What is fractional ownership? We know: it sounds like a legal term designed to confuse you into signing up for a timeshare. Stories perpetuated by consumer TV shows may have clouded your judgement about that already! However, in the 21st century, timeshare has grown up. Companies involved with it now make great efforts to distance themselves from the ‘old ways’.
According to the Resort Development Organisation (RDO), a governing body for the timeshare industry, complaints are down in recent years. Legislation has changed. This means that timeshare is fast becoming a genuine option for booking that much-needed time away.
When you see so many different options for your holiday, it’s easy to feel confused. Some of the terms you might hear include ‘fractionals’, ‘holiday clubs’, and ‘destination clubs’. So what’s the difference between a good old-fashioned timeshare and a Fractional Ownership agreement?
When it comes to taking your holiday, both business models are essentially shared ownership in holiday homes. In legal terms, however, Fractional Ownership and timeshare properties are completely different from each other. Which one is best for you depends on whether you want to buy into an actual property or just guarantee a holiday every year.
You will have a freehold or leasehold timeshare ownership. With a freehold timeshare (fractional ownership) you own the timeshare outright, and you can sell, rent, or bequeath it. A leased timeshare is the legal right to use a week at the property for a specific number of years.
What is Fractional Ownership?
Fractional ownership differs from the old style timeshare. You will see it being marketed very much as a way of buying property abroad rather than a simple holiday, but at a much lower cost than a full-time property in the resort. For an agreement to qualify as a fractional ownership agreement, you must receive the option to purchase at least one thirteenth ownership of the property with a maximum of twenty-five percent available to buy. There will usually be some form of deed involved, which therefore gives you an equity stake in the property.
In contrast when you buy a traditional timeshare, you usually buy one or two weeks’ use of a specific property. This agreement does not involve a deed. All you are doing with a timeshare agreement on a property is buying the right to spend an agreed amount of time in it every year.
Ignore the different names for different schemes. Instead, remember that if you want to buy a holiday every year, in the same property or with flexibility to use other properties, you want a timeshare agreement. If you want to buy a stake in a property and not just the permission to stay in it, look at fractional ownership.
For advice on which one is best for you, speak to the experts at Travel and Leisure Group today. You’ll receive the same standard of accommodation and service, but at a fraction of the price from trusted brokers with over two decades’ experience in timeshare resale.
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