The differences between Fractional Ownership and Timeshare Ownership

December 9, 2015 By Laura Allen, Broker Associate, Tahoe Real Estate Agent, CA RE 01473598 | 530-414-1260

The differences between Fractional Ownership and Timeshare Ownership

A common question home and condo buyers have in the North Lake Tahoe real estate market is what are the differences between Fractional Ownership and Timeshare Ownership?

While both are forms of “shared ownership” there are some significant differences between the two types.

Since both Fractional Ownership and Timeshare Ownership are both considered “shared ownership”, what are the differences between Fractional Ownership and Timeshare Ownership?

Fractional shared ownership verses Timeshare shared ownership

In the greater Truckee and North Lake Tahoe area here are some of the basic ownership differences between the two:

	Fractional Ownership	Timeshare Ownership
Deeded Title	Yes – recorded with county assessor	No – title to property is held with the general operating partner/developer
Individual Assessor Parcel Number (APN)	Yes – each share in a property comes with its own APN (Each property is assigned an APN by the relevant county in California).	No – While each condo, or home in the development may have a specific APN, there are not individual APN’s assigned to each owner.
Title Company	Yes – Buyers can use a title company to ensure clear title/title insurance to the property and proper recording	No – Since there is no individual APN number the option to use a title company to transfer ownership is not possible.
Equity Ownership	Yes – The value of your share should move up and down with the current market conditions/value of the property.	No – Buyers are purchasing the right to use the property at a specific time each year and the re-sale value of the share is not necessarily tied to current market conditions/value of the property.
Value	Fair Market Value – Market value of the property is based on recent, similar sales of shares in the complex and the over-all real estate market in that area. Fair Market Value for the fractional share does have a basis on the actual over-all property value.	Private Market Makers – Market value is established by a third party (private market maker). It is often a fraction of what a buyer paid for the share due to high marketing costs and a limited market for re-sale. Typically it is not tied back to the price new shares are being offered for sale in the development, or the fair market value of the property.
Re-Sale	Yes – Open market just like selling any other property. Can list with a real estate agent/broker and place the property for sale in the Multiple Listing Service (MLS).	Yes – Limited to either the developer/business owner, or specialty company that has chosen to make a market in the specific development. Typically not available for MLS*.

Costs	Yes – In addition to your annual property tax bill, fractional owners typically have a monthly home owners association (HOA) fee, along with periodic assessments. Fractional ownership tends to be more expensive because of the limited number of owners in a property. Tip – make sure the HOA fees cover the cost of unit cleaning and doesn’t come as a separate charge so you are properly comparing HOA fees between the different developments.	Yes – Timeshare owners can expect an annual maintenance/assessment fee. Depending on the development, you may also have a separate tax bill for your share of property taxes, so ask when you are buying what is included in your annual assessment. You may also have periodic assessments to improve the property. Timeshare ownership tends to be less expensive than fractional ownership because of the large number of owners.
Number of Owners per Unit	Limited/Small – Fractional ownership tends to have a smaller group of owners per unit than timeshare. Fractional ownership can be as small as 2 (1/2 ownership) owners to as many as 17 owners (1/17 ownership) in the North Lake Tahoe-Truckee area	Large – Timeshare ownership tends to have a much larger group of owners/users as many as 52 owners per unit (1 owner per week) in the North Lake Tahoe-Truckee area
Size of Complex	Limited/Smaller – Typically less than 50 units in a complex, but any size is possible.	Larger – Typically more than 100 units in a complex, but any size is possible.
Selection of Week(s) of Use	Flexible – Typically owners are on a rotation schedule and they get flexibility on what weeks they will use each year.	Fixed week(s) of use a year. You know when you’ll get to use your week(s) each year.
Location	Specific Location – The benefit of fractional ownership is getting more time in a specific location. While the option to exchange weeks of use through an exchange organization may be possible, fractional ownership is about the location of the property.	Variety of Locations – While timeshare owners are buying into a specific location and time of year to use the property most come with the option to use their time in other developer/sister properties giving the timeshare owner flexibility in the destination.
Property Exchange Options	Possible – Some fractional share ownership properties offer owners the ability to exchange/rent their weeks of use with other premier luxury destinations and/or developer affiliated properties.	Most Likely -Some timeshare ownership properties/programs offer owners the ability to exchange/rent their week(s) of use with other premier luxury destinations and/or developer – affiliated properties, or with other timeshare organizations.
Rental of your week(s) of Use	Depends – Depending on the development, some properties may, or may not allow you to rent out your weeks of use.	Depends – Depending on the development some properties may, or may not allow you to rent out your weeks of use.
Pets	Possible \| Not Allowed – Depending on the development, some properties will allow pets (non-service animals).	Possible \| Not Allowed – Typically pets (non-service animals) are not allowed.

