What is 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. 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 terms private residence club (or “PRC”), timeshare, shared ownership, vacation home partnership and
In its simplest form, fractional ownership of real property is simply ownership by more than one person of a home, apartment or other real property, with such ownership held as tenants in common (vis–vis other owners), rather than joint tenancy. In addition, rights of usage and occupancy are separated for each owner, rather than being commingled. In other words, each owner has separate periods of time for which the ownership carries the right to sole and exclusive occupancy of the property.
Fractional ownership can apply to anything: cars, yachts, even designer handbags. But sharing possession of a holiday home, popular in the US for years, is finally taking off over here. In brief, fractional ownership gives a buyer ownership and use of a property for an agreed number of weeks each year to enjoy themselves, or rent out for profit. For a yearly fee the maintenance and bills are taken care of by a management company, so the owners are free to relax, rather than spend two weeks redecorating and cleaning out guttering.
Fractional real estate ownership is like ownership of your primary residence. You have the protection of a deeded interest in Fee Simple (not a leasehold or timeshare). Your attorney may tell you it is an undivided Fractional interest as a tenant in common with each of the other Fractional owners, with all the benefits and rights that accompany normal property ownership. Under Hawaii law, a Fractional owner must own at least 60 contiguous days or more per year; any less is a time share. For instance, it is possible, and likely attractive, to own 120 days (FOUR whole months of Kauai Paradise!).
