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MVC ROFR Point Sales Contract Language

tf2275

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Does anyone have an excerpt of the MVC ROFR language in their retail point sale contract?
I have a reputable resale broker I have dealt with stating MVC has the right to interpret any resale contract which has the seller paying closing costs or current year MF to reduce the price of the points paid for ROFR. An example, buyer pays $3.00 pp with seller paying closing costs and current year MF on the points all specified in the sales contract. Broker says MVC may interpret the agreement to reduce price per point after subtracting seller’s costs and then fail ROFR.
Is this MVC right spelled out anywhere or do they just do it and assume no buyer will sue?
 

BigDawgTUG

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The following is from the governing documents for The Marriott Vacation Club Destinations® Program. Although not specifically spelled out in contract, I think your broker is essentially correct. MVC will likely look at the NET proceeds payable by buyer to seller, that is, proceeds less expenses. So, if MVC exercises ROFR, seller gets the same net proceeds it would have received from the buyer.

"In consideration of the affirmative obligations of and benefits to all Beneficiaries provided by
Developer under the Trust Agreement, when any Interest is offered for sale, Developer will have the
exclusive option to purchase such Interest at the price and on the other terms of any bona fide offer
made
in writing to the Beneficiary at such time and submitted to Developer for verification. Each Beneficiary
will notify Developer in writing of its intent to sell its Interest and provide Developer with a copy of the
offer received. Such notice will include the full terms and conditions of the sale, and the full name and
primary address of the prospective true buyer (as distinguished from agents and intermediaries). Notice
of a Beneficiary’s intent to sell will be sent to Developer at 6649 Westwood Boulevard, Orlando, Florida
32821-6090 or such other department or address as may be designated by Developer from time to time.
Developer will have thirty (30) days after receipt of such notice to exercise its option to purchase the
Interest at the same price and on the same monetary terms and conditions as the verified offer. If
Developer does not notify the Beneficiary of its election to purchase the Interest within such thirty (30)
day period, then the Beneficiary may sell the Interest to the subject bona fide offeror subject to the Trust
Agreement and to all limitations set forth in the Trust Agreement, at a price not lower than that at which
it was offered to Developer. In addition, any permitted sale between a Beneficiary and a bona fide third
party will be deemed to contain a provision requiring that any sums due to the Association as
Assessments must be paid in full as a condition of closing of the sale. Should, however, such sale to a
third party not be consummated within four (4) months after the date the offer is transmitted to
Developer at the price and terms equal to or less favorable than those offered to Developer, the terms and
limitations of Developer’s right of first refusal will again be imposed on any sale by a Beneficiary. If
Developer elects to purchase such Interest, the transaction will be consummated on the terms offered;
provided, however, that Developer will have a minimum of thirty (30) days from the delivery of notice of
Developer’s election to exercise Developer’s option to consummate the transaction. Developer may
impose an administrative charge in connection with the waiver of this right of first refusal."
 

StevenTing

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You need to structure the language in your contract a specific way. Ideally, you put in a clause that buyer needs to find escrow/make a deposit within 30 days of the date of the contract or agree to an additional fee to the contract. MVC likely cannot move that quickly.
 

tf2275

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The following is from the governing documents for The Marriott Vacation Club Destinations® Program. Although not specifically spelled out in contract, I think your broker is essentially correct. MVC will likely look at the NET proceeds payable by buyer to seller, that is, proceeds less expenses. So, if MVC exercises ROFR, seller gets the same net proceeds it would have received from the buyer.

"In consideration of the affirmative obligations of and benefits to all Beneficiaries provided by
Developer under the Trust Agreement, when any Interest is offered for sale, Developer will have the
exclusive option to purchase such Interest at the price and on the other terms of any bona fide offer
made
in writing to the Beneficiary at such time and submitted to Developer for verification. Each Beneficiary
will notify Developer in writing of its intent to sell its Interest and provide Developer with a copy of the
offer received. Such notice will include the full terms and conditions of the sale, and the full name and
primary address of the prospective true buyer (as distinguished from agents and intermediaries). Notice
of a Beneficiary’s intent to sell will be sent to Developer at 6649 Westwood Boulevard, Orlando, Florida
32821-6090 or such other department or address as may be designated by Developer from time to time.
Developer will have thirty (30) days after receipt of such notice to exercise its option to purchase the
Interest at the same price and on the same monetary terms and conditions as the verified offer. If
Developer does not notify the Beneficiary of its election to purchase the Interest within such thirty (30)
day period, then the Beneficiary may sell the Interest to the subject bona fide offeror subject to the Trust
Agreement and to all limitations set forth in the Trust Agreement, at a price not lower than that at which
it was offered to Developer. In addition, any permitted sale between a Beneficiary and a bona fide third
party will be deemed to contain a provision requiring that any sums due to the Association as
Assessments must be paid in full as a condition of closing of the sale. Should, however, such sale to a
third party not be consummated within four (4) months after the date the offer is transmitted to
Developer at the price and terms equal to or less favorable than those offered to Developer, the terms and
limitations of Developer’s right of first refusal will again be imposed on any sale by a Beneficiary. If
Developer elects to purchase such Interest, the transaction will be consummated on the terms offered;
provided, however, that Developer will have a minimum of thirty (30) days from the delivery of notice of
Developer’s election to exercise Developer’s option to consummate the transaction. Developer may
impose an administrative charge in connection with the waiver of this right of first refusal."
Thanks. Not the answer I was hoping for, but very helpful. Broker says MVC currently exercising on every sale below $3.50 pp.
 

tf2275

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You need to structure the language in your contract a specific way. Ideally, you put in a clause that buyer needs to find escrow/make a deposit within 30 days of the date of the contract or agree to an additional fee to the contract. MVC likely cannot move that quickly.
I’ve seen this theory in recent ROFR posts, but as an attorney I frankly don’t understand it. All MVC has to do is provide notice of exercising ROFR within 30 days, not actually purchase the points. Please explain why MVC cannot “move that quickly” to provide notice of ROFR?
 

rthib

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If you are buying and your broker doesn't know how to structure contact to get it passed, find a new broker.
 

StevenTing

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I’ve seen this theory in recent ROFR posts, but as an attorney I frankly don’t understand it. All MVC has to do is provide notice of exercising ROFR within 30 days, not actually purchase the points. Please explain why MVC cannot “move that quickly” to provide notice of ROFR?
While they can provide notice within 30 days, they likely cannot find escrow within 30 days. That has always been the challenge with MVC is that they usually take 8-12 weeks to fund and close a transaction.
With “real estate” time is of the essence. If MVC cannot meet the requirements of the contract, they would be subject to an escalation in price, as one would hope a broker would define in the contract.
And if MVC doesn’t act, you could sue to enforce the contract.
But I would put the following in the contract.
50% of agreed upon price placed in escrow within 7 Calendar days. With remaining 50% to be placed in escrow within 30 calendar days. If unable to complete, price increases by $XXXX to compensate for lost time. Failure to complete transaction results in forfeiture of funds placed in escrow.
 
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