By Freda Rumford from the September 2010 Edition
PartII: Fractional Ownerships
Last month we covered the “Time Share” form of ownership in which participants have the use of certain periods of time but that does not always suit everyone. Some people prefer to actually own a piece of where they are staying.
To make the leap into ownership in a foreign country is so huge and daunting that probably, although retirement may not be far off, a person is not completely sure that this lifestyle would suit completely. Yet a lovely holiday is just not a true test. Why not then consider owning a piece of a property.
Why not consider what is known as “Fractional Ownership”. This is a form of ownership which is becoming hugely popular in many countries, particularlyin Europe and not always limited to housing. Planes, boats and similar items of value are also owned by groups of people for just the period of time required, In Mexico, that is a very real idea already as family members and groups of friends have for years formed companies that is a very real idea already as family members and groups of friends have for years formed companies and bought a piece of property jointly within that company and often extending it to purchasing boats, jet skis, vehicles etc so that availability is there when needed. Actual sections of ownership are divvied up proportionate to the amount of shares owned by any particular member according to a joint and previously agreed upon method, be it days, weeks or months each year. In this instance, unlike time- only-share, a freehold share in the property is owned by each partner. This can, in turn, be sold or bequeathed to heirs as in any other owned item or property and each individual owner has the value, equity and other benefits or headaches associated with ownership. Exactly how the division is to be is determined ahead of time either by perhaps having an odd number of owners, thus automatically rotating the good and lesser months or by agreeing to set times each year, perhaps each month being given a value. There is no reason that any individual cannot have more than one share but not necessarily all in subsequent weeks, thus allowing proper and fair time distribution. How it is done is completely up to the group concerned and according to the laws of the country in which the property is situated. It is advised that the latter are checked by potential owners.In Mexico, it is an advantage to purchase property within 60 miles of the border and 30 miles of the coast with a company rather than as an individual, to avoid having to have the Fideo Comiso (Bank Trust) which can sometimes be a bit of a nuisance to get, transfer or maintain. It must be stressed however, that the cost of the bank trust is still far less than assessed rates on houses in Canada or the USA. So it is not a huge cost factor.
It is advisable to have an amicable group of friends or family joining together for such a venture or at least people that can be trusted to honor the final system agreed upon.
There should be a board to run and to manage the asset on behalf of the owners, who then would pay monthly/annual fees for variable use. If the group purchases a condo versus a house, then besides the initial cost of the property and a fund for replacement of large items or repairs, the owners must also divide monthly fees and all running costs accordingly.
Individuals are naturally to be responsible for replacing items broken or damaged during their occupancy, although repairs through wear and tear come from the side fund. Each owner is free to use or rent out the property for their own time period but is responsible for both the conduct of any renter and for seeing that applicable fees as mentioned above are paid. Each owner also has a share in the not so desirable months and is responsible for covering those costs. Sometimes the owners arrange for set times each year or for offset times so that all, can have a share of the best months.
Many things have to be considered as in all group ownerships but everything should be agreed upon according to the wishes of the entire group. This is a format which can be completely tailored to conform to each and all owners needs. It gives a chance to live in a holiday home whilst not having to be responsible for complete ownership and not having a valuable property sit idle and uncared for or a security risk, for any length of time.
Whether there is any saving in holiday costs through Fractional Share ownership versus renting holiday accommodation is debatable but there are occasionally tax benefits allowed in various countries and also there is the resale value at the conclusion of the ownership.
Naturally whom one may resell to has to also be considered in the initial set up of the partnership. Quite possibly it should first be offered to original members of the group. Should you be a part of a large group of friends with potential usage, this could be an excellent alternative to consider.
Most knew her as Freda Rumford. Freda Anne Vickery was a founder, editor, and contributor of the Manzanillo Sun magazine. She was one of the founders and, took over being President of the Manzamigos, when her husband Nigel, died. When she first came to Manzanillo, she got a job writing for the Guadalajara Reporter and used that as a foundation for her later humanities work. Freda was born in the East side of London in 1934 but grew up in Norwich. Freda’s early life was one of overcoming things. As an example, she was born with a lisp but one of her first jobs was being a telephone operator after some extensive elocution lessons. She met and married a young military man and, like so many others, they and their children moved to Canada for his employment opportunities and she ended up working for the Hudson’s Bay Company in cosmetic sales in Calgary. They moved to BC and then to Manzanillo, for her health, which flourished in the tropical weather. After Nigel died, she later married Kirby Vickery. She later became ill and finally lost the battle with cancer on the 27th of February 2016.