What kinds of risks does vacation home fractional shared ownership create?
Fractional ownership involves the risks of sharing use of property with others and relying on them to fulfill their obligations to you. Sharing use means that you will not be able to do what you want when you want, and that others may do things that displease you. Sharing obligations means that necessary maintenance and management might not be completed, or worse, that as the result of a co-owner failing to make a payment, a mortgage lender could foreclose on the entire building causing all of the other co-owners to lose use of the vacation home and possibly all of the money they have invested. There is no way to eliminate these risks, but there are ways to diminish and manage them. Perhaps the single most important thing you can do to lower the risk of co-ownership is to have a thorough, written, signed, shared ownership contract that deals with all of the issues, including events you don’t expect to happen, the possibility that people you don’t know will be in the group as the result
Related Questions
- Should the shared or fractional ownership vacation home be held in a limited liability company or limited partnership?
- Do vacation fractional co-owners who are close firends or family really need a formal shared ownership contract?
- What kinds of risks does vacation home fractional co-ownership create?
