Frequently Asked Questions:

What is Fractional Ownership?

Fractional Ownership is an agreement whereby a group of owners share the costs and use of a vacation property. Each co-owner owns a percentage of the property and has a deed listing them as the owner of that percentage. There are documents that describe usage rights, responsibilities, and costs for each owner. Typically each owner buys a fractional interest, usually a 1/12 to 1/4 share, which entitles them to a specified amount of usage per year.

Why Consider Fractional Ownership?

Most people cannot use more than a few weeks or months of a vacation house each year. Fractional Ownership allows them to pay only for a specified number of weeks each year. Because they are only paying for a small part of the purchase price, they can own a bigger, more expensive vacation home than they would have been able to afford by themselves. In addition, the monthly costs of ownership - utilities, property taxes, insurance, etc. are reduced to each owner's proportional share.

Many people do not want the hassle and stress trying to keep up a second home. They simply do not have the time or energy to go to a second home and clean, take care of the lawn and landscaping, and deal with maintenance problems, painting, etc. They just want to relax and enjoy their vacation, not deal with problems. Fractional Ownership takes care of these needs by providing professional management of all maintenance, cleaning, linens, etc.

How much time will I get with my Fractional Share?

This is based on what fractional share is purchased. For example, a 1/12 share equates to 4 weeks per year, and a 1/4 share equates to 12 or 13 weeks per year.

Will I get the same weeks each year to use the home?

The answer to this is found in the Usage Agreement. Each owner is allocated the exclusive right to use the home for a specified number of weeks or months per year. They can use the home, allow friends, family, or business associates to use it, rent it out (if the ownership documents allow this), or leave it empty. Typically, there are 2 types of Usage Agreements. One is fixed where the owner is assigned the same weeks each year. The other is variable, where the schedule rotates each year. For example, an owner may have the first 2 weeks in June the first year, the second 2 weeks in June the second year, and the first 2 weeks in July the third year, and so on. There are many variations of usage plans, so read the Usage Agreement carefully.

How does Fractional Ownership differ from Time Shares?

Timeshares typically do not involve ownership of the real estate. With Fractional Ownership, each owner has a deeded interest in the property. The extent to which the deeded interest provides the owner with control over ongoing costs and how the property is managed is governed by the ownership documents (may be called Declaration of Covenants, Articles of Incorporation, Management Agreements, etc.). But normally Fractional Ownership provides each owner with much greater control of future costs and how the property is managed than a timeshare. Timeshares are usually smaller in size - usually about 1/2 the size of a Fractional Ownership home. Timeshares are also purchased for one or two week periods per year, versus 1 to 3 month periods per year for Fractional Ownership. Because they are purchased for shorter time periods, Timeshares typically cost less than Fractional Ownership shares. Timeshares typically lose value over time, while Fractional Ownership shares will follow the single family home real estate market, with appreciation occurring in normal markets. Fractional Ownership shares typically, but not always, have higher quality construction materials and home furnishings than Timeshares.

How Do You Purchase a Fractional Ownership Vacation House?

Well, the straight answer is ........pretty much like you purchased your first house. You complete a Purchase Agreement form and sign it. This document describes what you are buying, how much you are agreeing to pay for it and how that money is to be paid, and any other terms and conditions of sale that are agreed upon between the seller and you (financing, closing date, inspections to be done, etc.).

Then you apply for financing (if you need to borrow money), meet the requirements of a lender, have inspections of the property done by a professional real estate inspector, and finally attend a closing with a real estate lawyer where all required documents are signed and money is exchanged in return for a title and keys to the property.

The main difference between purchasing a fractional ownership share and your first house is in the documents that accompany the sale. There will be a document (usually under the name of Declaration of Covenants, Conditions, and Restrictions) that describes the common furnishings, amenities, the usage agreements and schedules, future sale and transfer rules, and any restrictions on trading, renting, or alterations, maintenance fees, special assessments and charges, insurance, etc. You should also see an Articles of Incorporation document if the property is owned by a Corporation (usually a nonprofit one). There should be a Bylaws Document for the homeowner's association that is similar to one you will see in most subdivisions today that describes officers and any board membership, meetings, voting, powers and duties. And lastly, there may be a property management agreement describing how the property is to be managed by a professional management company - in terms of maintenance, supply of goods and services, and compensation.

How does the financing work for a Fractional Ownership Vacation Home?

Just like it does for the first house you purchased. You apply for a loan, meet the lenders requirements, get approved, and sign the papers at the closing. The only difference is that there is not a secondary market for these mortgages to be resold in, so your local bank will hold these mortgages themselves rather than resell them.