Was closing DVC Resorts Legal?

[TisBit]

I know there are a couple of similar topics to this, about why they closed resorts. I understand the perception of why they closed the resorts and that it would also protect cast members. The hotels, it makes perfect sense, but for DVC isn't it WAY more complicated and possibly a breach of contract. I am not a timeshare expert and I am sure there have been emergency closures in the timeshare industry with some type of impact, so I would love to hear how that is typically handled. But my thoughts on the legality of DVC voluntary closing the resorts:

1. The contract specifically unlinks the resorts and timeshares from the parks. The fact that the parks closed is not a reason any owner could say they were deprived of their room, points or fixed week. If they chose to cancel, it is on them. DVC's decision shifts the liability to DVC.

2. If the number of points in a year is to book all rooms for that year (plus breakage, etc) and now DVC has taken all rooms out of service for three weeks minimum, there is an excess of points in 2020 and there is not enough capacity of rooms to allow all owners to use their points. How do you compensate or know who these owners are or alleviate this burden. DVC has even acknowledged this by saying they cannot give excess points back to a specific year without causing a ripple effect of availability.

3. Banking, borrowing offsets years equally (as the room is now available in one year versus another year), trading to RCI gives RCI rooms to trade in for. The only place that I see there is a chance to "right" the ship is that points traded to Disney Collection and Cruises are then converted to cash rooms. Disney could theoretically give those rooms back, but is there enough points in a year to offset this full closure? And how does than affect the dues for members, as these cash rooms profits came back into the DVC accounts to offset expenses.

Am I crazy to think that they have really opened themselves up by closing these timeshares to legal action. If the rooms sat empty because no one booked, that would be on the membership, not them. If they even kept one open and moved everyone still booked into that one resort, there would people complaining, but they would still have their room and not be able to say they were deprived of the use of the resorts.

 

[Sandisw]

The POS mentions...I’m in the process of reading it again..that they could carry business insurance to cover interruptions in service.

But, if I I understand the wording correctly, it is not mandatory. It basically says if it’s available and affordable. Not those exact words but close..I’ll try to find page again.

If that’s in place, and it covers a situation like this, there could be an avenue for reimbursement.

They are allowed to suspend banking and borrowing per our contract. And this, if implemented will help down the road and honestly, that is what I think is coming.

They aren’t changing banking rules. They are putting back borrowed and my guess is, if this lasts more than 3 weeks, they will suspend come 2021 UY.

 

[ziravan]

Whatever contractual obligation they may or may not have is overridden by state and federal guidelines and mandates to restrict groups greater than 10.

Nobody is getting anywhere with a lawsuit. Remember, every single potential jury member is living through this, too.

I haven’t read the contract specifically to find this, but there’s almost certainly a clause somewhere about force majeure or being subject to emergency governmental responses. Hell, WDW is hurricane country and the contract would anticipate such measures for that reason alone. This is why the Fed and States are declaring disasters. Those declarations empower them to do things like override contracts.

Contracts are subject to the prevailing law. Honestly, trying to sue about this right now would be akin to the guy who calls 911 to report that he got ripped off in a drug transaction.

 

[TisBit]

Whatever contractual obligation they may or may not have is overridden by state and federal guidelines and mandates to restrict groups greater than 10.

Nobody is getting anywhere with a lawsuit. Remember, every single potential jury member is living through this, too.

I haven’t read the contract specifically to find this, but there’s almost certainly a clause somewhere about force majeure or being subject to emergency governmental responses. Hell, WDW is hurricane country and the contract would anticipate such measures for that reason alone. This is why the Fed and States are declaring disasters. Those declarations empower them to do things like override contracts.

Contracts are subject to the prevailing law. Honestly, trying to sue about this right now would be akin to the guy who calls 911 to report that he got ripped off in a drug transaction.

But, they did not close hotels or rentals, so they cannot blame the Government. The groups greater than 10 is a guideline and has not been implemented as a mandate. They can claim State of Emergency for the parks, restaurants, etc. Even to cancel reservations for hotels, but DVC is different with "owners" and it was a choice they made. Same with a hurricane, if the resort is damaged or unsafe or mandatory evacuations are in place, that is totally different then them choosing to close the resorts.

And for the record, I am not saying someone should go sue about it right now, but what are the legal implications. Also, when everything is over and people have lost points or been impacted by this, every decision by the Government or in this case DVC will have to be looked at. If they stayed closed through July/August (I don't think they will, but some do) and the membership cannot use the points they have paid for is a big issue. Also, does this set a precedent that they can close the resorts whenever they want, for whatever reason. Again, there was no state or federal declaration that resulted in the closure of the resorts, this was solely done by DVC.

