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Frequently
Asked Questions About
Fractional Ownership. |
Please
click on any question below.
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Why
1/8th shares versus more, or less owners?
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Many forms of vacation
property ownership, such as most time shares are based on just a
few weeks of use per year. This effectively becomes more like a
prepaid hotel vacation. True pride of ownership can only come
from the exclusive right to use your property on a more frequent
basis. With 1/8th share deeded ownership, you will have the
right to use the property as often as you wish, subject to the
tiebreaker rules. You'll enjoy usage throughout all seasons,
providing you a complete appreciation of your property and the
rewards and activities of the community. Studies have determined
that the average 2nd home is used less than 30 days per year.
Our 1/8th share ownership, provides you with the optimum amount
of usage time, while not burdening you with more upfront
out-of-pocket cost, ongoing expense or use time than you may
need. Meaningful and fulfilling ownership, not limited access
that doesn't make sense, and doesn't provide you with the real
benefits of a vacation property of your own.
Please note, while 1/8th is our most popular ownership
structure, some of our Fractional Villas®
are offered in 1/4th, 1/6th, 1/7th, 1/10th and
1/12th interests, depending on local zoning codes and market
conditions. In these cases, all documents and operating
agreements are adjusted accordingly along with the frequency of
use.
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Can
I buy more than one share?
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Yes, you may purchase
more shares to allow you and your family more frequent use of
the property. You can also buy additional interests as they may
become available in the future from your fellow share owners, or
you may sell your fractional ownership interest to another
owner, or any third party, at the then fair market value.
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How
do I know my schedule for use?
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With our Priority
Reservation System you will be able to plan ahead, years in
advance, knowing exactly when you have the highest priority
making it optimum for you to make your reservation. Or, you may
use it on a moment’s notice, subject to availability, and your
priority over other owners for a certain week. One week per
year, in the spring, is reserved for routine maintenance and
deep cleaning. This provides for 51 weeks of total owners
occupancy, per year, or if used equally in a particular year,
just under an average of 7 weeks per owner. For more information
see our Priority
Reservation System.
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Can
I use the property on holidays?
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Each owner will have
the highest priority for every specific holiday and every week
of the year, once every eight years. This means that you will
have an equal opportunity to reserve the property on those
holidays that are important to you. Owners may independently
swap their priority, or scheduled time with each other,
combining weeks, or opting for time that better fits their
respective schedules. Either way, you won't have the customary
frustration of not being able to spend more time at the
property, knowing that it won't be vacant for long, or unused,
while still providing you the option to use it throughout the
year.
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As
a fractional interest owner, will I have exclusive use of the
property?
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Yes, the property will
be exclusively yours to use for up to one week at time. Weekly
periods begin on Monday afternoons, and end on the following
Monday mornings. The housekeepers completely clean the property
and prepare it for each owners’ arrival. You may arrive any
time after the scheduled arrival time. Many owners will skip the
weekdays and arrive for extended weekends only. Thus, another
owner may use the property, on those days when you are not,
maximizing everyone’s use. In some years you might end up
using the property 10, 15 or even 20 weeks a year, when other
owners don‘t wish to use it as much! For more information see
our Priority
Reservation System.
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Where
did the concept of fractional ownership originate?
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The concept isn't new,
but the term "fractional ownership" is. Friends,
relatives, and business partners have been pooling their
resources to buy a second home for centuries. In the early
1990's, fractional ownership of private jets became popular,
followed by yachts, then luxury vacation homes. According
to the National Association of Realtors, in 2004, "36% of
all home sales were second homes purchased for either vacation
use or investment". Despite the current market
slowdown, the interest and demand for fractional ownership is
growing every year, as more and more consumers discover that
they can have their proverbial dream vacation home, without all
of the expense, hassle or guilt!
Fractional Villas®
recognized the need for an exclusive vacation home,
where a true sense of pride of ownership exists; and the
benefits of making a wise purchase can be realized with an
eighth-share fractional deeded ownership, instead of a club
membership in an elusive complex, with ever changing properties.
Whether it’s a vacation villa, private jet, or yacht,
fractional ownership is proving to be the best way to purchase
and enjoy high-value assets that you don't use fulltime.
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Can't
I just find a property and purchase it with my friends?
