| ion homes are the most extensive use of the | | | | Owners can buy a fractional share in one of these |
| fractional ownership model. After growing in popularity | | | | properties, but are able to trade right of use to their |
| in Europe, the practice first reached the ski resorts in | | | | vacation home for use of a property in a different |
| the U.S., then to the East and West coasts. Now | | | | location. |
| fractional vacation homes are being developed all | | | | Fractional ownership vacation homes are administered |
| through the country, chiefly in Florida, in golf | | | | by a property manager who sees to all business |
| developments and in other resort areas. | | | | affairs, coordinates scheduling of owners' visits and |
| Fractional ownership is also available at destination or | | | | may take care of numerous things to make the |
| residence clubs currently being constructed and | | | | owner's arrival easy and effortless. Owners' individual |
| operated by some key players - Ritz Carlton, | | | | possessions may be removed from their private |
| Starwood, Four Seasons, Hyatt and others. These | | | | storage area and placed in the home, prepared for |
| corporations manage sizeable resorts in California, | | | | their arrival. It is possible to have the refrigerator and/or |
| Florida, and the East Coast. Residence clubs also exist | | | | liquor cabinet supplied with specified items; tee times, |
| on a smaller scale, often as a portion of a hotel or | | | | tennis lessons, child care, spa appointments and |
| residential development whose major purpose is to | | | | charter fishing can be set up. |
| lodge short-term guests or to sell residences to | | | | A fractional share of a vacation home entitles the |
| individual buyers. | | | | owner to a specified amount of use of the property. A |
| In spite of the diversity of structures a fractional | | | | 1/13 share means the owner enjoys four weeks in the |
| ownership vacation home may take - from luxury | | | | property each year; a 1/6 share entitles one to eight |
| single-family coastal properties to what are essentially | | | | weeks each year. Some fractional properties provide |
| 5-star hotels and resorts; from coastal condo | | | | a fixed calendar, with owners' weeks rotating during |
| developments to residence clubs that are a portion of | | | | the year so there is fair allocation of favorite holiday |
| a larger development –- they all share a lot of | | | | times. Some developments permit owners to trade |
| general characteristics. | | | | time among themselves; others have clearly defined |
| Most importantly, fractional ownership is not a | | | | bidding procedures where an owner may have a |
| timeshare. The distinction is that a fractional share | | | | number of fixed weeks per year and several floating |
| owner has possession of a deeded share for a | | | | weeks, to be determined year by year. |
| percentage of the property. In contrast, timeshare | | | | All the details of the legal and monetary structure of |
| "owner" is entitled to use his property for specific | | | | the fractional vacation property are transparently |
| periods of time; he does not have ownership rights in | | | | described in the deed, LLC Operating Agreement, and |
| the property. | | | | other management instruments. Most fractional homes |
| An alternative structure that is used at times for | | | | have a monthly or quarterly fee assessment that |
| single-family vacation homes is the Fractional Property | | | | provides for operating costs, management, taxes, |
| LLC, basically a holding company in which each share | | | | insurance, repairs, landscaping, and a fund for |
| owner has an equivalent interest. | | | | furnishings replacement. Annual accounting of all costs |
| Whether the fractional share owner holds a deeded | | | | and budget projections for the approaching year are |
| portion of the property or a interest in an LLC, there | | | | made available to share owners for approval and |
| are a number of benefits. If the property goes up in | | | | comment. |
| value, owners' shares also go up in value. Share | | | | The increasing popularity of fractional ownership |
| owners can buy, sell, trade or otherwise convey their | | | | vacation homes is explained by the striking benefits |
| fractional share of the property. Share owners, as | | | | they provide –- particularly, that of having |
| members of the Property Owners' Association, have | | | | access to a luxury vacation home without the |
| say in choices affecting their property. There may be | | | | expense, liability or worries of owning it outright. No |
| tax benefits to the share owner from deducting | | | | repairs, no shopping (unless you want to), no worries. |
| mortgage interest or the fractional share of the | | | | All the owner has to do is show up, unpack the |
| depreciation on the asset. | | | | suitcases and – enjoy. |
| A number of fractional vacation companies manage | | | | Financing options for fractional vacation homes will be |
| properties in numerous locations around the world. | | | | covered in a separate article. |