Email from MVC about use of club points

[Cyberc]

Using DVC and MVC terms for "commercial acrivity" I interpret is as I cannot use villa for commercial purposes like running a massage business, use villa to sell things out of (like a mini mart). The COA use of wording is ambiguous at best. If push comes to shove I believe a court of law will rule against MVC and DVC just because if they did not allow rental of unit they should say it. You will have hard time explaining to courts that in one paragraph that rental of unit is allowed. Then in another paragraph say "commercial use" means no renting of unit.

I find it hard to believe that court will look kindly on the obscure clause your lawyers inserted that contradicts another sentence you wrote.

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Have never read in the CCR for DVC mention exactly the number of reservations that can cause you to go into commercial renting. I have e read that DVC states you can rent your points and it is allowed. But warns prospective buyer that you will be competing on an uneven footing with DVC.

The way I read the restrictions that intent of DVC lawyers was no commercial use of the DVC villas. example running a massage parlor from villa. No where did I read specifically the DVC CC&R specifies commercial renting of villas. Now since DVC wrote the CC&R, I believe DVC will have a hard time convincing a judge to agree to DVC loose wording and interpretation of commercial use. The distinction of what is allowed and what is not will be upon those who wrote the CC&R (DVC) not the purchasers. That is probably why DVC has not stopped outaide rentals of villas but put have put up much effort to dissuade it.

I am not a lawyer nor pretend to be but that is my take from being a landlord all these years.

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The commercial activity that you are referring to is definitely included in the governing documents however as you state they refer to you running a business from the villas. It's not referencing the use of you points to run a commercial enterprise. However the documents also states that commercial use is prohibited and a commercial use policy is available upon request.

My understanding is that a court not necessarily will rule in favor of those who created the vague documents, but more likely in favor of those who didn't.

 

[Cyberc]

I want to apologize for laughing but I think your first thought is one that many of us thought when we first started hearing about this Daniel Craig - you're just the first person to voice it. This Daniel Craig isn't Daniel Craig the actor, he's some guy who sits on a few different resort boards without owning at them. Some people have a big problem with it, others not so much. My opinion is that some battles are not worth picking with Marriott and this is one of them. I'm not saying my opinion or anyone else's opinion is right or wrong - it's just that before taking up swords it should be understood that Marriott can put anybody into a board seat at the many resorts where the governing docs entitle them to representative seats, and at the resorts where they don't have that entitlement they still have a decent amount of control over who is allowed to run for a board seat.

No offense taken, and thanks for clearing that up.

I definitely thought it was the actor. I wonder how many times IRL he's been mistaken by the actor

Personally I don't care who sits at the boards, as long as they remember who they have a responsibility to. Unfortunately it will be DVC, Marriott or any other managing company that will end up pulling the strings.

 

[Cyberc]

Its also worth remembering that MVC operate the system across international boundaries and as such there may be national or local definitions of Commercial activity that are different from eachother, so they need to allow for that possibility, as well as the possibility that the definitions change over time. MVC would also need to protect itself from any potential complicity in the event that the local taxation authorities took issue with any potential tax liability from the specific activity of an owning individual or owning organisation. It is quite possible that a tax authority definition of Commercial activity would be different from the definition that an insurance company would take and/or any labour regulations that might apply to the activity that the individual or organisation undertake. For example, there are people who state that they include their maint fees as a tax deductible for their business e.g They sent their staff on timeshare stays as a bonus or perk, which makes it difficult to see how that can't be commercial activity, but isn't a pattern of rental.

that could also be another reason why some owners renting 3 reservations haven't heard a thing and yet another who only rented 2 did get a letter.

 

[dougp26364]

I think we’re over thinking this. Essentially , MVC is a vacation club and their intention is for it to remain a vacation club. At their discretion, if they feel the club is being used for commercial rather than leisure purposes, they reserve the right to cancel reservations and suspend membership. This is in line with their purposes to sell their product for leisure usage.

This ideology keeps the prime units in prime resorts during prime vacation time open and available for families who may not be able to plan and book their vacations 12 or 13 months in advance. Those looking to maximize personal profits would naturally have an advantage as they could book their vacations very best units at the most desirable times since they have no intention of using the unit for personal usage, but instead plan to rent for profit to those who can’t make vacation plans so far in advance.

I support MVC in this ideology and I believe the majority of owner/members will support this ideology as well. If you own strictly to rent for profit, any timeshare vacation club that stops this sort of activity does so to benefit the owners who have purchased for the stated purpose of leisure travel.

