Contract for DVC(I bet YT and TM know the answer)

[Tweety1]

Overthinker alert...
When you sign your DVC contract is there anything in that, that could cause financial hardship to us? What I mean by this is on the back of the Rick Singh post it has made me think about if Disney had a large debt to pay would/could they come to DVC owners? Are they only able to increase 15% max dues per year and that’s it, or is there anything else they could make us pay? Like a clause in the contract ect. I was just a little worried
I know this is a really odd question but before I sign in I want to Disney can’t say we are in debt and your portion is £10k! Or worse still more... so if anyone could confirm exactly what you sign in to pay I would be most grateful

[Mr Tom Morrow]

Ok. There is a percentage at which they can't increase by. However there are extenuating circumstances which they can call upon. The hurricanes are a prime example that have impacted on HH, Vero and SSR amongst others.
HH got walloped and no pun intended. They have a debt to clear over a 5 year period and no choice in the matter.

[Tweety1]

Originally Posted by Mr Tom Morrow

Ok. There is a percentage at which they can't increase by. However there are extenuating circumstances which they can call upon. The hurricanes are a prime example that have impacted on HH, Vero and SSR amongst others.
HH got walloped and no pun intended. They have a debt to clear over a 5 year period and no choice in the matter.

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My understanding of the dues is the max they can increase is 15% and they didn’t do that with SSR! So is it normally around 3% and above the ‘norm’ they need to justify like hurricane ect (as I thought as long as it’s below 15% they don’t have to give a reason). I think my main concern is they make they could make the dues so high it’s not cost effective. Could they ever ask you to pay thousands $ extra?
Are you concerned (as you do own half of SSR lol)

[Mr Tom Morrow]

You are correct ref the max percentage increase but DVC aren't daft. They know they have to justify each and every rise and some owners are experts in Tax, Law and Contract issues. Plus they have the Condominium meeting each December to get through when they can be challenged on rises.
The figures for the SSR rise were published and directly linked to the post Irma clear up. The same as the roof destruction at HH and Vero some years before that one.

But lets say a sinkhole opened up at OKW, or a building collapsed at WL etc. Then yes the bill will come to Owners but certainly it will only be the difference between the Insurance payout and the actual repair/replacement cost and then it will be spread over a number of years for repayment.

Am I worried? Not at all. Disney wont kill the goose that lays the golden egg.

[YorkshireT]

They are insured for most things (hurricanes included) albeit I’ve never seen the policy, so if they have sinkhole cover, for example, I don’t know.
So when they’ve been hit with a hurricane for example, it’s the insurance deductible (excess) they’ve had to charge the members for.
That deductible is quite large.
However, traditionally (at least with Hilton Head which was a large deductible), DVD made an interest free loan to pay the deductible, which has then been split down to I think 10 years and added onto dues.
From memory (and I could be wrong about exact figure) this meant members ended up paying on average $50 extra a year for 10 years instead of $500 in one go.
Who knows what will happen in the future but as long as DVD has new timeshare to sell, they won’t want bad publicity.

[YorkshireT]

As an aside the biggest financial issue (often not appreciated ) is dues increasing quite a bit over inflation. And yes, Rick Singh’s property tax rises had some effect here. People often fail to appreciate that these dues increases are compound, and if they are running at 3% above inflation, this will make a big difference, in real terms, to what they’ll be paying in dues in 20 years compared to now. One guy did some modelling and they could be nearly double, in today’s money if DVCMC don’t get that under control.
That is why when people say that one resort only has dues of a dollar more than another, not to worry etc, take into account that dollar could add up to a very significant sum if you hold onto that contract for 25 years and dues average 5% pa increase.

[Tweety1]

Originally Posted by Mr Tom Morrow

You are correct ref the max percentage increase but DVC aren't daft. They know they have to justify each and every rise and some owners are experts in Tax, Law and Contract issues. Plus they have the Condominium meeting each December to get through when they can be challenged on rises.
The figures for the SSR rise were published and directly linked to the post Irma clear up. The same as the roof destruction at HH and Vero some years before that one.