* As a note in the Tahoe Sierra Multiple Listing Service (TSMLS), which covers North Lake Tahoe – Kings Beach, Tahoe Vista, Carnelian Bay, Tahoe City, Homewood, Tahoma and the greater Truckee area, when I searched for Time Share listings for sale, since 2006, there were only two properties that had been listed for sale indicating this is not a popular, or traditional method for selling timeshares in the greater North Lake Tahoe-Truckee area. You may find different results for the Incline, NV, or South Lake Tahoe CA-NV areas, which are covered by a different Multiple Listing Services.

Title:

Fractional Ownership – Is a deeded purchase and comes with a specific California County Assessor Parcel Number (APN) that is actually recorded at the county when ownership changes between individuals. Owners have a real equity stake in the property and are responsible for their own property taxes. If the over-all value of the property goes up or down, so does the value of the share they own.

Timeshare Ownership – does not come with an APN number. Owners purchase a right to use specific week(s), but equity (actual real estate) ownership is not given to the owner and there is no deeded title of the interest purchased. The title to the property is held with the principal/developer owner, not the individual week owner.

Title Company | Insurance – Escrow Company

Fractional Ownership – Most real estate agents will include in the purchase contract the use of an escrow company and title company that includes title insurance to ensure that the property is transferred to the new owner that the property is being delivered free and clear of any encumbrances, liens, or anything that could cloud title. In the future should an item come up that the title company did not show up in their original title search the new owner has an insurance policy to deal with any unknown problem that may have been missed in the future.

The title company will also make sure that property recording of the change of ownership is recorded with the county recorder that the property is located in.

Timeshare Ownership – The purchase of timeshare ownership does not involve a title, or escrow company. An escrow company may be used to hold funds for the third parties, but typically the purchase is handled all in-house.

Re-Sale:

Fractional Ownership – Similar to whole ownership, your fractional share comes with its own APN number and it can be marketed and re-sold through a real estate broker out on the open market. Title and escrow are the same process as if you were selling a whole home, or whole condo. You will often find fractional ownership shares for sale on the mega real estate websites. The demand for shared ownership may be limited depending on your local market conditions.

Timeshare Ownership – Selling is often limited to either the principal/developer and/or their in-house re-sale program, or to a specialty timeshare exchange group that makes a market in your timeshare development. If there is a resale market for your timeshare development, expect to sell your timeshare at a fraction of your original cost due to the high costs of marketing/selling. Your timeshare development may also charge a transfer fee. You typically will not find timeshares for sale on the mega real estate websites. The demand for shared ownership may be limited depending on your local market conditions and the sales|re-sales structure of the development.

Annual Costs:

Fractional Ownership – Expect to pay a monthly fee, along with a cleaning charge for each owner use if it is not already included in your monthly fee. Expect the possibility of period assessments for improvements, or renovations. In additional to these on-going expenses you’ll also have your individual property tax that the state/county will bill you on a semi-annual basis.

Timeshare Ownership – Expect to pay an annual fee and always ask if that fee is inclusive of the property taxes that may be due on the property, otherwise there may be another annual expense. Periodic special assessments may be necessary for major improvements, so be prepared for that possibility. Each timeshare ownership development is different, but timeshare owners can expect to pay some type of fee annually even if you don’t use your week(s) of use.

Benefits and Disadvantage of General Shared Ownership

	Benefits – Advantages	Disadvantages
Professional Management	Ease of ownership as someone else takes care of the day-to-day and long-term care of the property	Additional cost for professional management.
Limited Use	Fractional ownership typically provides enough week(s) of use to satisfy an owners’ use demands.	No full-time occupancy, or large blocks of high-season usage time (no one gets all summer, or all winter weeks of use) unless you are buying a specific week(s) of use.
Cost	Typically the buy-in is a fraction of the value of the property with the benefit of being able to use the entire property and complex.	On-going costs whether you use the property or not. Costs may be more than what you would choose to do as an individual owner as the costs typically include for long-term maintenance, replacement, reserves, and professional management fees. Costs also tend to go up each year for inflation.
Re-Sale	Fractional ownership or timeshare ownership is local. It may represent a small or large portion of any specific community/real estate market sales. Talk to a local real estate professional about the complex, property, and/or local real estate market conditions before buying, or selling.	Depending on the local real estate market conditions the re-sale of fractional, and/or timeshare ownership may have limit appeal, or demand for that product. Talk to a local real estate professional about the complex, property, and/or local real estate market conditions before buying, or selling.