Buy more and rent for profit isn’t a new conversation but it always ends the same…….its always been against club rules and eventually it becomes enough of a problem those rules are enforced. The first time we heard “rent to cover cost” was with the old Sunterra system. There were a few mega owners who successfully owned and rented hundreds of thousands of points……..until they got shut down. They complained, threatened and cried foul, but in the end they were shut down. Own to rent works until it becomes an issue and owners with fewer points complain that they can never get Hawaii in February, nothing is available of spring break or ski weeks are only a available for rent in the secondary market. When the problem becomes large enough it affects sales, then they’ll use the rules to shut it down.

In the end, they’re selling family vacations, not vacation rental franchises. If you’re foolish enough to buy more points with the intention to rent for profit, the story always ends the same. Eventually it becomes a big enough problem the management company will shut you down. The only people who don’t understand this either haven’t read TUG very long or they just want to believe the lies told by the sales staff.

if you want to buy a fixed week/fixed unit and rent that out then I’m all for it. But with floating systems, to have a handful of mega owners always reserving the best weeks at the best resorts with the sole purpose to rent for profit, I’m not going to cry when the management company shuts you down.

 

[DRH90277]

I think MVC can do a few things but I'm not sure MVC's solutions will be successful in achieving dougp26364's notion of making more reservations available to all participants. So, what has MVC done, they now limit promo enrollments to 10 weeks, they are selling points such that a naive new owner must have 5,000 points ($70,000+) for 1 good annual vacation, they have had no significant U.S. resort additions since 2010 to keep up with demand, etc. And some of us week owners are apprehensive to deposit our weeks (the very life blood of the Trust program) because "we can't get our desired" point reservations.

Finally, can someone please give me an example of just one of these mega-owners and their success in cornering the market on point reservations for any particular resort and then making a bunch of money. By the way, I'm a retired financial officer and I can't imagine a franchise-like position in anything as silly as trying to make money renting out timeshares. I'd rather start a squirrel farm.

It also seems inappropriate to shutter an owner's ability to rent out a few timeshares to pay maintenance fees. Remember, we all go through cycles when we can't use some of our vacation ownership and still must face these maintenance fees at Christmas.

Could it be that the best game in town is to just keep our weeks and exchange them through Interval or rent them out? Another option, save the maintenance fees and just rent what you will use.

Whose fault is it if MVC enabled and allowed a mega-owner to buy enough points to cause a shortage in available point reservations? They do have the ROFR.

 

[frank808]

The commercial activity that you are referring to is definitely included in the governing documents however as you state they refer to you running a business from the villas. It's not referencing the use of you points to run a commercial enterprise. However the documents also states that commercial use is prohibited and a commercial use policy is available upon request.

My understanding is that a court not necessarily will rule in favor of those who created the vague documents, but more likely in favor of those who didn't.

Yes you are correct. I had a couple friends look into this. Their opinion is the court will not look to kindly on the entity that wrote the rules. Then are saying that this is what they meant when they wrote the rules. Most standard rebuke would be if that is what you meant you should have wrote it specifically and not so generally.

Also the stigma of a billion dollar corporation against an individual trying to make MF payments by renting some reservations out will probably not sway the court. Add the negative PR fallout and it is not a slam dunk case for the timeshare developer.

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[dougp26364]

Finally, can someone please give me an example of just one of these mega-owners and their success in cornering the market on point reservations for any particular resort and then making a bunch of money. By the way, I'm a retired financial officer and I can't imagine a franchise-like position in anything as silly as trying to make money renting out timeshares. I'd rather start a squirrel farm.

The last time I saw a mega owner was under the old Sunterra program. Once DRI bought Sunterra, they used a rule buried in all the fine print to shut the, down. I can’t say I’ve seen one since. At least to the extent these guys owned back then.

 

[heathpack]

I think we’re over thinking this. Essentially , MVC is a vacation club and their intention is for it to remain a vacation club. At their discretion, if they feel the club is being used for commercial rather than leisure purposes, they reserve the right to cancel reservations and suspend membership. This is in line with their purposes to sell their product for leisure usage.

This ideology keeps the prime units in prime resorts during prime vacation time open and available for families who may not be able to plan and book their vacations 12 or 13 months in advance. Those looking to maximize personal profits would naturally have an advantage as they could book their vacations very best units at the most desirable times since they have no intention of using the unit for personal usage, but instead plan to rent for profit to those who can’t make vacation plans so far in advance.

I support MVC in this ideology and I believe the majority of owner/members will support this ideology as well. If you own strictly to rent for profit, any timeshare vacation club that stops this sort of activity does so to benefit the owners who have purchased for the stated purpose of leisure travel.