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You can, however, with
Fractional Villas®
you don't need to convince 7 others to buy a share
in your dream vacation home, which as most people know, can be
very difficult. Further, you will need to prepare a
comprehensive set of CC&R's, operating by-laws, rules and
regulations, as well as all of the legal and HOA documents for
purchase and shared ownership. Instead, with Fractional Villas®
you can just make your own decision to own a share
in a larger and more luxurious villa, than you could normally
afford, in an area where you would otherwise be priced out of
the market. With our typical Fractional Villa, you'll own a
1/8th share with 7 other proud owners, not hundreds, like with
the "residence clubs" or timeshare properties. We do
all of the work, and take all of the risk, identifying the
property, furnishing it, appointing the property manager and a
team of maintenance professionals, preparing all of the legal
documents correctly, and marketing the property to just 8
exclusive owners.
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How
does fractional ownership primarily differ from the economic
considerations for wholly owned real estate?
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Primarily, fractional
ownership allows you to afford a much more luxurious, elegant
and larger vacation property than you would normally on your
own. All costs and expenses are all divided and shared amongst
the owners vs. carrying the burden by yourself. Ownership is
evidenced by a fee simple "Tenants In Common" grant
deed to the property, backed by title insurance, exactly like
the home you live in now. However, you still enjoy all the
benefits of real estate ownership. This is a true value catering
to discriminating investors who are looking for a second home
but really don't want the full burden of owning a second home.
The more expensive the property, the more fractional ownership
makes financial sense!
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Are
there legal agreements between the co-owners?
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Fractional Villas®
has developed, what is considered one of the
"best set of proprietary fractional ownership
documents" in the industry, from the "co-owners point
of view". Each property is owned, governed and operated by
a very tight package of legal agreements that remove virtually
all ambiguity and questions for each of the owners. These
agreements help to assure each owner of their independent quiet
enjoyment, legal control, property rights and ownership
protection. Without these agreements, a group of owners would
effectively be operating on a handshake, with faith that
everything will work out. This may work for friends and family
(until there is a problem), but a handshake cannot be relied on
for independent owners, brought together under this
sophisticated structure. We are confident that after your
review, you will agree that virtually every concern has been
addressed and prescribed for the benefit of all co-owners,
assuring a very safe and enjoyable ownership experience.
This package of documents is tailored specifically to each
property and the local municipal codes, and is made available to
each buyer in escrow, during their contingency evaluation
period.
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Who
are fractional properties really for?
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This type of vacation
real estate ownership is ideal if you want the benefits of
owning an impressive second home (typically of more value than
you would afford on your own), complete with management
services, located in a very exclusive community, but you can't
justify whole ownership because of your projected limited use.
Most fractional owners are frequent visitors to the resort area,
and want something they can call "their own", with
friends and family members. These buyers aren't looking to be
sold vacation time, but instead want an upscale vacation
property without the responsibilities and costs associated with
a wholly owned home. Fractional ownership is a lifestyle choice,
yet an affordable and sensible way to purchase a second home,
providing most of the benefits of true property ownership. With
Fractional Villas®
, you can own several vacation properties - in
several parts of the world - collectively for the price of just
one!
Is
co-ownership right for you?
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How
do Fractional Villas®
differ from residence clubs or condo hotels?
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Both offer luxurious
accommodations and services for the person seeking a vacation
home. However, the residence club/condo hotel tends to be an
individual room or suite located within a major multi-unit
complex. In most cases, the ownership is of a "like kind
unit", meaning you will rarely stay in the same unit twice.
Effectively, you have bought a “floating floor plan” in the
complex, even though you may have title to a specific property,
or unit. With a Fractional Villa you will own and enjoy the same
property, on every visit, not just a floor plan where you float
from similar unit to unit. Additionally, a private estate
Fractional Villa assures you the highest degree of privacy. No
public hot tubs, lobbies, parking lots, or hallways!
Residence clubs typical "$25,000 annual fees" equate
to $555.00 per day, with just 45 days of usage rights. The lost
interest (cost of funds) for the typical hefty, non-interest
bearing $350,000 to $400,000 membership fee adds another
significant cost. At just 5%, your cost of funds is $20,000 per
year (lost interest that could have been earned in a typical
Certificate of Deposit). So, your combined effective cost of
funds and annual fees, per year, is about $45,000, before resale
fees.
