If you’re looking to purchase a Disney Vacation Club contract you will quickly come across the term “Right of First Refusal”. Right of First Refusal is a legalese term that effectively gives Disney Vacation Development the right to repurchase a Disney Vacation Club ownership that is for sale on the resale market. All DVC contracts resold on the resale market must go through this process. Here are is everything you should know about DVC Right of First Refusal if you are buying or selling a DVC Resale.
Right Of First Refusal Waived
Once you find your perfect Disney Vacation Club contract, you and the seller will work with your resale agent and agree on a price. This price is now set in stone between you and the seller, and the contract is executed. Next, the contract goes to Disney Vacation Development, Incorporated for review. Typically, Disney does not take more than 30 days to review contracts, although this timeline was extended due to COVID-19.
During this time, Disney is evaluating if they will exercise their Right of First Refusal or waive the Right of First Refusal. The majority of the time Disney does indeed waive their Right of First Refusal and the contract then closes between the original seller and buyer as agreed upon. This is the ideal situation, everyone gets what they want! The seller has successfully offloaded their Disney Vacation Club contract, and the buyer now owns the contract and has access to those Disney Vacation Points and membership benefits.
Right Of First Refusal Exercised
However, at the full discretion of Disney Vacation Development, the corporation may instead step in as the buyer of the contract at the same terms the original seller and buyer agreed upon. Once Disney has made the decision to exercise their Right of First Refusal largely nothing can be done. The seller cannot take their contract back or cancel the deal. But ultimately Disney is purchasing the contract so the seller has not really lost anything. The seller is made whole as Disney is buying the contract at the previously agreed upon rate.
Unfortunately, the same cannot be said for the buyer. If Disney Vacation Development exercises their Right of First Refusal the buyer is removed from the deal and they no longer have the opportunity to purchase this DVC Contract. If Disney does act on their Right of First Refusal and purchases the contract, sadly the buyer has no recourse. While the seller is generally pleased regardless of who ends up purchasing their contract, the buyer suffers the loss of their dream contract going to Disney due to Right of First Refusal. Usually buyers would then re-start the purchasing process, again searching through resale listings for their ideal contract.
Why Does Disney Exercise Right Of First Refusal?
There is no official statement from Disney Vacation Development, Incorporated on why or when they choose to exercise their Right of First Refusal. DVC Resale experts agree that it has to do with maintaining the value of Disney Vacation Club overall. For example, if the price a seller and resale buyer agreed upon was egregiously low, that may end up devaluing the DVC overall. It makes sense that Disney wants to protect themselves and DVC Owners against Disney Vacation Club contracts being sold for what they deem is too low a price. Therefore, rather than letting contracts be sold at prices that may devalue the resort to resale buyers, Disney themselves purchases these contracts. Then, this inventory is Disney’s and they are able to sell it directly to buyers.
Another possible reason for Disney exercising their Right of First Refusal may be to increase their inventory at sold out resorts. Purchasing a DVC Shop resale listing is a fantastic way to obtain a Disney Vacation Club contract at a resort that Disney is not currently selling. Most of the resorts are considered sold out–only Riviera Resort and Aulani are not officially sold out at the moment.
Tips For Getting Right Of First Refusal Waived
While the decision to exercise or waive the Right of First Refusal is Disney’s alone, there are some things a buyer can do to better their chances of having the Right of First Refusal waived.
It is highly recommended that buyers work with an experienced DVC Resale broker to receive guidance on recent resale pricing before making an offer on a DVC Resale contract. Just like with residential sales, a resale broker can provide information on recent sales and share which sales have passed through the Right of First Refusal. Making a reasonable offer for the DVC Contract you are interested in will increase the chances that Right of First Refusal will be waived.
Additionally, working with a Resale broker will ensure that all documents are submitted to Disney accurately and in a timely manner, therefore eliminating any extra waiting during the Right of First Refusal or ownership transfer process.
Again, buyers should note that it is completely at the discretion of Disney Vacation Development whether they waive or exercise Right of First Refusal on a resale conrract.
Resale Benefits Outweigh Enduring Right Of First Refusal Process
Remember that by purchasing your DVC contract on the resale market you are able to save an immense amount of money compared to Disney’s direct pricing. Personally, I would definitely recommend buying a resale contract over buying directly through Disney.
Waiting to hear back about Right of First Refusal as a buyer can be stress-inducing, and certainly if Disney exercises their Right of First Refusal that can be heartbreaking. But overall Disney’s Right of First Refusal does tend to protect the value of Disney Vacation Club. This is absolutely good news for when you become a Disney Vacation Club owner, this process helps ensure that if you ever need to sell your contract you will be able to sell for a fair value.
Ultimately, you have no control over Right of First Refusal; that lies solely in the hands of Disney Vacation Development, Incorporated. But knowing about Right of First Refusal is helpful as a buyer to understand the process you will be going through. Your patience through the resale timeline will be well worth it once you are a Disney Vacation Club owner that saved thousands compared to buying directly from Disney!
If you have any questions about Right of First Refusal, or the Disney Vacation Club resale process in general, let us know in the comments down below. And remember, DVC Shop resale experts are here to help you every step of the way!