There is a major difference between the prior restrictions placed on resale purchasers and the new one that prohibits post-January 19, 2019 resale purchasers of the existing 14 resorts from reserving Riviera (and future resorts) and precludes Riviera resale purchasers from using the other DVC resorts. All those previously created restrictions on resale purchasers addressed "incidental benefits," e.g., reserving a Disney hotel with points, discounts for AP's, merchandise and restaurants, and Moonlight Magic nights. Incidental benefits are benefits created by the developer that it can provide or take away at any time and nothing in the POS or its contracts creates a right for any purchaser to have and retain incidental benefits.
The difference now is that DVD is, for the first time, taking aim directly at material rights actually covered by the POS, which includes the site POS and Multi-Site POS, all the disclosures and other statements contained therein, the declarations, bylaws, and various agreements including the DVC Membership Agreement and DVC Resort Agreement. Though DVD can make modifications to some things set out in the POS, it cannot, absent the vote of the actual DVC members, do away with material rights of owners created in the POS.
What has happened is that DVD took the CCV POS documents as a draft for Riviera, modified the declarations and disclosure documents somewhat to reflect that resale purchasers can now be restricted from use of the services and benefits of the Disney Vacation Club, including the DVC Reservation Component, the reservation system that applies to Club Members reserving DVC Resorts other than the one they own. DVD and BVTC then, via a new DVC Resort Agreement for Riviera, made substantial changes and deletions in relation to all previously existing DVC Resort Agreements, and added new terms which prohibit post Jan 19, 2019 resale purchasers from ever using the DVC reservation Component to reserve Riviera . The issue is simply whether DVD and BVTC could enter into and enforce such a DVC Resort Agreement. An examination of the terms of the prior POS's and applicable agreements shows it is not a valid agreement. The following uses references to the BWV POS documents but others are the same in relevant respects, although applicable section numbers differ.
Some Key Definitions: the documents in various places (including disclosure documents, declarations, and the DVC Resort Agreemen) define a "Club Member" as the Owner of record of an Ownership Interest in a DVC Resort. An Owner is defined as the owner of any unit in a DVC Resort. Neither definition excludes any resale purchasers. A "DVC Resort" means each resort entitled to access to the DVC Reservation Component. The “DVC Reservation Component” is the exchange reservation component operated by BVTC through which Vacation Homes in any DVC Resort can be reserved with DVC Vacation Points. “DVC Vacation Points” are Home Resort Points that are converted to Disney Vacation Points for the purpose of reserving a DVC Resort other than the one owned by the Club Member.
Club Member: The documents expand on who a Club Member is and the rights of a Club Member. Membership in the Disney Vacation Club is deemed to be an appurtenance to every Ownership Interest. Upon recording of a deed, the Club Member is “automatically entitled to enjoy the services and benefits associated with membership in the Club.” If a member transfers his Ownership Interest to another, the transferee automatically becomes a Club Member. (Declarations §5.2.) if DVD fails to exercise its right of first refusal in a resale and a sale is completed, the transferee automatically becomes a Club Member. In fact, that resale purchaser has no right to turn down or attempt to exclude himself from Club Membership. (Id §13.1.) Thus, by the terms of POS every resale purchaser is an owner and is included as a Club Member, and is entitled to enjoy the services and benefits of the Club. Whenever the POS and agreements use the term “Club Member, “ the term automatically includes resale purchasers.
Use of the DVC Reservation Component: The services provided by the Disney Vacation Club include the use of the DVC Reservation Component. (Definition of Disney Vacation Club in Multi-Site POS.), Every “Owner” (Dec.§12.12b) and “all Club Members” (Multi-Site POS §III.3.b(2)) are entitled to use the DVC Reservation Component to make reservations at any non-owned DVC Resort using Disney Vacation Points. The Member’s use rights are ones applicable on a first come first served basis subject to the limitation that results from the home resort priority period, (Id. §4.)
