WHAT TYPE OF SHARED OWNERSHIP AGREEMENT OR FRACTIONAL GOVERNING DOCUMENT IS NEEDED FOR A FRACTIONAL OWNERSHIP ARRANGEMENT?
Every fractional ownership group needs a document or group of documents detailing their rights (especially usage/rental, alteration, financing and resale) and obligations (especially cost allocation, dues structure, repair/replacement, and rules). The document or documents must be prepared in view of the fact that it/they will only be used if the owners disagree, and will only be useful if it can resolve the disagreement (more on this later). Where the fractional owners will hold title to the property (a “direct ownership” arrangement), governing documents fall into two general categories: (i) those that are recorded in the chain of title and thereby become binding on each fractional interest owner without that owner’s signature, and (ii) those that are unrecorded and bind only those fractional owners that sign them. The principle advantages of recorded documents, often called “Declarations” or “CC&Rs” (which stands for “Covenants, Conditions and Restrictions”), are that they reduce th
