We believe the best buyer is an educated buyer. Therefore, we recommend that you ask the following questions before purchasing a fractional or membership in a private residence club. The answers will help you determine if this type of vacation home ownership is right for you.
HOW IS THE FRACTION DEFINED?
Each company bases its numbers on several factors, among them seasonal demand and members’ average length of stay. The number of days you get is represented as a fraction of the year, typically a seventh or an eighth.
Technically, for example, an eighth of a year is 46 days, but in practice it can be significantly fewer. The Ritz-Carlton Club in Jupiter, Florida, for example, sells eighth interests, which are defined as 35 days each. The Four Seasons Residence Club in Jackson Hole, on the other hand, will sell sevenths, which also turn out to be 35 days.
WHAT FORM OF OWNERSHIP ARE YOU GETTING?
In the United States, fractional ownership is most often conveyed with a fee-simple deed in perpetuity. In some cases, what’s offered is a lease or a right-to-use agreement. This is more common when the land is in a country or region that restricts property ownership by non-citizens.
WHAT DOES THE ANNUAL MAINTENANCE FEE COVER?
As with condominium fees, maintenance fees for fractionals generally cover taxes, insurance, utilities, housekeeping, landscaping, and upkeep, though specifics vary from place to place. Ordinarily, the fee also includes access to basic resort facilities (spa, pools, restaurants). Make sure you know what the fee is and exactly what it covers.
WHAT ARE THE EXCHANGE OPTIONS?
If your main interest is destination hopping, a private residence club may serve you best. If you mostly want to nest in a favorite spot, vacationing elsewhere just occasionally, a high-end fractional from a multi-property company may offer the best of both worlds. You can exchange a portion of your time at your residence for time at another fractional within the system.
HOW IS TIME ALLOTTED?
In fractional ownership and with private residence clubs, you are typically allotted a certain number of days each year in peak seasons (mountain resorts usually have a peak season in summer as well as in winter), with the remainder in off-season or in so-called shoulder seasons. As an owner, you should be able to pick the exact dates.
The weeks in highest demand, such as Christmas and spring break, are often assigned years in advance on a rotating basis-that way, everyone eventually gets the choicest dates. Swaps are usually possible.
HOW FAR IN ADVANCE DO YOU HAVE TO RESERVE?
The reservation process varies from company to company and can sometimes be quite complex. Each property has its own twist so be careful to review the reservation policies before buying and make sure they will work for your planned usage.
CAN YOU STAY MORE DAYS THAN YOU’RE ALLOTTED?
Most fractional ownership programs let you book additional time on a “space available” basis. Some places even offer unlimited use based on availability.
Typically, you pay what’s termed a housekeeping charge – approximately $100 a night, although the fee varies depending on company and location. This space- available basis allows you to make last-minute reservations. Keep in mind there may be limits on how much extra time you can book, again depending on the company and location.
WHAT ARE THE RULES ON RESALE?
Should you decide to sell your unit yourself, rather than going through the company’s brokers, the new buyer might not be entitled to exchange rights and other privileges so make sure to check.