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Introduction To Fractional Ownership

The phrase “fractional ownership” is typically used to describe shared ownership of a vacation or resort property by people in an arrangement which allocates usage rights based on time. In other words, only one owner will be allowed to use a particular home or apartment at a particular time. The terms, private residence club (or “PRC”), destination club, vacation club, quartershare, timeshare, and vacation home partnership are also used to describe variations on these arrangements, and there are no consistent distinctions in the use of these descriptions. Fractional ownership arrangements should not be confused with condohotels or condotels, in which each participant has whole ownership of a particular hotel room or suite.

Fractional ownership arrangements can be applied to a single home or apartment (typically referred to as a “one-off fractional”) or to a multi-unit building or resort development. In multi-unit developments, each co-owner may have ownership rights to all the units, some of the units, or only one unit, and his/her usage rights, and cost obligations, may or may not correspond to his/her ownership rights. Groups can be assembled by a real estate development or hotel company, an individual builder, Realtor or seller, one or more of the prospective buyers/users, or groups of friends or family members.

The Difference Between Fractional Ownership and Timeshare

It is incorrect to say that timeshare involves the sale of time, weeks or usage, while fractional ownership involves full titled ownership. Today, many timeshare properties involve titled ownership. The real differences between timeshares and fractional ownership arrangements are:
  • Fractional ownership typically involves more usage than timeshare for each owner each year
  • Fractional ownership typically involves fewer owners than timeshare
  • Fractional ownership is typically more expensive than timeshare

  • Why Is Fractional Ownership Becoming So Popular?

    Although many people dream of owning vacation property, most either can’t afford the type of property they want, or reason that they would not use the vacation home often enough to justify the expense. Fractional ownership provides a solution to these problems by allowing each co-owner to pay only a fraction of the costs and ongoing expenses of vacation home ownership, and share the risks of unforeseen maintenance problems and value depreciation with others.

    Fractional ownership is increasingly popular among those who already own a vacation home (or even a primary residence in a resort community) but feel burdened by the expense, upkeep and management of a property they use infrequently or are regularly absent from during certain seasons. Rather than sell a home they love, these people opt to sell one or more fractional ownership interests to others who will use the home when the original owner does not and will help share the costs and burdens. Besides lowering cost and time burdens, shared ownership can free capital for the purchase of other resort property, or for alternative investments. It can also provide an alternative when selling the entire home proves difficult due to market conditions.

    Fractional ownership can be a significantly less expensive and more attractive alternative offering in a new development, giving some buyers an incentive or opportunity to purchase that would otherwise be lacking. The builder or developer can thus open up a new market and access a different group of potential customers by offering fractional ownership, a particularly attractive opportunity when whole ownership sales are slow. Marketing a less costly ownership option may also increase the overall visibility of, and traffic to, the project sales sites, and increase sales volume of whole ownership. Finally, opening a project to fractional ownership will generally increase overall usage of the property, which can enhance the viability and financial performance of amenities and ancillary services such as a spa, golf course, ski resort, or restaurant.

    Learn More About Fractional Ownership

    This site contans many articles on all aspects of fractional ownership, categorized for easy navigation under the links below.

    General Information on Fractional Ownership
    Get started with the basics of fractional ownership and other vacation home sharing arrangements with a short overview of fractional ownership, a more comprehensive explanation of fractional ownership, definitions of fractional ownership terms and lingo, characteristics of fractional ownership and timeshare product categories, and essential tips for smaller, less formal vacation home sharing partnerships and family ownership groups.

    Designing and Creating Fractional Ownership Arrangements
    Guides and tips for vacation home owners, developers, and real estate professionals interested in selling property as fractional ownership, and individual buyers interested in organizing a fractional ownership group. Step-by-step instructions for analyzing the fractional ownership potential of individual homes and condominiums, and assessing the feasiblity of offering fractional ownership within a resort or other real estate development. A detailed article describing the various fractional ownership usage arrangements, and another explaining how to price fractional ownership offerings.

