| Vacation homes are the most widespread use of the | | | | properties in several locations around the world. |
| fractional ownership model. After growing in popularity | | | | Owners can buy a fractional share in a single property, |
| in Europe, the system first spread in the U.S. to ski | | | | but are allowed to trade access to their vacation |
| resorts, and after that to the East and West coasts. | | | | home for use of a property in a different location. |
| Now fractional vacation homes are being developed | | | | Fractional ownership vacation homes are handled by a |
| throughout the country, chiefly in Florida, in golf | | | | property manager who sees to all business affairs, |
| developments and in other resort areas. | | | | organizes scheduling of owners' visits and may take |
| In addition, fractional ownership is offered at destination | | | | care of numerous matters to make the owner's arrival |
| or residence clubs currently being built and managed | | | | uncomplicated and effortless. Owners' personal things |
| by various key players -- Ritz Carlton, Starwood, Four | | | | may be taken out of their private storage area and |
| Seasons, Hyatt and others. These corporations | | | | placed in the home, ready for their arrival. It is possible |
| administer sizeable resorts in California, Florida, and the | | | | to have the refrigerator and/or liquor cabinet supplied |
| East Coast. Residence clubs also exist on a reduced | | | | with specified items; tee times, tennis lessons, child |
| scale, frequently as a portion of a hotel or residential | | | | care, spa appointments and charter fishing can be |
| development whose primary purpose is to house | | | | prearranged. |
| short-term guests or to sell residences to individual | | | | A fractional share of a vacation home entitles the |
| purchasers. | | | | owner to a specified amount of use of the property. A |
| Despite the variety of structures a fractional | | | | 1/13 share means the owner enjoys four weeks in the |
| ownership vacation home may take -- from luxurious | | | | property every year; a 1/6 share allows for eight |
| single-family coastal properties to what are essentially | | | | weeks every year. Some fractional properties have a |
| 5-star hotels and resorts; from coastal condo | | | | set calendar, with owners' weeks rotating in the |
| developments to residence clubs that are a portion of | | | | course of the year, resulting in fair sharing of favorite |
| a larger development -- all together they share many | | | | holiday times. Some developments permit owners to |
| general characteristics. | | | | trade time amongst themselves; others have clearly |
| Most importantly, fractional ownership is not a | | | | defined bidding procedures where an owner may |
| timeshare. The difference is that a fractional share | | | | have several fixed weeks per year and a number of |
| owner possesses a deeded share for a fraction of | | | | floating weeks that are determined year by year. |
| the property. On the other hand, the timeshare "owner" | | | | All the details of the legal and financial structure of the |
| is entitled to use his property for specific periods of | | | | fractional vacation property are clearly laid down in the |
| time; he does not have ownership interest in the | | | | deed, LLC Operating Agreement, and other |
| property. | | | | management documents. Most fractional properties |
| An different structure that is used at times for | | | | have a monthly or quarterly fee assessment that |
| single-family vacation homes is the Fractional Property | | | | covers operating expenses, management, taxes, |
| LLC, in effect a holding company in which each share | | | | insurance, maintenance, landscaping, and a fund for |
| owner has an equivalent interest. | | | | replacing furnishings. Yearly accounting of all expenses |
| Whether the fractional share owner possesses a | | | | and budget projections for the forthcoming year are |
| deeded portion of the property or a interest in an LLC, | | | | made available to share owners for approval and |
| there are a number of benefits. If the property goes up | | | | input. |
| in value, owners' shares also gain in value. Share | | | | The growing popularity of fractional ownership |
| owners can buy, sell, trade or otherwise convey their | | | | vacation homes is explained by the noteworthy |
| fractional share of the property. Share owners, as | | | | benefits they afford -- chiefly, that of having access to |
| constituents of the Property Owners' Association, | | | | a luxury vacation home minus the expense, liability or |
| have input into decisions affecting their property. There | | | | worries of owning it outright. No repairs, no shopping |
| may be tax benefits to the share owner from | | | | (unless you want to), no worries. All the owner has to |
| deducting mortgage interest or the fractional share of | | | | do is show up, unpack the suitcases and - enjoy. |
| the depreciation on the property. | | | | Financing options for fractional vacation homes will be |
| A number of fractional vacation companies manage | | | | covered in a separate article. |