What is shared ownership?Shared ownership also known as fractional ownership in a private residence club is a form of second home real estate ownership. An owner becomes a "partner" with other owners in the same unit. The unit is professionally managed and maintained usually by a hospitality company with a known reputation for exceptional quality. That means when you choose to use your vacation home, your stay is completely hassle free.
How did the concept of shared ownership develop?According to current studies the average second homeowner uses his or her property only 17 days per year but pays for 365 days of the year. Shared ownership offers a sensible, problem-free way to balance your vacation time usage to your investment in a second home.
Is ownership in a private residence club the same as owning real estate?Absolutely. You enjoy all the rights and privileges of owning fee simple deeded real estate. That is, you can sell your property at any time at any price, will your share to your heirs, rent it, allow friends to use it, invite guests to share it and not least, escape to it with only you and your family.
Is the shared ownership concept the same as timeshare?A private residence club is a form of shared ownership where you have ownership and a deed to the property. With timeshare you only have a right to use and may or may not have deeded ownership.
Why is the shared ownership concept suddenly being offered in resort areas?Appreciation of real estate values in resort areas in recent years has escalated to a point where the average person can't afford to own a resort second home. The value of shared ownership just makes common sense. Rather than paying full price for a full interest in a second home, you purchase a one-eighth to one-fourth interest at a fraction of the price.
How do members reserve usage of the residences?Planning and reserving your vacation time is easy, with members being able to have a schedule in advance of guaranteed vacation weeks each year. On top of the weeks you purchase, you can also use other units on a "space available" basis as often as you like and usually pay only modest housekeeping fees.
What if I buy a studio and want to stay in a two-bedroom residence?You can usually upgrade into larger residences using a "space available" program. This option is fantastic for those homeowners who have flexible work schedules and can visit their vacation home during the quieter mid-week periods.
Can I stay at other resorts worldwide as a benefit to ownership?That depends on the individual private residence club. If the club is part of a chain or exchange network, then most likely you will have access to other resort properties around the world.
What about selling my unit?Like any other form of real estate, partners can sell their undivided interest at any time. Shared interest typically increases in value correspondingly to whole ownership real estate thus you gain the benefits of increasing value without buying the whole unit. Each owner holds a fee-simple title to whatever the fractional interest is.
Will my unit be rented out to help offset some of the costs of ownership?Some private residence clubs will rent your shared interest unit on a rotation basis when you're not using it. Income generated can be used to help pay your homeowner's fees, taxes and loan costs.
Is there financing available?There are numerous financing options available for prospective buyers. Generally, up to 90% financing is available. Usually, the individual property has several lenders with whom they've established a relationship, and they can refer you to them. It's a bit more difficult to find lenders for resales of fractionals.
What if I don't know the other owners?Few people know the other owners before their purchase. The ownership structure eliminates the need if you want. There are rules, bylaws and management services that keep the property running smoothly. There is no overlap in calendar dates and no need to interact socially if you don't wish to. However, there may be an annual meeting and through joint ownership, long-term friendships will often form.
The above question(s) 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.