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OBXShare.com
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FAQ |
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What is fractional ownership? |
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How does Shared ownership work? |
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What are the benefits of Shared
ownership? |
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How is Shared ownership usage
allocated? |
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How is Shared
ownership financed? |
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How do Shared ownership Co-Owners share expenses? |
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How do Shared ownership Co-Owners make decisions? |
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Are payments on a Shared ownership home tax deductible? |
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How will I be taxed when I
sell my part of the property? |
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What
type of documentation is needed? |
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What happens if a Co-Owner does not fulfill their
obligations? |
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**Please notice the term Shared Ownership, Fractional
Ownership & Timeshare are all interchangeable.** |
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What is fractional ownership? |
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Here at OBXShare.com we prefer to call it "shared
ownership" instead of fractional. So here is a
quick description of shared ownership. |
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Shared ownership is a arrangement setup by a group of
owners (sometimes friends sometimes strangers) that
shares the cost and use of a vacation home. Each
owner owns a undivided interest, (1/3, 1/5, 1/7, 1/10)
which is shown on both the deed & title.
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How does Shared ownership
work? |
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Shared Ownership is
similar to any other real estate purchase, except that
you are only purchasing a fraction of the property
instead of the whole property. Different
developments and properties have a variety of options.
The undivided interest can vary from a tenth (1/10th) to
a third (1/3). A tenth, for example, provides five
weeks use of the property each year & so on. Under this
unique form of strata title ownership, an owner has
registered title to their fractional interest in the
condominium, estate or townhouse. |
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What are the benefits of
Shared ownership? |
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One of the main reasons people buy fractionals, even
when they can afford the entire purchase, is the
reduction of expense and responsibility. This makes the
second home truly a vacation, where you simply go, and
know everything is in order. At the same time, you have
the deed to the property, and you can pass it down
through generations in your family, or resell it through
a broker. |
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How is Shared
ownership usage allocated? |
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The most common approach is called the "progressive
roatation approach" mainly stating that each owner is
assigned the exclusive right to use the home during a
specific weeks throughout the year. Normally these
weeks are variable (can be fixed) and will change from
year to year. During each owners assigned weeks
they have the right to rent, use, trade, or leave
vacant. Here is an illustration:
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How is Shared
ownership financed? |
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OBXShare has a list of preferred lenders available if
you choose to finance the property.
Preferred Lenders
listed below |
- Beau Spivey - Gateway Financial Mortgage
- 252-255-0308
- Karen Gresham - The Bank of Currituck -
252-453-4900
- Erik
Anderson - First Fractional Funding - 303-221-3130
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How do Shared ownership Co-Owners share expenses? |
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Expenses are paid based on how many Co-Owners own the
property. If you own 1/5 undivided interest of the home you will then
pay 1/5 of the expenses and so forth. The manager
of the property will setup a yearly budget for the home
which will then be divided by the number of owners.
Each owner is then responsible for their share of the
expenses, can either be paid annually or monthly.
- $10,000 yearly budget / 5 Co-Owners = $2,000
each Co-Owner's share of expenses.
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How do Shared ownership Co-Owners make decisions? |
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Just like decisions are made in society owners of shared
properties make their decisions though voting with a
majority vote needed. With that being said there
are many times when certain duties are mandatory.
The
follow duties are required in many shared ownership
properties.
- Allocating usage
- Paying recurring operation expenses
- Maintaining home
By establishing these duties prevents an individual
owner or a majority of owners, from taking actions that
might endanger the group's investment. |
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Are payments on a Shared ownership home tax deductible? |
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In most ways owning a fraction of a vacation home works
the same as owning the whole pie, but we would suggest
you talking with your CPA for definite answers as we are
Real Estate Brokers, not Accountants.
If your CPA is unaware of the answer to these
questions, we would be more than happy to set you up
with ours! Please
contact us if this is needed. |
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How will I be taxed when I sell
my part of the property? |
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Same as above please contact your CPA with any and all
tax questions. |
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What type of documentation is needed? |
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Our team has attorneys in place that will have all the
documents needed in order to purchase or sell a shared
ownership property. |
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What happens if a Co-Owner does not fulfill their
obligations? |
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In short, the co-owner who does not fulfill their
obligations can be forced to sell their fraction of the
property at that days fair market value. From the
sale of that fraction the following must be paid any
arrearages, transaction costs, legal fees and penalties,
and any remaining amounts will go to the defaulted
co-owner. |
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OBX Share
Team:
Village Realty & Management Services | 501 B Hunt Club
Drive | Corolla, NC 27927 |
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Business:
(252)-457-1914 or (252)-457-1917 | Fax: (252)-453-6997 | Toll free: (877)-546-5362 |
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Email:
Info@OBXShare.com |