fractional ownership can be very attractive, there is a downside. Financing fractional ownership is often challenging, as some lenders may not be familiar with this type of ownership. If you purchase fractional real estate that already has a lender, you may be in luck. If you can pay for it in cash, you may not have a problem at all.
Chapters
A unique type of co-ownership that has recently surfaced is chapter ownership, in which a property is divided among ten owners — that is, a chapter owner shares ownership with nine others. Presently chapter ownership is unique to British Columbia, in places such as Whistler, and to some parts of the United States, such as Lake Tahoe in California and Aspen/Snowmass in Colorado. Owners are allotted five weeks per year — two weeks in the summer, two weeks in the winter, and one week whenever it is available.
Demographics for this type of ownership vary, and include both baby boomers and younger couples with children who are not able to afford a single-detached recreational home in vacation hot spots, which can have an average price of $1 million.
Baby boomers tend to enjoy the benefits of worry-free maintenance. However, such benefits usually come with a monthly price tag in the form of maintenance charges that can be quite costly. Make sure that if you purchase a chapter ownership, you take into account these additional monthly charges.
In any type of co-ownership, especially fractional ownership, find out your rights and obligations before you purchase. You will want to make sure you agree with all of the terms and conditions that are set out in the contract by either the previous owners or the project developers. In addition, it is advisable to consult your local agent to find out the legalities regarding ownership and resale of co-owned properties.
Timeshares
A timeshare is a property that is owned by several people who each have a right to use it for certain periods each year. There are two categories of timeshare ownership: fee-ownership interest and right-to-use ownership.
In fee-ownership interest, the owner has absolute ownership for his or her share of the property, meaning he or she has a right to encumber, convey, or transfer the property for all future time.
In right-to-use ownership, the buyer receives no registrable title. This means you are not purchasing the property with full rights (as you would have with fee ownership). You only have the right to enjoy use of the property for specific periods of time.
Many provinces currently do not have legislation specifically addressing timeshare ownership. If you are considering buying or selling a timeshare, seek the advice of a lawyer or a real estate agent.
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