Wednesday, May 29, 2013
Buying Disney Vacation Club - What are “Right of First Refusal” and “Lease Terms?”
I'm thinking of buying a DVC membership, but I don't understand the Right of First Refusal, and the Limited Right to Use clauses. Can Disney buy the timeshare out from under me? Will I lose the timeshare in 30 years and have nothing left?
The simple answers to your questions are "Yes" and "Yes". But you are right to ensure you thoroughly understand what you are buying, and how the purchase process works, before making an offer.
1. The Right of First Refusal.
This gives Disney the option to buy back any timeshare at the sales price that has been agreed upon by the owner and buyer. Disney has the right of first refusal on all of their properties, and DVC memberships.
Once the buyer and seller sign a sales contract, the closing company must submit the right of first refusal paperwork to Disney. Disney then has 30 days to decide if they will waive their right to purchase the timeshare, and let the sale proceed.
If they exercise their right to refuse the sale, then Disney becomes the buyer under the same terms and conditions outlined in the original contract.
2. Limited Right to Use Clause.
This is a DVC lease-hold deed. DVC memberships are essentially long-term leases where you may use the property for the term outlined in the ownership paperwork.
If an owner purchased a 40-year lease, and 10 years later decided to sell the lease then the new owner would have use of the timeshare for the duration left on the lease, which in this case would be 30 years.
At the end of that the term, Disney may offer an extension for a fee, but there are no guarantees this will happen. You would need to purchase it knowing that your ownership could expire at the end of the lease.
Take a look at Disney Vacation Club resales listed by RedWeek members.
This month's answer comes from Janet Erimie, owner of Timeshare Resale Partners.