About Time Sharing

TIMESHARE, OR THE CO-OWNERSHIP of a vacation home, is an industry that had its genesis in Europe over fifty years ago. It was during a time when many parts of Europe had very high personal taxation rates. In Britain for example, high-income earners were paying over ninety percent of their salary in taxation.

This turned the vacation home, an asset used once a year and often with high annual maintenance costs, into a liability few could afford. These realities also limited the pool of available purchasers so creative solutions were sought.

Now it’s true that various co-operative ownership arrangements for vacation properties had existed in many parts of the world for hundreds of years. However, it was England that first created the legal and commercial framework necessary for Timeshare ownership to become widespread. Many of the legal precedents, previously used for condominium and townhouse ownership, were adopted by the new industry.

Types of Time Share Ownership

Background
The most common form of property ownership is the single-family home.
The home sits on a lot with a clearly defined perimeter and the landholder, in theory, owns everything above, below and within those boundaries.

It is known as Real Property and ownership is invariably absolute or in “Fee Simple.” “Fee Simple” is an English term that describes a person’s unfettered rights in his own home and on his own land.

One advantage of Real Property is that it can be used as security for a loan. Loans secured by Real Property are preferred by lenders and so attract low interest rates and favorable conditions.

The Condominium can also be purchased as Real Property
Condominium firstly means joint rule or joint dominion. Later it came to mean the ownership of an individual unit within a multiple-unit complex. It is also the type of ownership for most timeshare properties.

The purchase of a condominium within a complex means you are buying the airspace for a particular unit in a multi-unit complex. Your unit, or airspace, is defined in the survey contained in the “Declaration of Condominium” or “Master Deed.”

When you buy a unit in a complex, you are also deeded a percentage of the common property or common elements. The common elements are usually everything else in the development. That includes pools, carports, walkways, the main structure (including the walls of your unit, for example), clubhouse, gardens, reception areas, elevators and the surrounding grounds. Your percentage of ownership of the common elements is based on a formula that uses the size of your unit as a basis. This formula is also used to calculate the annual maintenance fees that you will be charged. These fees are to ensure the entire development is maintained to a high standard.

The maintenance fees are first paid by the developer, but as the units are sold this responsibility transfers to the owners. The owners, through the owners association, invariably appoint a professional management group to administer this function. Professional managers ensure that daily, weekly and long term maintenance programs are in place so the development, your investment, is kept in first class order. They also ensure that there are sufficient reserves to cover unexpected contingencies. Twenty percent of annual revenues is considered prudent, but with older developments a larger reserve pool is wise.

When buying a re-sale unit it’s a good idea to make sure there are sufficient reserves to cover emergencies, otherwise, special levies on owners may be made to fund unscheduled expenditures.