Fractional vs Full Ownership
FRACTIONAL VS. FULL OWNERSHIP
Fractional Ownership can be favorable for those who intend to visit only a few weeks or months each year. For that group of users, the lower price paid to visit infrequently is worth the inability to redecorate or alter their surroundings. In the post-2009 market, however, it’s important to note that you can frequently find turnkey single family residences in gated communities with private or community pools and other resort style amenities for a similar amount, or less than the cost of a Fractional purchase.
Of course, these won’t be ocean front beach properties, but they’ll be moments from everything with tremendous views, larger floorspace, and additional guest bedrooms & similar amenities.
You need to do your own research in this regard in order to determine what works best for you, but we want to aid in beginning your quest with the important differences between the two.
Fractional ownership refers to buying property with a group of other individuals, much as people have been doing for years when a family would get together and pool their resources to buy a vacation property the whole family could enjoy. You have use this month, or these 2-3 months, and uncle Joe has that month, etc. In Fractional ownership, your weeks or months of usage change every year so that no individual owner gets all the primo times of year. Hence, you’ll know you have Christmas, or Thanksgiving, or Spring Break in specific years. Owners decide who manipulates the ‘calendar’, and that person is responsible for creating and distributing scheduled usage annually.
In this situation in today’s market, the developer or realtor finds buying partners for you. You must be careful if looking for this type of ownership on your own, as some very high end time share properties began using that term a few years back as well, and time share usage is a whole different ball-game!
Usually, Fractional ownership is also in a high-end resort or community, such as Villa la Estancia, Esperanza, Monte Cristo, Pueblo Bonito Sunset, etc….You must be very careful to understand and get in writing that your Fractional Ownership is actually Deeded…meaning you receive a Title to that UNIT for this number of weeks/months, which you can use, rent or resell as you please. These high end vacation resorts usually also have property management programs and rental pools that you can utilize for additional fees, and there will be a rather hefty monthly HOA even for months you don’t own or occupy the unit.
In some instances, a Fractional Ownership is actually ‘undeeded’…sometimes the contract is written with a promise to ‘trust’ in the future. These are extremely difficult to resell, and usually you are forced to give the property back to the developer for resale purposes. Occasionally, your particular unit: the one you fell in love with, is not the one you’ll use during your visit. It may be ‘rented’ out much as a hotel suite as needed by the developer or manager, and your own visit will be in a similar suite with different views, etc.
You can see that offerings that are real property (deeded Fractionals) needed a way to differentiate themselves from the time share mentality/usage programs. Hence, the phrase ‘deeded fractional’ came into being. This phrase is supposed to convey to the potential buyer that this is real property and that the buyer will receive title to the property, the UNIT they loved, just as if they were buying a single family home.
Always keep in mind that because Los Cabos is within 50 km of the ocean, any purchase will involve a family trust with a Mexican bank and signing before a Notario Publico (a government appointed lawyer who presides over real estate transactions). If these steps are not part of the purchase process, the property under consideration is almost certainly not deeded real ownership, but a form of time-share contract of fractional use. Another good way to differentiate is to ask for title insurance from a US provider, which is always available for deeded fractional ownership.
We’re here, as your real estate professionals, to provide you with the necessary information to make wise decisions based on your own needs and vision of a future here at Land’s End. Don’t hesitate to ask those important questions. We have the experience and expertise you need because we live and breathe the local market, and are happy to aid in bringing your vision of a future Cabo lifestyle into your life today.