But lets say a sinkhole opened up at OKW, or a building collapsed at WL etc. Then yes the bill will come to Owners but certainly it will only be the difference between the Insurance payout and the actual repair/replacement cost and then it will be spread over a number of years for repayment.

Am I worried? Not at all. Disney wont kill the goose that lays the golden egg.

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So what you are saying is that the dues go up every yr (as everything does!) and looking at the history it’s not hit the max 15% but if it’s something extreme like hurricane damage then your dues increase to cover the cost. Using YT example so say over 5 yrs extra $50pa on top of normal increase but then when the debt is paid off will that $50 be taken off?

[YorkshireT]

Originally Posted by Tweety1

So what you are saying is that the dues go up every yr (as everything does!) and looking at the history it’s not hit the max 15% but if it’s something extreme like hurricane damage then your dues increase to cover the cost. Using YT example so say over 5 yrs extra $50pa on top of normal increase but then when the debt is paid off will that $50 be taken off?

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Yes then the special increase should go off.

[Tweety1]

Originally Posted by YorkshireT

As an aside the biggest financial issue (often not appreciated ) is dues increasing quite a bit over inflation. And yes, Rick Singh’s property tax rises had some effect here. People often fail to appreciate that these dues increases are compound, and if they are running at 3% above inflation, this will make a big difference, in real terms, to what they’ll be paying in dues in 20 years compared to now. One guy did some modelling and they could be nearly double, in today’s money if DVCMC don’t get that under control.
That is why when people say that one resort only has dues of a dollar more than another, not to worry etc, take into account that dollar could add up to a very significant sum if you hold onto that contract for 25 years and dues average 5% pa increase.

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As Mr TM you don’t seem concerned with these things whereas I am overthinker and think well if something disastrous happened where would i find that money? Is it written into the contract what they are allowed to do? I don’t want anyone knocking on my door (figuratively speaking) saying we want X in full to pay for this or even X per per if it was loads... obviously $50 isn’t a great deal but does the uncertainty of that not worry you? Or is there somewhere in the contract that they can’t expect you to pay massive amounts. Also does the excess debt get split over how many owners there is so if you own in a smaller place you pay more and then the likes of SSR you pay less as it’s split between more. Also d9 they base the repayment on how many pts you have so some9ne like TM would pay more than you?
The information you have provided re dues do you have any examples of that or can you link me to the page you are talking about? As I am one of those it’s only 90c more it’s not that much?
Lastly both yourself and TM (as well as others but I always seem to harass you two ) are a wealth of information for someone like me where I need to know the ins and outs but perhaps can’t find the right information or don’t understand what I’m reading. I know it’s what I want to do and lots of ppl but whilst in Disney and never give the future a second thought of any implications. My personality isn’t like that yes I’m impulsive in some things but I won’t sign up to anything and not know what Disney can or can’t charge. All sorts of things run through my head like what if in 15 yrs you want to get rid and can’t,exchange rates,health and what if you can’t go,most importantly is that can they offload their debt to us if there was a disaster (if it’s just like you say $50 I’m alright with that it’s more if it was thousands). This Rick Singh I’ve read it but don’t fully understand the implications. I hope you understand my ramblings and would appreciate how your thought process was when buying and did/are you concerned.
I know ppl reading this will probably think I’m neurotic lol but I don’t want the fear factor stopping me doing something that could ultimately be a fabulous experience and let us experience wonderful hotels but I need to understand the legality on what they are allowed to charge

[Mr Tom Morrow]

There is nothing wrong with over thinking. It's called doing due diligence in my book.

You are right ref the amount of points one holds. So if I had 1000 at HH and YT had 500 I would be covering the same % per point as him ref the roof damage but of course my 'bill' would be double his.
The amount they recoup is based on ownership interest not per member.