 

[Sandisw]

But, they did not close hotels or rentals, so they cannot blame the Government. The groups greater than 10 is a guideline and has not been implemented as a mandate. They can claim State of Emergency for the parks, restaurants, etc. Even to cancel reservations for hotels, but DVC is different with "owners" and it was a choice they made. Same with a hurricane, if the resort is damaged or unsafe or mandatory evacuations are in place, that is totally different then them choosing to close the resorts.

And for the record, I am not saying someone should go sue about it right now, but what are the legal implications. Also, when everything is over and people have lost points or been impacted by this, every decision by the Government or in this case DVC will have to be looked at. If they stayed closed through July/August (I don't think they will, but some do) and the membership cannot use the points they have paid for is a big issue. Also, does this set a precedent that they can close the resorts whenever they want, for whatever reason. Again, there was no state or federal declaration that resulted in the closure of the resorts, this was solely done by DVC.

I will just add that we, as owners, authorized them to make those decisions on our behalf, and giving up our right to have a say or vote,

So, again, the way I see it, this was a decision made with the implicit approval of owners.

Right now, we have no idea the length and until we do, the strain on the system will be unknown. What you may see is people booking home resoets more often at 11 months snd not changing, leaving all those that own at non WDW more difficulty booking on site,

Those non WDW resorts are a lot of points coming into the system at 7 months. If those aren’t coming in, then it will help with owners of WDW resorts to book, providing they do at 11 months.

 

[TisBit]

We did as owners give up a lot of things, like the ability to amend certain parts of the contracts or rules without vote. Not sure we gave up the right for them to close the resorts and deprive us of using our points at the resort. The cannot even change the point charts however they want, but now they have taken thousands of points out of the system and caused a massive imbalance.

If there is a negative point situation, it will not be difficult to book at 7 months, it will be difficult to book period, even at 11. And listen, my question is, were they legally allowed to do this, not if it was right or wrong. Literally, by contract and the law, no other timeshares closed that I am aware of. Even if the beach they are on is closed, they are open and a room can be rented. In that situation the owners cannot complain that they can't book, cause the room was there at a certain point. DVC wouldn't have any liability if they still allowed DVC point reservations, but I am not sure that is still the case.

 

[drusba]

There is a common law defense to enforcement or breach of contract claims called acts of God. When an act of God, which could include a pandemic, makes it impracticable to fairly carry out the contract, the defense exists. You do not need impossibility to carry out the contract, just impracticability, in that keeping the DVC resorts open in the current circumstances, where the members would lose any use of the parks, and the members and employees could be subject to the risk of contracting the disease by being kept together in the same building, along with all the national recommendations to avoid large groups, would likely be enough for a court to rule DVC’s closure of the resorts is OK because it is impractible to keep doing business as usual.

Moreover, whether any members can claim breach for not keeping the resorts open is the least of DVC’s liability considerations. A real concern is what happens if they kept them open in light of everything that is now known, guidelines given, and other actions taken by Disney, and then a number of older employees at the resorts or older DVC members happen to get sick and die. Now the lawsuits become ones of wrongful death actions brought against DVC seeking millions in liability for failure to take needed actions to prevent disease.

 

[bumbershoot]

Whatever contractual obligation they may or may not have is overridden by state and federal guidelines and mandates to restrict groups greater than 10.

So should apartment buildings be evacuated? That’s what DVC is, at the basic level. Temporary apartments. Each unit with its own little group of people in it.

 

[iheartglaciers]

So should apartment buildings be evacuated? That’s what DVC is, at the basic level. Temporary apartments. Each unit with its own little group of people in it.

Although DVC resorts have a lot more staff working on-site than an apartment building, even after you cut out the entertainment. And no one relies on DVC rooms as their main housing.

 

[davper]

I can't speak to the illegality of it, but it was necessary. It sucks because I m going to lose 150 points (UY JUNE) that we banked for a long trip with multiple rooms in April/May if the parks don't reopen.
I won't be looking for restitution but would hope that DVC did something to those that lost points. Maybe give those points back at the end of the contract.

 

[Miffy]

So should apartment buildings be evacuated? That’s what DVC is, at the basic level. Temporary apartments. Each unit with its own little group of people in it.

That's not quite accurate. As an apartment dweller in a co-op apartment, I see a huge difference. For one thing, there's no restaurant or store in my building. There's no lobby where people hang out. There's no waiting in line to check in or front desk to go to when I have a question or problem. I live here all the time, not just for a week or two or a month every year. I clean my own apartment. No maid or service person comes in here regularly. Occupancy in my building isn't constantly, continuously shifting.