Buy more and rent for profit isn’t a new conversation but it always ends the same…….its always been against club rules and eventually it becomes enough of a problem those rules are enforced. The first time we heard “rent to cover cost” was with the old Sunterra system. There were a few mega owners who successfully owned and rented hundreds of thousands of points……..until they got shut down. They complained, threatened and cried foul, but in the end they were shut down. Own to rent works until it becomes an issue and owners with fewer points complain that they can never get Hawaii in February, nothing is available of spring break or ski weeks are only a available for rent in the secondary market. When the problem becomes large enough it affects sales, then they’ll use the rules to shut it down.

In the end, they’re selling family vacations, not vacation rental franchises. If you’re foolish enough to buy more points with the intention to rent for profit, the story always ends the same. Eventually it becomes a big enough problem the management company will shut you down. The only people who don’t understand this either haven’t read TUG very long or they just want to believe the lies told by the sales staff.

if you want to buy a fixed week/fixed unit and rent that out then I’m all for it. But with floating systems, to have a handful of mega owners always reserving the best weeks at the best resorts with the sole purpose to rent for profit, I’m not going to cry when the management company shuts you down.

Totally agree @dougp26364.

I actually think it’s the same for DVC- we might be hearing the “20 reservations” rule of thumb right now but that’s written nowhere for a reason. They’ll use that metric until they don’t. The underlying concept will be the same however: renting “now and then” is allowed. Owning some percentage of what you own with the intention of renting it every year isn’t the intent of the ownership. It’s a “who cares?” situation until people can’t get the reservations they want. There could be all kinds of reasons that might happen but if commercial renters are perceived to be part of the problem, no one should be surprised if the “club” cracks down on commercial renting and defines it in any manner they think will hold up in a court of law.

 

[tha]

Wake Up! It is in Marriott's financial interest to drive the resale value to zero or less so they can replenish their inventory at minimum cost. What are they doing to accomplish this? Three things:
1) Banning name changes within 30 days of arrival. That makes renting more difficult and makes resales less attractive. It can also be devastating to a lot of owners with medical or family emergencies but....wait for it....Marriott couldn't care less about your problems.
2) Threatening to cancel, apparently without notice and up to the moment of check-in, reservations they determine in their exclusive judgement 'without any right to arbitration, to be "commercial". That makes renting more difficult and makes resales less attractive.
3) They are blocking nights and imposing undisclosed minimum stay requirements during "events", i.e. when rooms are most valuable. That makes renting more difficult and makes resales less attractive.

Timeshare owners are not Marriott's customers, they are the product. The customer is insurance companies, hedge funds, family offices, and sovereign wealth funds, i.e. Wall Street. And as their revenue from sales drops (wonder why?) they are becoming more dependent on rental income. Just review the last couple quarters.

PS someone above mentioned their "fiduciary duty". If they have one, it is to their shareholders, not to timeshare owners. If that is wrong, I'd love to see evidence.

 

[Retired2025 aka AlmostRetired]

Action speaks louder than words. When I read a first hand account of actions taken against someone renting units or points, I will believe it. With this has to come with what they did. Until this happens, this is a very helpful discussion for if/when it does.

The real issue is there are too many point owners who have more points,than they can use for many different reasons. Many are just getting past the age they travel like they once did, others were convinced to buy more points than they could ever use. Most of these people struggle on renting points with many doing so below the cost of a trust MF. Enrolled owners have a significant advantage.

Whatever Marriott does, it will impact a group of owners. Most owners do not have the knowledge contained on TUG.

 

[Dean]

It is actually that simple. Sometimes the simplest solution is the best solution, but maybe less believable.

Owners have requested the policy and any related documents etc thats used together with the commercial use policy. All they got was the written policy as I mentioned above. That means currently you are allowed to have 20 reservations and you can rent them. If you make 21 reservations your last one could risk being cancelled - this is my opinion and understanding of it.
I'm sure that if DVC wanted a more narrow definition they would have changed it already.

DVC did give themselves the power to change the policy, but here is where the FL statutes comes into play. They are free to change it, as long as they don't restrict it any further than it already is.

I know that starting June 1st we have to attest that all reservations are for personal use. DVC defines personal use as: You going personally, but also friends, family and lessees are included in DVC' definition.

As I understand it one must certify that each reservations if for personal use (owner, family, friends) when making each reservation.

 

[dioxide45]

DVC did give themselves the power to change the policy, but here is where the FL statutes comes into play. They are free to change it, as long as they don't restrict it any further than it already is.

