I am often asked how a “partnership” works for vacation properties. The following is a brief description of fractional vacation ownership.
Many vacation properties can be owned by fractional vacation ownership interest or shares.
Many people who wish to own vacation property cannot afford or justify bearing the full cost, maintenance and management burden when they expect to use the home only occasionally. Fraction vacation home sharing creates a situation where the cost and management burdens are more closely related to actual usage of the home. It is an excellent alternative to vacation rentals.
Fractional ownership is fee-simple ownership and is deeded as such. The homes are not time-shares. The only similarity to a time-share is that the co-owners divide time to stay in their condo, rent it for income or keep it vacant. At first, the co-owners get together to decide which fractional ownership arrangement they want to use or to write a new agreement. It is advised to seek legal counsel for help in writing a fractional ownership agreement. A typical fractional agreement includes rules governing how often each owner can use the home, how usage is reserved and managed, how expense and other responsibilities are shared, when and how each owner can leave the group by selling his/her share.
Each co-owner has the right sell or give away his/her ownership interest at any time. It is written in most agreements that the remaining owners will have “first right of refusal”. That means the remaining owners can have a window of time (usually 10 days) to purchase the share at the asking price. If there is not interest to purchase from the existing owners, the selling owner may sell his/her share to the public. The remaining owners may ask to meet the new, incoming owner to agree that this would be a good match to the co-ownership.
Gail Cruse can be contacted by Clicking Here
She is an Oceanfront and Vacation Property Specialist.