How to handle unpaid 2019 maintenance fees when buying resale right now...

[JohnGypsy]

So, I'm currently buying another contract -- just had the offer accepted and submitted the paperwork today. It has no preloaded/banked points. It's just a standard 160 points with a February UY. We, as the buyers, are expected to pay the 2019 maintenance fees, of course -- as expected.

What is a bit odd, I just realized, is that the Sellers have not yet paid them. Normally, I would expect the Sellers to have paid them at this point and then we'd reimburse that as part of the contract. But, for ours, that isn't the case. It is unpaid, so we'll pay Disney as part of the closing. (I believe that is required for anything that closes in December or later anyhow if they aren't already paid.)

What is weird to me is that, technically, that is due by the end of January, right? Well, I don't even expect ROFR to have come back by then. That means that the dues will go to "late" status before we'd even have a chance to close. I know that Disney gives a 30 day grace period before the account is marked "suspended", but, heck, even THAT might come before we can close if Disney takes 40 days for ROFR like they did on my last purchase!

Is this anything I should worry about? The fact that this contract may go to "late" and even possibly "suspended" status before we can close and get Disney paid up?

Anyone dealt with that sort of situation?

- John...

 

[erionm]

Maintenance fees are due today (1/15) and late fees and interest will be added if paid after 2/14.

If the current owner is setup for monthly payments, the remaining balance would need to be paid before the transfer of ownership.

 

[JohnGypsy]

Right -- that's my concern. It seems very unlikely to me that a contract made today will close before that date. Therefore, the contract that I am buying today is very likely to be in "late" status with interest and fees by the time we close and the title company would be paying Disney.

 

[TinyTGO]

When did you sign the sales agreement?

 

[lntx]

Are there 2019 points on the contract? I'm assuming not since you said it had no "preloaded/banked" points. When I have sold resale contracts in the past, I've been told that if there are no points for current year, typically the seller pays the maintenance fees. Otherwise, you're paying maintenance fees on points that you're not getting. I'd renegotiate this if it's not too late and you're being asked to pay fees for points you're not getting. Keep us posted!

 

[JohnGypsy]

When did you sign the sales agreement?

Today.

 

[JohnGypsy]

Are there 2019 points on the contract? I'm assuming not since you said it had no "preloaded/banked" points. When I have sold resale contracts in the past, I've been told that if there are no points for current year, typically the seller pays the maintenance fees. Otherwise, you're paying maintenance fees on points that you're not getting. I'd renegotiate this if it's not too late and you're being asked to pay fees for points you're not getting. Keep us posted!

Yes, there are the full points on it for this (2019) Feb UY. I consider "preloaded/banked" points to be extra points in addition to the upcoming year.

So, there are full points coming on February 1st. So, I fully expect to pay for the maintenance for 2019. The problem is that I can't pay it until I own it -- and the seller hasn't paid it yet (and they were technically due today). By the time we close, it will very likely be past February 15th, which means that there will also be a late fee and interest tacked on, right?

 

[erionm]

If the current owner is setup for monthly payments, they won't go late. The remaining balance would need to be paid before DVC will transfer ownership.

 

[lntx]

Yes, there are the full points on it for this (2019) Feb UY. I consider "preloaded/banked" points to be extra points in addition to the upcoming year.

So, there are full points coming on February 1st. So, I fully expect to pay for the maintenance for 2019. The problem is that I can't pay it until I own it -- and the seller hasn't paid it yet (and they were technically due today). By the time we close, it will very likely be past February 15th, which means that there will also be a late fee and interest tacked on, right?

Title company (and Disney) won't let you close unless maintenance fees are paid. They'll take Jan's fees from buyer's proceeds, I would imagine on the closing statement (or you'll reimburse them on the closing statement if they were set up to pay monthly). But, if I were you, I'd reach out to your broker and ask just to make sure.

 

[TinyTGO]

Assuming you used a broker, I would ask them. They should be made aware of your concern. Don't assume they are all on their game. They aren't.

The seller should be paying the dues now (by Feb 15) and receiving a reimbursement back from the title company at closing.

If all else fails and your contract settles in March with unpaid dues, every membership is allotted a one time forgiveness of late fees per X years.

 

[JohnGypsy]

Note that I have already contacted the broker and they said everything will be fine. They said that if there are any late fees, the seller will cover them (and the buy/sell agreement does say that). It just seems a weird way to do it if they actually don't pay them before the close.

I'm sure it'll work out -- I'm just thinking there might be a bit of a hassle involved. And I'm hoping to avoid that.

 

[JohnGypsy]

The seller should be paying the dues now (by Feb 15) and receiving a reimbursement back from the title company at closing.

Agreed!

If all else fails and your contract settles in March with unpaid dues, every membership is allotted a one time forgiveness of late fees per X years.

Good to know, thanks. And, again, we're only talking like $25 plus a tiny bit of interest.

On a side note, today I happened to look at the 2018 financial summary and saw that Disney takes in almost a quarter million dollars in late fees and interest each year! Doh!

 

[lntx]

Note that I have already contacted the broker and they said everything will be fine. They said that if there are any late fees, the seller will cover them (and the buy/sell agreement does say that). It just seems a weird way to do it if they actually don't pay them before the close.

I'm sure it'll work out -- I'm just thinking there might be a bit of a hassle involved. And I'm hoping to avoid that.

I think Disney requires that maintenance fees be paid current in order to close. I wouldn't think you'd be able to walk away from closing without all of 2019's fees paid (either from seller or you(buyer) or a combination).

 

[JohnGypsy]

I agree. Hopefully it all works out. I mean, we all agree that I will pay for it -- it is written that way -- I was simply concerned with the timeline since they don't take my money to pay until closing.

So, hopefully, it is clear to the Seller that they need to make the 2019 payment (like now) and will then get it back at closing. The broker now says they know that, so we'll see how it goes.

 

[miTnosnhoJ]

It may be too late for you, but whether you pay the 2019 dues or not is negotiable. My rule of thumb is I'll pay it if the contract has the 2019 points available, but let the seller pay it if they have already used the points. (In my case, with a December use year, if they have already used the December 2018 points, they would pay.) If they are insistent on you paying for points that they have already used, just lower your offer.

I just re-read your post, and you are fine. It looks like you get full points starting in Feb, so it is fair that you would pay the Maintenance Fees.