Doesn't the same come into play regarding exchange company Terms and Conditions vs. what the COA covers for DVC. I understand with DVC that you buy a deed for a fraction of a unit at a specific DVC property. They allot a set number of points for administrative purposes. When you make a reservation 11 to 7 months in advance at your home resort, that reservation would be governed by the COA. However at 7 months, aren't reservations facilitated through the Buena Vista Exchange Company. (is that what it is called). Many owners have no clue that there is a separate legal entity that facilitates bookings between resorts at 7 months.

 

[jellen613]

If Marriott doesn't want people to rent their weeks or points, then the first thing they need to do is STOP their sales people from telling owners to buy more points to rent to cover maintenance fees, and the sales people saying lots of owners are doing this. We have heard that at almost every presentation we have attended since April 2019.

 

[Likes to Travel]

I think MVC can do a few things but I'm not sure MVC's solutions will be successful in achieving dougp26364's notion of making more reservations available to all participants. So, what has MVC done, they now limit promo enrollments to 10 weeks, they are selling points such that a naive new owner must have 5,000 points ($70,000+) for 1 good annual vacation, they have had no significant U.S. resort additions since 2010 to keep up with demand, etc. And some of us week owners are apprehensive to deposit our weeks (the very life blood of the Trust program) because "we can't get our desired" point reservations.

Finally, can someone please give me an example of just one of these mega-owners and their success in cornering the market on point reservations for any particular resort and then making a bunch of money. By the way, I'm a retired financial officer and I can't imagine a franchise-like position in anything as silly as trying to make money renting out timeshares. I'd rather start a squirrel farm.

It also seems inappropriate to shutter an owner's ability to rent out a few timeshares to pay maintenance fees. Remember, we all go through cycles when we can't use some of our vacation ownership and still must face these maintenance fees at Christmas.

Could it be that the best game in town is to just keep our weeks and exchange them through Interval or rent them out? Another option, save the maintenance fees and just rent what you will use.

Whose fault is it if MVC enabled and allowed a mega-owner to buy enough points to cause a shortage in available point reservations? They do have the ROFR.

If you think that you can't make good money renting Marriott timeshares then you need to do a little more research. There is a reason that MVC sent the email to GRC owners. This resort is different than all the others and most people don't know this. Most timeshares at this resort were sold as qtr shares which means you aren't buying 1 week, it means you are buying a qtr of the year or 13 weeks. On average one qtr share will produce/elect to 50,000 points plus one has to buy 5000 points from Marriott to grandfather in the qtr share to be able to elect. With some maneuvering its been around $160,000 all in(5000MVC points + qtr share) which is less than $3/point all in and you have ~55,000 MVC points a year to use(That's almost 4xChairman status-How much would this cost you if you just walked in to a presentation and bought 55,000 points? ~$1million). Dues/CA taxes average less than .45/point for 5000MVC and 50,000 elected points(~$24,500/year-this is a lot of money so I rent to pay this). If you just rented out points at $.82 you make good money. If you reserve high value weeks, people are making $1.3/point or even more. I know because I own here. I rent out enough to pay dues and then I travel. On this email, there is a phone number if you have questions. I called and it is the main GRC MVC number that GRC owners call when electing their weeks etc. This is a different line that only focuses on GRC because GRC is so different. GRC owners know exactly what line this is. The lady was very helpful. She saw that I own 2 of these qtr shares. I brought up all the questions brought up here etc such as how to define "commercial"(she said they weren't given a solid definition). She said my ownership looked like many of the current GRC owners and didn't feel I had a problem. She said MVC has contacted owners that rent out 100s of weeks a year. My response was, "Really? Over a hundred?" Her response, "way more than a 100." She made it sound like there are multiple groups like this. So if owners are renting out 1 or 30, they aren't even close to being the biggest fish in the pond and probably not on the radar at this point. MVC knows that GRC can produce a lot of points but owners will have to rent more to cover the dues than your average MVC owner but the real question is if MVC will start going after the medium fish once it deals with the big fish.

 

[Fido Chuckwagon]

y offering a water bottle or bag that probably costs them $5-$10;

Lol, the water bottle and bag probably cost them fifty cents. And yes, i went to one of those presentations once, while waiting for a flight in the Disney Springs DVC lounge with time to kill, and got my bottle.

The presentations are also incredibly low pressure.

 

[Fido Chuckwagon]

If DVC had sole discretion to change the rules to ie: any and all renting is verboten they surely would.

That would actually be illegal under FL timeshare law.

 

[Fido Chuckwagon]

Wow. We easily hit 20 reservations with our own use, going to Tahoe every weekend in the winter and several in the summer. Never mind friends and family, and trips to other resorts.

