What Is Fractional Ownership?

You might have heard of the terms  ‘Fractional Ownership’, ‘Equity Shares’ and ‘Deeded Property’ they can often be used and thought of as the same thing. Here we clear up the terms so you know what they mean.

Fractional ownership

Fractional ownership does what it says on the tin. It is the division of an asset, most often a property, into portions or shares. In fractional ownership, usually, multiple owners legally share the asset which allocates each owner access to the property.

The term fractional ownership is often thought of an interchanged with timeshare, however, although at first glance they may seem like the same thing, there are some main differences to distinguish the two. With Fractional Ownership, the purchaser owns an equity share in the entire deed on the property, usually 25%. If the value of the property increases, the owner’s share becomes worth more money, and therefore more valuable. The Fractional owners (usually 4) can sell their deed whenever they deem necessary, releasing the capital growth from their investment and making a profit.

Timeshare

With Timeshare, the ownership is still distributed to multiple purchases, however, the fraction is usually only 1 week out of 52, therefore the ownership is often split between 52 people. This means, as so many people have shares in the unit, it is nearly impossible to sell as all owners would have to agree to the terms of sale and the value of the property. This results in many people being stuck in their timeshare and having to resort to selling their fraction of ownership in order to get out of the contract, which can be difficult.

If you have any questions regarding your timeshare ownership and how to exit your contract, do not hesitate to contact us for advice.


 



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