    Marketing and Selling Fractional Ownership
    Learn the most effective marketing and sales techniques for fractional ownership, private residence clubs, destination clubs, and quartershares. Most people quickly understand the benefits of fractional ownership arrangements, but can find many reasons to delay the decision to buy. To sell out a fractional ownership project quickly and cost-effectively, it is critical to understand how to expose the property to the right customers, explain the concept of fractional ownership in a clear and compelling way, and then convince the customer to buy now instead of later. These articles will explain the best practices used with the most successful fractional ownership properties, from individual homes to large private residence clubs.
    Fractional Ownership and Residence Club Buyer Guide
    Operating and Managing Fractional Ownership Groups
    Fractional Ownership and Timeshare Law
    Fractional Ownership Resources
    Marketing and Selling Fractional Interests
    Fractional Ownership Primer For Real Estate Agents
    Using fractional ownership to increase commissions and sales: slides from speech to the CAR Global Real Estate Forum. (4572 KBytes, PDF)
    Using Real Estate Agents to Sell Fractional Properties
    Ten keys to introducing Realtors to fractional ownership and enticing them to market and sell fractional property.
    Buyers of Fractionals, Timeshares, and Private Residence Clubs
    Comparing and Choosing Among Fractional Ownership Options
    This article is intended to help you understand, analyze and compare fractional vacation ownership options, ranging from buying into an individual home or condominium with friends or family, to buying into a private residence club resort offered by Ritz Carlton or Four Seasons.
    Fractional Ownership: Timeshare With A Makeover?
    Are fractional ownership, private residence clubs, destination clubs and quartershares the same as timeshares? What are the differences?
    All About Fractional Ownership and PRC Exchange Programs
    How do fractional ownership and private residence club exchange programs work? What are the differences, and which exchange programs are best?
    Pros and Cons: Vacation Home or Fractional Ownership
    Owning a vacation home at a fraction of the cost sounds good. But isn't owning with others asking for trouble? When is fractional ownership better than owning alone?
    Fractional Ownership Video Tutorial
    Video explains the basics of shared vacation home ownership with specifics on how to arrange fractional ownership of homes and apartments in France.
    Operating a Fractional Owners Association
    Starting and Operating A Fractional Owners Association
    Step-by-step operating instructions for a fractional ownership association or any group that co-owns and shares vacation or resort property
    Fractional Ownership and Timeshare Law
    Sirkin’s Fractional Ownership Regulation Guide
    Law, regulations and filing requirements for fractional ownership, residence clubs and timeshare for all 50 states with bullet point summaries
    California Fractional Ownership & Timeshare Law
    Full text of California law on timeshare, fractional ownership, and residence clubs, including registration, advertising, sales, contracts and owner protection (977 KBytes, HTM)
    E.U. Fractional Ownership & Timeshare Directive
    Regulations for fractional ownership, residence clubs, and timeshare sales, contracts and disclosure for every European country with bullet point summary
    Income Tax Apects of Fractional Ownership
    Learn whether dues and expenses paid by owners of residence clubs, timeshares and other fractional ownership arrangements tax deductible (210 KBytes, PDF)
    Fractional & Shared Ownership of Property in France: Tax Considerations
    Key concepts in French real estate transactions, taxation and treaties; tax effects of various fractional ownership structures; tax consequence of vacation rentals and commercial characterization (346 KBytes, PDF)
    Fractional Ownership Resources
    Podcast on Fractional Ownership
    Andy Sirkin explains why fractional ownership makes sense as an alternative to vacation rentals for both vacation home owners and renters.
    Fractional Ownership of French Property
    La Tribune interviews Andy Sirkin on the growth of fractional ownership in France (Francais) (87 KBytes, PDF)
    A Place For All Seasons
    Once upon a time, not that long ago, it was the early adopters who embraced the fractional lifestyle, spotting a trend that grew into a new way to own a holiday home. Now, as the fractional ownership story goes more mainstream, one question many are asking is, is it a lifestyle purchase or alternative property investment - or both? Fiona Klonarides reports for Gibraltar International Magazine (2581 KBytes, PDF)
    Own a Slice of The Ideal Vacation with Fractional Ownership
    Article from Luxury Travel Magazine (summer 2007) (27546 KBytes, PDF)
    Books on Fractional Vacation Home Ownership
    A list of books now available on Fractional Ownership along with links to sites where you can buy them.
    Fractional Ownership Financing Resources
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