It was 20 reservations in the names of people other than the owner, per membership, per use year. It wasn't 20 reservations total.

 

[Cyberc]

Sorry for keep comparing with DVC but it’s the 1 timeshare I know most about.

How does Marriott feel about LLC owners renting? I know the governing documents for DVC prohibit any LLC to rent and only allow employees from those LLC’s to use the points.

Currently there are zero enforcement from DVC on this and LLC’s would be the easiest to go after.

 

[Cyberc]

That would actually be illegal under FL timeshare law.

That’s exactly my point - DVC or any other timeshare management company can’t restrict whatever rental policy they currently have and that’s due to the FL statutes.

 

[Cyberc]

It was 20 reservations in the names of people other than the owner, per membership, per use year. It wasn't 20 reservations total.

unfortunately you are not correct.

DVC commercial use policy says you are allowed to make all the reservations you want. However if you make more than 20 in 12 month period you need to establish to the satisfaction of the board that all first 20 reservations are for personal use and not commercial use. If you can’t then any reservation on excess of the first 20 are considered commercial use.

Policy does not say that the first 20 need to be in the name of others or not. It does say that it’s reservations made by the DVC member and for all memberships for which the DVC members is an associate.

 

[Cyberc]

Doesn't the same come into play regarding exchange company Terms and Conditions vs. what the COA covers for DVC. I understand with DVC that you buy a deed for a fraction of a unit at a specific DVC property. They allot a set number of points for administrative purposes. When you make a reservation 11 to 7 months in advance at your home resort, that reservation would be governed by the COA. However at 7 months, aren't reservations facilitated through the Buena Vista Exchange Company. (is that what it is called). Many owners have no clue that there is a separate legal entity that facilitates bookings between resorts at 7 months.

I must say that you raise an interesting question because when DVC members book other resorts the exchange it facilitated by BVEC (name sounds about right)

I have no clue if all bets are off when it’s an exchange - however there is nothing in the governing documents to support that it should be any different than a 11 - 7 months reservation.

 

[Cyberc]

As I understand it one must certify that each reservations if for personal use (owner, family, friends) when making each reservation.

When you create or modify a reservation you need to attest that it’s for personal use.

However DVC defines personal use as used by: DVC members, DVC members family and friends but more importantly they also considers the use of lessees as personal use.

 

[Cyberc]

Totally agree @dougp26364.

I actually think it’s the same for DVC- we might be hearing the “20 reservations” rule of thumb right now but that’s written nowhere for a reason. They’ll use that metric until they don’t. The underlying concept will be the same however: renting “now and then” is allowed. Owning some percentage of what you own with the intention of renting it every year isn’t the intent of the ownership. It’s a “who cares?” situation until people can’t get the reservations they want. There could be all kinds of reasons that might happen but if commercial renters are perceived to be part of the problem, no one should be surprised if the “club” cracks down on commercial renting and defines it in any manner they think will hold up in a court of law.

Thing is it is written into the governing documents with the caveat that you need to request the policy to get it. It’s not available to read online anywhere.

For now that’s all DVC has if they want to add additional metrics to define commercial use I think they can as long as it’s not considered restricting the rental rules any further.

Some owners have heard that a potential change could be that you are allowed to rent to cover you annual dues but not in excess of that. However that would be managed and controlled I don’t know.

 

[Dean]

When you create or modify a reservation you need to attest that it’s for personal use.

However DVC defines personal use as used by: DVC members, DVC members family and friends but more importantly they also considers the use of lessees as personal use.

Sorry for the late reply but DVC does not consider a rental (lessee) as personal use. I'm sure they will not chase an occasional rental but if one rents 19 reservation a year, they will likely flag that person if done routinely. My point perviously was these changes do not remove their other criteria, they still have all of the control. I did reach out to MS before I left to travel and here is their response.

Personal Use may include enjoying the benefits of a Disney Vacation Club Membership with family or extending the use of any reservation points to friends and family on occasion. Additionally, Personal Use means that the Member does not regularly, or frequently, rent or sell reservations booked using their Membership.

Renting Points to host friends or family on a Membership as an infrequent practice is allowable under the Terms and Conditions outlined in our governing documents.

 

[Cyberc]

Sorry for the late reply but DVC does not consider a rental (lessee) as personal use. I'm sure they will not chase an occasional rental but if one rents 19 reservation a year, they will likely flag that person if done routinely. My point perviously was these changes do not remove their other criteria, they still have all of the control. I did reach out to MS before I left to travel and here is their response.

Let me find the exact wording in the POS and screenshot it here. Just to avoid any confusion of what DVC consider and does not consider.