Under most club plans, if you wish to cancel your membership,
they charge a significant 20% resale fee. Only 80% of the
original fee is refundable should you decide to resign your
"club membership" So, lets say you retain your
membership for 10 years, that's another $80,000 charge tagged
onto the end (resale fee), or about $8,000 per year.
Effectively, under this scenario, you will have paid about
$48,000 per year. That's $1,066 a day for your use with no
equity upside!
What would that $400,000 have made in equity, when leveraged
into a fractional deeded, "fee" ownership interest in
a resort property, over the same 10 years?
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How
is the home furnished?
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Professional
decorators have furnished each home in a first class, upscale
style, befitting each locale and the architecture. Not trendy,
and not tacky. Elegantly appointed from luxurious furniture, to
paintings and museum quality panoramic photographs of the local
area, decorator touches, draperies, dishes, appliances, cooking
gear, linens, towels, comforters, even separate sets of summer
and winter bedding. Every detail is thought out to make you feel
at home – in some ways better than home. Even board games,
pool tables (subject to space), and outdoor toys from mountain
bikes, to sleds, pool floats and beach toys as appropriate for
your locale, are all provided. No reasonable cost is spared, and
nothing is overlooked!
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Can
I have guests stay at the property?
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Unaccompanied family, friends,
business associates, or anyone else you designate, can use the
property as your guests, provided you have the highest
Reservation Priority for the subject week of use. Guests are treated as family and
may join you anytime, or use the property should your schedule not allow
you to attend at the same time. Guests shall be your
responsibility and required to respect the CC&R’s, Bylaws
and Rules & Regulations.
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Can
I rent out my unused time?
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Certain villas do
allow for the rental of your priority time, however, many do
not. In those cases, only owners and their direct guests may use
the property. This also helps maintain less wear and tear on the
property, and makes its use more personal and exclusive. With
rental potential, some villas may qualify for 1031 exchanges,
and additional tax benefits, that your professional tax advisor
will need to determine for you.
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Do
I have the same tax considerations with fractional ownership as with
purchasing the entire property exclusively?
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Fractional ownership
is the same as ownership of any other real estate, wherein you
enjoy potential appreciation, depreciation, interest and expense
deductions. At your discretion, you may sell your share of the
property, gift it, or leave it to someone in a Will. Your tax
advisor will be better suited to provide specific details, and
advise what your individual tax circumstances may offer. You may
also register title in your children’s names to assist in
estate planning.
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Are
there concierge services available to me?
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Personal
concierge services are available to every owner as desired.
Prior to each owner's arrival, the property manager will be
certain the toiletries and linens are well stocked, make sure
the heating and air conditioning is set at your preferred
temperature, have your personal framed photos placed right where
you left them on your last visit, instruct the housekeeper to
store your vacation clothes for you in a secure storage area,
and put them back in the closet before you arrive. At your
direction, for an extra fee, our Property Concierge will
be sure to spoil you with all of the frills, from
personal grocery shopping to stock the fridge and kitchen with
your favorite foods and beverages, to a providing a butler, a
private chef to prepare your perfect party dinner, a bartender,
a nanny, a chauffeur to and from the airport or for a night out,
a bodyguard or any special security, or just ordering and
arranging fresh flowers before your arrival. Tee times,
restaurant or theater reservations, a day of fishing, yachting
or sailing, skiing or surfing lessons, a private massage, hair
and spa services, laundry, dry cleaning and even child daycare
or pet care services are all available to you as an owner of a
Fractional Villa.
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Is
there a valet to help me on arrival?
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Our optional “Meet
& Greet” service provided by the property concierge will
have a courteous valet meet you at the property upon your
arrival. They will arrive before you do, adjust the temperature
of the house and the hot tub, turn on the lights, shovel any
snow on the entry stairs and walkway, light a fire in the
fireplace, turn on the music to your favorite selections, help
you bring in your luggage, and even pop the cork on your
favorite bottle of wine! All you need to do is arrive. No
worries!
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What
are the Operating Costs associated with fractional ownership?
