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What Happens If One of the Fractional Owners Defaults?

Question

  If I own a fractional in a private residence club and one of the other owners defaults, how does that affect me?  Also, what happens to that other owner and his share?

Joel's Response


  When you purchase a fractional, you get a deed and probably a mortgage, which only affects your “fraction” of the whole ownership.  You are not responsible, nor liable, for the obligations of others to pay their fractional shares of the taxes, HOA fees, insurance or their mortgage.  If they lose their fraction to the bank, for instance, the bank inherits the obligation of the owner.


  What happens if when the developer sells his initial inventory, I purchase a 1/8th share, but he is unable to sell all of the other 1/8th fractions prior to the completion of construction?


  The developer is still responsible for the other 7/8th shares, and this will have no bearing on you.  




The above questions were submitted via e-mail by a visitor to www.condohotelcenter.com. The answer was prepared by Joel Greene, a licensed real estate broker with Condo Hotel Center which specializes in the sale of condo hotel units and fractional ownerships in private residence clubs.


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