megram - Index

megram - 55JulOttawa - Index

if several people pooled their
finances. As property prices rose, the
idea transferred to purchasing part of
a vacation home that the purchaser
would, in any case, use for only a limited
time each year. Fractional ownership
(the highest price versions are
sometimes called private residence
clubs) first became popular in ski
resorts in the 1990s.The idea has now
spread to luxury resorts for all seasons
around the world.
Fractional ownership is partial
ownership of a property. Rather than
one individual becoming the sole
owner, several individuals each purchase
a segment of a resort and so
gain the right to occupy one unit and
use the resort facilities for a specific
number of weeks each year. As well
as reducing the investment in the
vacation real estate, purchasing a
fraction is built around the level of
expected use.
Suppose, for example, that there
are 10 upscale dwellings on the property
and that the fractions for sale are
five-week segments in each building.
Assuming that each purchaser buys
one five-week portion (which could
cost anywhere from an average of
$30,000 to $100,000, depending on
the quality of the facility) there would
Pros and Cons of Fractional Ownership
Pros
Co-owners have access to, and partial ownership of, all resort
facilities.
They make a smaller financial commitment.
They do not have to do any housekeeping or indoor or outdoor
maintenance.
Fractional ownership reduces the responsibilities associated with
title to the property.
Co-owners do not have to worry about the property when they
are not in residence.
Cons
Partial ownership necessitates sharing time with other owners.
The cost of ownership is much higher than independent ownership
because purchasers are also paying for the convenience of
having others look after the property for them throughout the year.
Fractional ownership means that the owners do not have total
control, even inside their vacation homes.
Fractional Ownership vs. Timeshare
Fractional ownership
The purchaser owns a percentage of the property.
In an arrangement similar to condominium ownership, owners pay
annual maintenance fees, which include the property taxes.
The owners form a not-for-profit corporation to manage the property
and employ the developer (or an alternate) to maintain it.
Properties designed for fractional ownership are generally upscale.
Timeshare
The purchaser buys the right to occupy a unit for a number of
weeks, but the developer retains ownership.
Timeshare purchasers do not have any control of what happens on
the property, because they do not own or manage it.
Maintenance fees are usually included in the cost of the time purchased.
Timeshares are built in a variety of price ranges.
July/August 2008 • 27 • Fifty-Five Plus Magazine