What Is Fractional Ownership?
Fractional ownership is when an expensive asset is jointly owned by a group of people who bought it as a unit. Each member has access to and uses the property based on their share size, and the owners have the deed split between themselves according to the stake each holds in the property. It is usually used in the case of the purchase of luxury items like aircraft, sports cars, high-end real estate, yachts, and so on.
Usually, it is a manner of making investments employed when the cost of ownership of an asset is shared between individuals, with each owning only a percentage of the said asset. The ownership shares are distributed such that each shareholder enjoys rights of usage, income distribution, priority access, and reduced rates as a factor of their stake in the investment. It is, essentially, a form of collaborative consumption. It differs from other forms of shared use by which rights of usage are granted, but ownership rights are refused, and in this form of ownership, the maintenance of the asset is down to the fractional owners. As each member owns shares in the property, market realities also affect the shares as the value of the owner’s stake varies directly with the level of appreciation or depreciation as the case may be.
However, it differs from a timeshare in that assets can only be used for a specified period. Usually, a week and owners of a timeshare property are not granted permission to influence the manner of use, maintenance, or sale of the property, and fractional owners can buy large shares in their choice possessions for a period of up to 6 months.
Fractional Ownership Example
Assets that are considered to be beyond one’s means or reach but tickle one’s fancy can be snapped up using the option of fractional ownership. A holidaymaker, for instance, can choose to buy a beachside vacation home where he and his family can travel to and relax whenever they so desire. If they are no longer interested, they can also choose to sell their shares.« Back to Glossary Index