If something in my apartment breaks, I'm responsible for fixing it. If I want to redecorate, it's up to me. I don't own points that allow me to be here for a certain number of days every year or every 2 or 3 years. I have the right to be here all the time.

The people who live in my building now are, for the most part, and it could literally be all the tenants, the same people who lived here at the beginning of the coronavirus outbreak. We don't have a huge influx of people every day who're coming here from other places so we're not mutually being exposed to infection that wasn't already present here.

I could go on, but I think I've made at least some of my point.

That being said, I think this situation stinks for DVC owners. I'm not an owner but from reading these boards regularly I have an understanding of how this works.

The only thing I can compare it to is my AP, which expires this month but I renewed it in January on the first day that I could since I was sure they'd raise the price (which they did, btw). Yet it's entirely possible that the cost of that renewal will go down the tubes because even when WDW reopens I may not be able to go for any number of reasons.

I realize that the $1,012 I spent on my AP renewal is nothing compared to MFs that DVC owners are paying, but it isn't insignificant and it's certainly not money that I would've spent on "nothing" had I known.

 

[CarolMN]

So should apartment buildings be evacuated? That’s what DVC is, at the basic level. Temporary apartments. Each unit with its own little group of people in it.

That is very different. There is constant turnover in DVC resorts, and a different group of people in the hallways and common areas every day. DVC resorts are not people's long term residence. Should employees, especially housekeeping, be continually exposed (not to mention their families and contacts) just so some can take a vacation?

I am very sorry people are forfeiting $$ and vacations. There are many people who have already lost jobs and businesses, and worst of all, their lives. In light of this, it's hard to even entertain the "legality" of an action taken to save lives .

 

[Sandisw]

We did as owners give up a lot of things, like the ability to amend certain parts of the contracts or rules without vote. Not sure we gave up the right for them to close the resorts and deprive us of using our points at the resort. The cannot even change the point charts however they want, but now they have taken thousands of points out of the system and caused a massive imbalance.

If there is a negative point situation, it will not be difficult to book at 7 months, it will be difficult to book period, even at 11. And listen, my question is, were they legally allowed to do this, not if it was right or wrong. Literally, by contract and the law, no other timeshares closed that I am aware of. Even if the beach they are on is closed, they are open and a room can be rented. In that situation the owners cannot complain that they can't book, cause the room was there at a certain point. DVC wouldn't have any liability if they still allowed DVC point reservations, but I am not sure that is still the case.

Here is what is says in my RIV POS..page 22.

”Pursuant to the Property Management Agreement, the association has delegated it’s management, maintenance, and operation duties for the RIVera Resort to DVCM.”

Seems pretty clear to me that DVCM has the right to close the resort. DVCM is who we agreed to allow to make decisions on our behalf.

Not that this changes anything. But, your question was is it legal, and I would say this clause...which I assume is in all resort contracts...allows for it, even without all the government guidelines out there.

 

[TisBit]

That's not quite accurate. As an apartment dweller in a co-op apartment, I see a huge difference. For one thing, there's no restaurant or store in my building. There's no lobby where people hang out. There's no waiting in line to check in or front desk to go to when I have a question or problem. I live here all the time, not just for a week or two or a month every year. I clean my own apartment. No maid or service person comes in here regularly. Occupancy in my building isn't constantly, continuously shifting.

If something in my apartment breaks, I'm responsible for fixing it. If I want to redecorate, it's up to me. I don't own points that allow me to be here for a certain number of days every year or every 2 or 3 years. I have the right to be here all the time.

The people who live in my building now are, for the most part, and it could literally be all the tenants, the same people who lived here at the beginning of the coronavirus outbreak. We don't have a huge influx of people every day who're coming here from other places so we're not mutually being exposed to infection that wasn't already present here.

I could go on, but I think I've made at least some of my point.

That being said, I think this situation stinks for DVC owners. I'm not an owner but from reading these boards regularly I have an understanding of how this works.

The only thing I can compare it to is my AP, which expires this month but I renewed it in January on the first day that I could since I was sure they'd raise the price (which they did, btw). Yet it's entirely possible that the cost of that renewal will go down the tubes because even when WDW reopens I may not be able to go for any number of reasons.

I realize that the $1,012 I spent on my AP renewal is nothing compared to MFs that DVC owners are paying, but it isn't insignificant and it's certainly not money that I would've spent on "nothing" had I known.

I know what you are saying. But how is it different than a hotel that is not closed. Or another timeshare resort. I have not heard any other resorts closing. And while your apartment doesn’t have those things, there are a lot of apartments and condos that do. And Disney hasevery right to close the restaurant and pool and concierge. That is part of the contracts.

