ROFR idea / question

[daviator]

Had a discussion about ROFR in a Facebook group and I had (what seems like) an interesting idea, thought I’d post about it here and see if anyone had ever tried it.

Sellers don’t like it when MVC exercises ROFR on a sale they are trying to make, in part because MVC's process is very slow and often causes the ownership transfer not to occur until the subsequent year, which leaves the seller responsible for another year of maintenance fees.

Since ROFR merely allows MVC to “step in” to a buyer's shoes, subject to all of the terms of the purchase contract the buyer was hoping to consummate, would it not make sense to put a strict timeline in every resale purchase contract, like “Buyer and Seller agree that if the sale is not complete within XX (60? 90?) days of the date of this Agreement, the party responsible for the delay will pay $$$ (could be flat fee or $$/day) to the other party, or pay a cancellation fee of $$$ for failing to complete the sale.”

You could massage the terms a bit but the idea would be to force MVC to perform quickly if they decided to step in. It might even dissuade them from exercising ROFR or increasing the price at which they did so. You could have an exception for delays out of either party's control, which would let a buyer off the hook for MVC's delays but would not let MVC off the hook for their OWN delays.

It just seems as if there should be some standard terms that could be inserted into nearly every resale contract which would be onerous to MVC but not to a legitimate buyer. It might not dissuade MVC from exercising ROFR, but at least it might force them to move more quickly and create fewer problems for sellers when they do step in.

Has anyone tried anything like this?

 

[sponger76]

But what happens if MVC doesn't exercise ROFR and the transfer takes longer than your contracted deadline? Who pays the penalty? MVC won't because they didn't agree to those terms. And you'd begiving the buyeran out if they get tired of waiting.

 

[daviator]

But what happens if MVC doesn't exercise ROFR and the transfer takes longer than your contracted deadline? Who pays the penalty? MVC won't because they didn't agree to those terms. And you'd begiving the buyeran out if they get tired of waiting.

You as the seller could be lenient with a buyer. Or you could have a clause that said there were no penalties for delays that were beyond the control of buyer or seller.

When MVC is the buyer, all those delays are within their control, so the penalty would apply to them.

 

[dioxide45]

In the end Marriott probably ignores that and just looks at the sales price and first use year. If they fail to fulfill such extra terms, it would be up to the seller to either walk away or take Marriott to court to enforce the terms. Something that is doubtful in either case. I doubt it would have any bearing on MVC exercising or not and it wouldn't change the timeline. When it comes to the maintenance fees, I understand that the party that gets usage pays that years fee. So if the sale drags on, MVC would still be on the hook for the fees for which they get usage.

 

[CalGalTraveler]

I added similar wording to an HGVC resale not because of developer delays but I was worried about a buyer dragging their feet into the new year or having a hung deal with no action thus complicating the sale.

I like this idea. It seems that if MVC dragged their feet, the low amount of MF would qualify for small claims court treatment to recover an additional year.

 

[daviator]

If I was selling one of my VOIs, I would put something like this in the contract, with the buyer's understanding about the reasoning behind it. It seems to me that it couldn't hurt and might help in terms of possibly discouraging ROFR and possibly accelerating the timeline if ROFR does occur.

 

[Pat1mn]

Many ROFR have time limits established. Example Bluegreen has a minimum of 15 days from receiving paperwork and not more than 30 days from closing. I would just write a clause saying that closing is 15 days from signing and then send certified mail to establish receipt of paperwork. This legally gets rid of the lag time they use to extend closing. I would also add a rebate in it.

Example: seller wants $7000 for timeshare. You signed a contract for $10,000 June 1 with $3000 of maintenance fees due September 1. The seller will do a $3000 rebate to buyer if they close within 20 days of vacation club receiving paperwork(certified mail date) and add at seller’s discretion if closing after that date.

On day 21, I would send a second certified letter saying the club is now past it’s time limits waiving it’s ROFR and demand it move forward with the sale.

This gives you legal legitimacy as the mail receipt is your timestamp. The seller can now sell to buyer for $7000 as buyer will now be paying the maintenance fees, or if vacation club takes the seller gets $10,000 and still might not have to pay maintenance fees.

People need to use their contracts in their favor and make them stay within the time limits the vacation club set.