Fractional Ownership

What is fractional ownership?
Fractional ownership is an arrangement in which a property, most often a vacation home, is divided into equal shares and each share is owned by a separate individual or entity. Typically, each co-owner owns a percentage of the property and is shown on the title and deed as an owner. (Homes within Reserve at Lakota, for example, are being sold in 1/6 shares equating to roughly 17% ownership per share).

 A detailed co-ownership agreement, a recorded declaration of covenants conditions and restrictions (or “CC&Rs”), or a combination of such documents, allocates usage rights, costs and responsibilities among the co-owners.

Why fractional ownership?
Fractional ownership makes sense for a variety of reasons and for a variety of buyers. Some dream of owning a vacation home but cannot afford the type of vacation home they want or do not want the year-round burden of property management and deferred maintenance. Others who can afford a luxury vacation home may want to diversify their real estate portfolios by buying fractional interest in multiple vacations homes around the world. No matter the buyer profile, fractional ownership allows a second-home owner to share the cost, burden and risk of second-home ownership equally with others. Of course, in exchange for spreading the costs and risks, one does give up some usage rights and freedoms that one would have if they owned the property alone. Within Reserve at Lakota, each share includes full-service property management, meaning the burden of maintaining the home is alleviated entirely.
 

How does fractional ownership differ from a timeshare?
From a strictly legal standpoint, the term “timeshare” refers to any arrangement under which a group of people shares use of a property based on time, regardless of whether they own the property. From a practical standpoint, there are significant differences between most of the arrangements historically referred to as “timeshares”, and most modern fractional ownership arrangements. Old-fashioned timeshares typically did not involve direct ownership of real estate, meaning that the users of the property did not own or control it but merely owned the rights to use it for certain periods of time. Modern fractional ownership almost always involves direct ownership, meaning that each user has a deeded interest in the property.

Thus, a fractional owner actually owns real property, not just the rights to use a property.
 

How do fractional home co-owners allocate usage?
The most popular model for allocating usage rights is the “Usage Assignment Approach”. A version of this model has been adopted by Reserve at Lakota. In the “Usage Assignment Approach”, each owner is assigned the exclusive right to use the home during a specified number of weeks or months each year. A usage pattern will equitably allocate specific occupancy dates via a rotating calendar that gives owners occupancy in every season throughout the year. This system, called a Rotating Priority System®, also ensures that all owners will have equal access to high-demand, peak-vacation periods over the years.

Model Home Lease-Back Available
	Grand in scale and rich in amenities, The Larkspur represents an incredible opportunity to own the benchmark property in Reserve at Lakota. As the first and largest home slated for completion in Phase I of Reserve at Lakota, The Larkspur seeks to set the standard for what the modern mountain vacationer should expect in their home away from home. more...
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