Old Republic Title & Escrow of Hawaiiis helping pave the way for better understanding of “fractionals” for consumers and Realtors in Hawaii.  This is definitely new to me and almost every Realtor on the island, so we must become educated to help assist you and protect you.  I already see how this could go incredibly wrong if not handled properly, so as I learn more, I will share it with you.  To start, I have added Old Republics Basics 5’s for Fractional Ownership.  I will go further into detail regarding “fractionals” as I learn more.

What?
Fractonal ownership is a percentage of ownership in real property.  This can range from a 1/2 share to a 1/17 share.  Every state has different rules and regulations on the minimum size of the fraction.  The size of the fraction a person owns corresponds to the amount of time he/she is entitled to use the property.  For example, if a 1/2 share is purchased, the buyer is entitled to use the property 26 weeks a year.  If a 1/17 share is purchased, the buyer is entitled to use the property 3 weeks a year.

Who?
2nd home, 3rd home, 4th home buyers are purchasing Fractionals.  CEO’s, CFO’s, COO’s…VIP’s.  Fractionals are the modern version of the 2nd Home.

When?
People have been purchasing real property in the fractional style for hundreds of years.  Only recently have we been able to legally separate the shares of ownership so as to protect the rights of all owners.  Along with this separation comes the ability to mortgage individual fractional shares.

Where?
Resort destinations all over the world. Fractionals are commonly located in popular vacation destinations such as mountain, beach, golf, or urban resorts.  Locations typically include direct access to a lifestyle attraction such as ski resorts, oceans, golf courses or major cities.

Why?
A fractional will allow the buyer to share in the joys and burdens of home ownership.  Value- The average use of a second home is 6-8 weeks.  the second home buyer wants to be in the location, but can not necessarily justify spending the money for a whole unit that he/she will only be using for a couple of months a year.  Owning a fractional share allows the buyer to pay for the time he/she will actually use.
Relaxation- No maintenance required.  Fractional owners avoid maintenance hassles and concerns typically associated with second homes.  All of the daily, weekly, monthly and yearly maintenance, as well as repairs, are performed by a third party.  The fractional owner need only to relax and enjoy their second home,
Quality- Fractional owners enjoy premium quality design, furnishings, and equipment…not to mention a prime resort location.
Service- Fractional owners enjoy services and amenities not usually available to second home owners. 24-hour concierge, daily maid service, and pre-arrival provisioning are a few of the added benefits to owning a luxury fractional home.