The question I started was is It legal. I know why they did it, but let’s say next year there is something else happening. Can Disney legally lock deeded owners from the property at their own discretion and prohibit them from using points?

 

[Sandisw]

I know what you are saying. But how is it different than a hotel that is not closed. Or another timeshare resort. I have not heard any other resorts closing. And while your apartment doesn’t have those things, there are a lot of apartments and condos that do. And Disney hasevery right to close the restaurant and pool and concierge. That is part of the contracts.

The question I started was is It legal. I know why they did it, but let’s say next year there is something else happening. Can Disney legally lock deeded owners from the property at their own discretion and prohibit them from using points?

See my post above, Yes, DVCM has the control of operations. Having said that, I don’t think they can decide on a whim to shut it down, it would have to be for a valid reason.

 

[TisBit]

Here is what is says in my RIV POS..page 22.

”Pursuant to the Property Management Agreement, the association has delegated it’s management, maintenance, and operation duties for the RIVera Resort to DVCM.”

Seems pretty clear to me that DVCM has the right to close the resort. DVCM is who we agreed to allow to make decisions on our behalf.

Not that this changes anything. But, your question was is it legal, and I would say this clause...which I assume is in all resort contracts...allows for it, even without all the government guidelines out there.

I hear you. Maybe they do. But you would think point allocations could fall into that as well. I am not sure, which is why I asked. But I don’t remember there ever being a clause where they could take anything out of inventory outside of maintenance.

And my question is more along the lines that if they can legally do this, what prohibits them from closing a resort at their discretion anytime they want. And what are the repercussions?? I know they could try to mount a defense saying state of emergency or it being a pandemic they were logical. But it doesnt mean it was legal or they had the authority to do it.

 

[TisBit]

I completely understand why they closed and I can even say it’s a good decision. But as we all sit in social isolation I think it is perfectly acceptable to ask the question. If they can do it now at their discretion it’s a huge deal. They could literally close at their own discretion and make it impossible for an owner to use their timeshare with no responsibility To the owners. I don’t see how that could be the case in any way shape or form.

 

[jlb727]

People took the risk of traveling too close to the end of their use year. That’s all this is. You assume a risk when you do that. Even if something were to happen to you personally, like some kind of accident where you couldn’t travel when you planned.

My use year is Feb. I should be leaving tomorrow for my welcome home trip. BUT when I called to cancel, I got all my points back immediately, 2019 banked AND use year points, no questions asked. I pretty much have the rest of the year to use them. I followed advice and planned a trip near the beginning of my use year.

 

[Sandisw]

I hear you. Maybe they do. But you would think point allocations could fall into that as well. I am not sure, which is why I asked. But I don’t remember there ever being a clause where they could take anything out of inventory outside of maintenance.

And my question is more along the lines that if they can legally do this, what prohibits them from closing a resort at their discretion anytime they want. And what are the repercussions?? I know they could try to mount a defense saying state of emergency or it being a pandemic they were logical. But it doesnt mean it was legal or they had the authority to do it.

The point is they have the legal authority over the operations of the resort, If that means the resort shutting down for emergency situations, then it would fall under that. Even with thst authority, they would have to have a l valid reason to do it because being in charge doesn’t mean they can just do what they want. that is not in the interest of overseeing operations.

The remedy for taking rooms out of service and the overloading of points is the suspension of banking and borrowing going forward for however long they need to do thst,

It is also possible..which We have no idea of knowing.,is if there is business insurance held by DVC that will offset some of the costs for owners whose points go to waste....meaning they were booked during a resort closure time and expire before the resort reopens.

Once resort reopens, we will have a better idea of how it happens. Sad to say, but there are a lot of cabins and bungalows in the system that don’t get booked, which people could be forced to book for a night or two in lieu of losing points.

 

[TisBit]

I commend you defending the Resort closures, but I don't think Disney being in charge of operations does cover completely closing a resort. Operations is check in, housekeeping, etc. I even think a temporary closure for an emergency is different than a three week or more closure. Disney was not ordered to close their resorts, you can make a case that they are following some general guidelines, but it is easy to exceed your authority.

I think this is what is causing even more issues about the rentals, the resorts should not close. There should never be a situation where points cannot be used. If the resorts stayed open, the fact that the parks closed would not invalidate a contract. But just as owners and renters had a contract, Owners and DVC have a contract.

In a fixed week timeshare, this could easily be resolved by reimbursing those weeks that are affected. But suspending banking and borrowing would actually make it worse, as then people would be doubly impacted in this one year. Maybe they could offer to buy points or some other remedy, but could they use funds from DVC operations to that (passing the cost to owners).