DVC rental crackdown?

[Fido Chuckwagon]

But here's the worst aspect of owning a co-op, i.e., owning a share of the corporation. A creditor who's owed money can sue YOU if they feel you have the deepest pockets and not sue anyone else to collect the entire building's bills. Each corporation owner is him or herself potentially liable for 100% of the building's expenses.

This is not an accurate statement. Certainly not in NY anyway, which is what you were responding to.

 

[andre10056]

This is not an accurate statement. Certainly not in NY anyway, which is what you were responding to.

I worked in Manhattan and lived in Manhattan and Brooklyn for twenty-eight years. During that time, I purchased, and evaluated for purchase, numerous properties.

It's pretty much common knowledge among most NYC real estate investors that owners of co-ops in a co-op building have what's called "joint and several liability". I just did a search for "co-op joint and several liability" and this was one of the results:

• Basic concept: When two or more parties are jointly and severally liable, each party is independently responsible for the entire amount of an obligation or debt. This means that if a plaintiff (the party owed money) wins a judgment, they can collect the full amount from any one of the liable parties. The party who pays the entire amount then has the right to seek reimbursement (contribution) from the other responsible parties for their share.
• In a co-op:
  • Shareholders' responsibility: In a co-op, shareholders own shares in the corporation that owns the building, not the individual unit itself. They are responsible for a share of the cooperative's financial obligations, including building maintenance and upkeep, renovations, and underlying property mortgages.
  • Potential for joint and several liability: While generally, co-op members have limited liability for the cooperative's debts, there may be instances where joint and several liability comes into play. For example, if a lawsuit against the co-op results in damages exceeding the co-op's insurance coverage, individual shareholders might be assessed to cover the shortfall. In such cases, if the co-op's governing documents include a provision for joint and several liability for assessments or debts, an individual shareholder could potentially be responsible for the entire amount owed if other shareholders are unable to pay their share.

 

[Fido Chuckwagon]

I worked in Manhattan and lived in Manhattan and Brooklyn for twenty-eight years. During that time, I purchased, and evaluated for purchase, numerous properties.

It's pretty much common knowledge among most NYC real estate investors that owners of co-ops in a co-op building have what's called "joint and several liability". I just did a search for "co-op joint and several liability" and this was one of the results:

• Basic concept: When two or more parties are jointly and severally liable, each party is independently responsible for the entire amount of an obligation or debt. This means that if a plaintiff (the party owed money) wins a judgment, they can collect the full amount from any one of the liable parties. The party who pays the entire amount then has the right to seek reimbursement (contribution) from the other responsible parties for their share.
• In a co-op:
  • Shareholders' responsibility: In a co-op, shareholders own shares in the corporation that owns the building, not the individual unit itself. They are responsible for a share of the cooperative's financial obligations, including building maintenance and upkeep, renovations, and underlying property mortgages.
  • Potential for joint and several liability: While generally, co-op members have limited liability for the cooperative's debts, there may be instances where joint and several liability comes into play. For example, if a lawsuit against the co-op results in damages exceeding the co-op's insurance coverage, individual shareholders might be assessed to cover the shortfall. In such cases, if the co-op's governing documents include a provision for joint and several liability for assessments or debts, an individual shareholder could potentially be responsible for the entire amount owed if other shareholders are unable to pay their share.

I'm guessing you're not an attorney? Best not to use google AI when trying to figure out the nuances involved if someone tries to pierce the corporate veil of an LLC. Suffice it to say, your statement:

A creditor who's owed money can sue YOU if they feel you have the deepest pockets and not sue anyone else to collect the entire building's bills.

is not even close to accurate.

 

[andre10056]

I'm guessing you're not an attorney? Best not to use google AI when trying to figure out the nuances involved if someone tries to pierce the corporate veil of an LLC. Suffice it to say, your statement:

is not even close to accurate.

I bring up an issue of what could occur. You want to state absolutes that something can't occur.

I suggest you call an attorney and check your beliefs before you state things with such absolute certainty. You believe "piercing the corporate veil" is an insurmountable issue when the corporation's own documents "include a provision for joint and several liability for assessments or debts"? So successful insurance plaintiffs are out of luck. Contractors who haven't been paid have no way to collect. The lenders on the building's mortgage can't possibly expect to be paid. OK. Whatever you say.

 

[Fido Chuckwagon]

I suggest you call an attorney

I am an attorney. You are making inaccurate and borderline ridiculous claims about the potential liability of co-op owners. I am merely pointing this out as a service to anyone else who may happen upon this thread.

 

[andre10056]

The potential liability of owners of co-ops whose governing documents say that owners have joint and several liability means that they have zero potential liability for building assessments and/or debts because of the alleged difficulty of "piercing the corporate veil"???!!! OK Mr. Attorney. Like I said above, if you say so.

If I'm not mistaken, you always like to counsel your "clients", in your practice of law, that a timeshare entity can never file suit against any non-paying timeshare owner. Not that they might not do so, but that they CAN'T do so (again, an absolute). That the worst they can do to a non-paying timeshare owner is maybe ding their credit. Like I said. If you say so.

 

[nomoretslt]

@frank808 …. Sorry, but Aulani and California just never enter my mind…my comments are directed towards DVC @ WDW. I could see someone pushing for more points for Aulani…..I don’t t think they have sold out yet. Used my Saratoga points to go there in 2012….one of the towers wasn’t even completed. But what a beautiful place! We loved it there. We went the following year too (January both times). Our last experience buying direct was for Riviera before it opened (sold my Saratoga contact…more or less broke even after having it for 15 years and sold a small wilderness lodge contract I had picked up during the slump in 2008 for a profit). Same low key sales experience. So maybe things have changed since then. But still, buying direct is really pricey….I can’t see buying more to rent. The comment (not yours) just really rankled me. My goal right now is to outlive my Boardwalk contract (2042). I’ll be way into my eighties. I want to see what they will do with that lovely resort.
@kanerf … I agree that DVC should make it more appealing to do other things with your points. People used to bank their points or bank and borrow for a really large family trip. Room availability was not an issue. The on line reservation tool changed things too. I’m fortunate that I have enough points at my favorite resorts to get one bedrooms so I’m not fighting for a studio. I have friends with not so many points…and it has been extremely frustrating for them.
And now this thread has become way too muddled….