Adding a New DVC Resort: The addition of any new DVC Resort “will result in the addition of new Club Members” from that resort [which as noted above is defined to include all resale purchasers] who will have the opportunity to make reservations for the use of Vacation Homes at any DVC Resort. Moreover, the addition “will afford existing Club Members” the opportunity to reserve at the added resort. (Id.§III.3.6(b and DVC resort Agreement §6.4)
BWV DVC Resort Agreement(which is.substantially the same as others except Riviera): The agreement is entered into by the association on behalf of “all Club Members.” BVTC agrees “to arrange for the assignment and possession and use of Disney’s Boardwalk Villas Vacation Homes by Club Members from other DVC Resorts and the possession and use of Vacation Homes at other DVC Resorts by Club Members from Disney’s Boardwalk Villas through the DVC Reservation Component.” (§§ 2.1, 2.4.) Again, “Club Members” includes all resale purchasers. DVD enters into the agreement to acknowledge its consent and acceptance of all the terms and conditions of the agreement. (§2.2),
DVD and the association represent and warrant that “each Club Member” has the right to use his Ownership Interest in accordance with the Disney Boardwalk Villa Documents (§4.2), which documents, of course, provide that every BWV Owner and Club Member, including all resale purchasers, can use the DVC Reservation Component to reserve other DVC Resorts. A “Club Member” can participate in the DVC Reservation Component by using Home Resort Vacation Points as Disney Vacation Points to make a reservation at other DVC Resorts. (§5.2.)
As to adding new DVC Resorts, BVTC has the right to determine if a resort should be added as a DVC Resort. “In the event BVTC associates one or more additional resorts as DVC Resorts, the DVC Resort Agreement executed to effect such association shall be substantially similar to this Agreement in all material respects.” (§6-1). The “Club Members” of the new resort will have the opportunity to use Vacation Homes through use of the DVC Reservation Component under the same terms and conditions that are applicable to existing Club Members. In making a decision to add a new resort, BVTC must act “in the bests interests of the Club Members taken as a whole with respect to the Club Members’ opportunity to use and enjoy all Vacation homes and related facilities made available through the DVC Reservation Component.” Factors it must consider include the availability for Club Members to use and enjoy the added resort. §6-2.b.)
The Multi-Site POS points out four things DVD can do when it develops a new resort: (a) it can seek to add that resort as a DVC Resort via a DVC Resort Agreement under which “the new Club Members will have the right to make reservations at existing DVC Resorts along with existing Club Members”; (b) it can keep the new resort separate from the existing DVC Resorts and create an independent exchange program for use by the new resort to trade with the DVC resorts, but no members of the new resort will have the right to use the DVC Reservation Component; (c)it can create a separate vacation club and plan. without making accommodations available to the existing DVC, in which case existing Club members will not use the new resort; (d) it can operate the new resort as a hotel, in which case Club members will have no right to use the new resort. (Multi-Site POS §3.6.f.) Noteworthy is that option (a) does not reserve any ability to enter into a DVC Resort Agreement that prohibits resale Club Members from using the DVC Reservation Component.
The combination of terms leads to the conclusion that DVD and BVTC cannot do what they have done, which is to have a new DVC Resort Agreement for Riviera that does not contain the same material terms as prior agreements and is directly contrary to the rights of Club Members, which includes all resale purchasers, to use the DVC Reservation Component. Moreover, Riviera cannot be a DVC Resort unless its Club Members, both new and resale, have the same rights to use the DVC Reservation Component as existing Club members. Both BVTC and DVD appear to have just decided to ignore the rights set out in the prior POS’s and agreements and create a new DVC Resort Agreement that prohibits resale Club Members from using the DVC Reservation Component.
So if you exclude from the definition of "illegality" BVTC's breach of prior agreements and violation of its fiduciary duties, DVD's intentional interference with the POS and contracts applicable to the existing DVC resorts and their associations and members, and DVD's attempt to effectively amend, without an actual member vote, the material terms of prior POS's and agreements applicable to the Club Members of the 14 existing DVC resorts, then yes, maybe you can conclude it is not illegal.
DVD could possibly have accomplished what it is attempting to do by setting up a new DVC separate from the existing one and then creating some kind of exchange program between the new DVC and the old DVC that allowed trading between the different DVC programs with the restrictions it created for Riviera. That is actually contemplated as a possibility in the existing POS's. But doing that would have required more expensive legal work than was devoted to this change which consisted of just taking the prior CCV POS and agreements as a draft and making some language changes to reach the current result.
As to a lawsuit, it is something to consider. There is, of course, the issue that existing members are not immediately affected and will not suffer actual harm unless they buy resales in the future or go to sell what they currently have and resale prices have diminished as a result. You also have the issue that even if you beat DVD, it could possibly fix the problem by starting over again and doing a separate DVC 2. So you need to weigh whether an immediate suit is needed and would be ultimately effective in doing away with the new resale restrictions.
