LFG Fractional Ownership News Blog

by Sherman Potvin

Once you’ve made the decision to purchase a share in a fractional property or residence club, what should you know before you write that first check? The process of purchasing a fractional property is very similar to the purchase of a wholly-owned home with just a few additional items that you should be aware of.

Private Homes

If you are purchasing a share of an individually-owned private home, the process you go through will be determined by whether or not the current owner has a mortgage on the property. If so, the mortgage will need to be paid in full before you can close on your fractional share.

For example, let’s assume that the owner is selling 10 shares of the fractional home at $100,000 per share and the property has a $300,000 mortgage. The owner will then need to sell 3 shares in the home before any closing can take place. You will be expected to put down a small “soft” (refundable) deposit and to sign an agreement stating that the sale cannot take place until 3 owners have committed. How much you will be expected to put down will depend on the size and price of the fraction you are purchasing. In any case, your deposit will be put into an interest-bearing account and is refundable at any time up until you are notified that the owner has 3 committed buyers (or whatever stipulation was put into place in the agreement) and you have signed a Purchase and Sale Agreement. Read the rest of this entry »

by John Gosselin, Esq.

Legal Documents Owners Should Know Something About

Fractional ownership documents fall into two general categories: (i) those that are recorded in the chain of title to the co-owned property and thereby become binding on each subsequent owner even without that owner’s signature, and (ii) those that are unrecorded and bind only those that sign them.

Most fractional arrangements involve a combination of recorded documents like deeds, and unrecorded documents like management agreements, but one should not make generalizations about the kinds of documents or their names since each seller will undoubtedly use their own. Notwithstanding the fact that there are many flavors of documents, it may be useful to become familiar with some common names being used for fractional property documents like, “Declarations”, “User Agreement”, “Agreement to Purchase Real Property”, and “Bylaws.” Since there is no uniform requirement that all documents with a particular name contain the same terms and conditions, it is key that buyers review all documents carefully to make certain that they are getting what they bargained for. Read the rest of this entry »

by Sherman Potvin

Participating in an Inspection Tour or Discovery Visit at a fractional resort allows you to “try it on” and make sure that the property is the right fit for you and your family. You will have the opportunity to experience firsthand exactly what you might expect as an owner. This is your chance to ask all the right questions, make note of the answers and come to an informed decision.

Below are the 13 essential questions that you should ask during your visit. The answers to these questions should be the foundation for any decision you may make. Read the rest of this entry »

If you’re interested in learning more about fractional ownership property in Hawaii, you might want to check out the website of realtors Donna and Tom Rice. Their website covers Frequently Asked Questions, Legal Aspects, comparisons to Timeshare Ownership, and more. Another good resource for this type of info is Island Fractional Homes.

The following is an article posted by Jim Walberg of Caribbean Islands Realty.

What criteria are Caribbean resort/fractional developers considering when buying Caribbean real estate?

With the Boomers from the U.S., the Brits and the Europeans, the Canadians, and the buyers from South America flocking to buy up Caribbean properties, developers are getting much more picky with the islands and the properties they are considering for their resort developments. It doesn't matter if it is full ownership properties or fractional ownerships, at some level the price point becomes out of reach for their target market buyers within the above geographic groups.

Read the rest of this entry »

Three reviews have been posted of Sherman Potvin’s book “Fractionalize to Maximize: Dividing Your Vacation Home into Profit”. Sherman is a leading fractional consultant and the founder of Luxury Fractional Guide. Here are excerpts from the reviews:

Cottage Blogger
December 3, 2007
“The first fifty pages outline what fractional ownership is; offers suggestions on why owners might choose to go this route; how to prepare a property for sale, and generally provides an insightful 'how to' on the process. I was particularly interested in the section on setting the selling price, calculating fees on expense and maintenance, and establishing a Home Owners Association contract…. For investors, realtors, and anyone seriously interested in selling their property creatively and maximizing the potential for profit, the book has a lot of value in its pages.” Read the rest of this entry »