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In addition to the
initial acquisition cost, you will share in the ongoing
Operating Expenses including the utilities, property insurance, all maintenance, general household
and cleaning supplies, toiletries,
fireplace logs, interim housekeeping,
deep cleaning, repairs, the replacement of all furnishings as needed, security service,
bookkeeping, and the Property Manager’s fee. All
expenses are passed through to each Co-Owner on an equal and
proportionate basis without markup by Fractional Villas®.
The property manager works on a fixed annual fee, without a
conflict of interest. Only optional concierge services will be
billed directly to any owner requesting them on an a la carte
basis.
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What
happens if another Owner doesn’t pay his share of the on-going
Operating Expenses, or property taxes?
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Like a condominium home owners association, if an Owner does not pay their share of any expense, as and when due, the
fractional HOA may foreclose on that Owner’s deeded share, following a strict protocol, and reimburse the HOA from the proceeds of the
foreclosure. It is unlikely any action of this severity will ever be necessary.
In no case, is your deeded share ever in jeopardy by another Owner’s
default. The buyer of the “foreclosed share” will then step into the shoes of the defaulting shareowner and
thereafter be responsible for that equity share’s respective share of expenses.
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Who
manages and maintains the property?
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The Home Owners Association (consisting of
all of the Co-Owners) hires a Property Manager for annual periods. The Property
Manager manages every aspect of the property including the complete maintenance and care of your
villa, the payment of all operating expenses and the annual preparation and
filing of the tax return for the HOA.
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What do the
operating expenses cover?
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The
ongoing operating expense cover the
cost of all maintenance, repair, replacements and wear and tear
as required. A professional housekeeper is supervised by the
Property Manager, assuring the property is always clean and maintained in
a first class condition, as you would expect. Landscape
and pool maintenance is performed on a regularly scheduled basis
by local professionals, and, where necessary, snow removal as
required. Structural maintenance, including painting, and
repairs, is provided by the appropriate local trade contractors,
as and when needed. Certified professionals from the specific
equipment manufacturers and services will maintain the equipment
and appliances to our demanding standards. When the homeowners
are away, the property manager will look after the property,
assuring you the peace of mind that your property is safe and
secure.
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Who
is responsible if an Owner damages the Villa?
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Other than normal wear and tear, each Owner is responsible for immediate repair or replacement of any damage to the Villa or
to any of the furnishings, fixtures or equipment, if incurred during their use of the
property.
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Can
I finance my purchase?
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Fractional Villas®
has arranged with lenders to provide you a mortgage
for your purchase, requiring a typical deposit of 20% of the
share price. Most owners will, however, either pay all cash, or
opt to pay for their share with equity from their primary
residence, using a line of credit.
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How
can I sell my share in the future?
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You may sell your share to any other owner of the property,
or you may sell it to any third party. Typically, resale shares are listed with Fractional Villas®,
or with a local real estate broker, who will promote the sale of your share the same way they
promote any other property for sale. The market for fractional ownership shares is growing,
as more and more buyers realize the benefits and savings. You may also sell your share yourself,
by advertising in any publication, newspaper, or on the internet at free real estate listing sites.
You set the price and are in control of the sale, just like any other property sale.
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For
more information, please contact us at:
info@fractionalvillas.com
Each fractional ownership
property listed herein, is separately owned. Fractional Villas®
is neither the owner, nor the real estate sales broker of the
properties. Each Fractional Villas® fractional ownership
property is a separate offering. This is not a solicitation or
offering for fractional ownership in those states where
regulated. Fractional Villas makes no warranty express or
implied as to the merchantability or legality of any fractional
ownership offering herein.
The information contained on
this website is believed to be accurate to the best of our
knowledge. The purchaser of any fractional ownership interest is
solely responsible for verifying all information contained
herein. Actual Fractional Villas® properties may
vary in location, size, bedrooms, bathrooms, character,
furnishings, equipment, fixtures, amenities and features.
Certain photos featured within this website are for example
purposes only. Unless expressly stated in the purchase or
operating agreements of any property featured on this website,
Fractional Villas is not the property manager, concierge, or
scheduling agent, and shall not provide any services related
thereto.
Copyright © 2005 – 2015,
Fractional Villas, Inc. Terms of use of this website. All
Rights Reserved Fractional Villas, Inc. Del Mar, CA 92014 Green
Ownership and Fractional Escapes are trademarks owned by
Fractional Villas, Inc.
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