be enough points for the last year. If you take 1 Feb, 2041 through the Dec UY and you assume they sold 98% and the remainder is not available for reservations, that fills the entire resort ignoring the lockoff premium. But don't forget the previous UY's overall to a degree. Looking at the variables I'd estimate that there will potentially be 50% more points than available units without any banked points coming into play. Obviously there are variables we don't know and some of those may help these numbers if they allow borrowing late, you consider the default rates will likely rise, some will allow points to expire and consider the lockoff premium. But the point is simply a mathematical one.

As for what was promised and the contract, it doesn't address the ending. I think you're reading far more options and protections in that are technically present.

Likely the best way to come up with a fair estimate ignoring the lockoff premium is to see how many months would be left at the end of each UY. They didn't sell an equal number of points in each UY and that will skew it some as well but for sake of discussion and overview, if you assume the % of points sold for each UY are roughly the same, it'll give you a good estimate. You lose 1 month for March, 2 for April, and so on down to 10 for Dec.

Do you agree all the use years (Feb to Dec) added all up equal the number of points to book the resort from 2/1 to 1/31? That is exactly the requirement by Florida law and the contract. So I’m not reading anything into it. This is exactly the one to one right required by Florida law. I’ve completely ignored lockoff premium (assuming all lockoffs booked as 2 beds). If one doesn’t plan to use all their points properly then yes they will lose out. But that simply doesn’t mean the protections don’t exist in the law or contract.

Your contention is that banking will be the issue (but I got lost because you then seemed to suggest even the current year’s points were an issue). I agree and I think they may start to phase banking down to some degree.