There are many similarities between Fractional Ownership and Timeshare Ownership, but there are also significant differences. The Differences between Fractional Ownership and Timeshare Ownership and choosing the right one will be based upon your individual needs.

Have more questions? Call me 530.414.1260!

North Shore Lake Tahoe Fractional Share Condo Developments

Sweetbriar, 8000|8004 North Lake Blvd., Kings Beach, CA 96143

Tonopalo, 6750 North Lake Blvd., Tahoe Vista, CA 96148

Fractional Shares for Sale in North Lake Tahoe (condos, homes, Tahoe City, North Shore and West Shore)

Greater Truckee Area Fractional Share Condo|Home Developments

Olympic Valley |Squaw Valley Fractional Share Condo|Home Developments

This document is not intended to provide legal advice. All legal questions should be directed to a California real estate attorney.

Want more home buying options? Something other than fractional ownership. Lake Tahoe, California homes for sale here:

Want to see what condos are for sale in Lake Tahoe? Here are the current listings:

For all of your Tahoe real estate needs –

Laura A. Allen | 530.414.1260 | Laura@TahoeLaura.com
BROKER ASSOCIATE, Tahoe Real Estate Agent
CalRE# 01473598
Coldwell Banker, Tahoe City, CA CalRE#01908304

All information is deemed reliable, but is subject to change, and/or correction without notice.

The Differences between Fractional Ownership and Timeshare Ownership

What is a Front Loaded Tahoe City Home Buyer Negotiation?

August 1, 2013 By Laura Allen, Broker Associate, Tahoe Real Estate Agent, CA RE 01473598 | 530-414-1260

What is a “Front Loaded” Tahoe City Home Buyer Negotiation?

Unlike other areas in California most of our Tahoe City home sellers do not have property inspection reports (home, pest, chimney, electrical, foundation, etc…), or seller property disclosures to provide to a potential Tahoe City buyer .

When these disclosures are provided ‘upfront” before that Tahoe City buyer makes an offer on a property, we look at the transaction as a “front loaded” purchase.

Most Tahoe City home buyer offer negotiations are not “front loaded”.

So what is a “front loaded” Tahoe City home buyer negotiation?

A front loaded Tahoe City home buyer negotiation process is when property disclosures, inspection reports, HOA documents and other pertinent/material information about a Tahoe property is given to the buyer either before, or during the purchase offer price negotiation process.

The buying process becomes “front loaded” as typically this information would not be given to a Tahoe City buyer until after an agreement on price and contract terms had been reached.

When do we typically see a front loaded Tahoe City home buyer negotiation situation?

Failed Sale Situation: Often when a Tahoe City home falls out of escrow (the buyer decides to cancel the purchase agreement), there will be a number of Tahoe property disclosures, inspection reports, and other information that was collected by first buyer that the seller can now pass that organized information along to a new buyer.

The purpose of providing these documents before, or during the purchase offer negotiation process is to reduce the chances of the new buyer from canceling the transaction based upon the review of the property condition reports and other disclosures after both sides have come to an agreement on price and contract terms.

This front loaded Tahoe City home buyer negotiation process often results in a better price between the buyer and seller and the escrow process tends to have a much higher success rate of closing.

Multiple Offers: Another situation when a front loaded Tahoe City home buyer negotiation process is used is when a Tahoe City seller knows they are going to price their property at, or below the current market to encourage multiple offers.

By using a front load negotiation process and providing property disclosures, inspection reports, and other useful information on the property to prospective Tahoe City home buyers when multiple offers are expected before the potential buyer(s) make an offer, often reduces the chances of a cancelled sale and is more likely to have negotiated a price that will be less subject to change.

Most Tahoe City home buyers would prefer a “front loaded” negotiation purchase offer process, but in the greater Tahoe area, most offers are made without the benefit of specific property inspections and/or sellers property disclosures.

If you have more questions about how the Tahoe City home buying process works in our area, let me know, I’m here to help you!

Thinking about making Tahoe City, California your second home? Check out the homes that are for sale in Tahoe City here:

Want to see what condos are for sale in Tahoe City? Here are the current listings:

For all of your Tahoe real estate needs –

Laura A. Allen | 530.414.1260 | Laura@TahoeLaura.com
BROKER ASSOCIATE, Tahoe Real Estate Agent
CalRE# 01473598
Coldwell Banker, Tahoe City, CA CalRE#01908304

All information is deemed reliable, but is subject to change, and/or correction without notice.

What is a Front Loaded Tahoe City Home Buyer Negotiation?

Is my Tahoe Home Purchase Contract Offer Confidential?

April 12, 2013 By Laura Allen, Broker Associate, Tahoe Real Estate Agent, CA RE 01473598 | 530-414-1260

Is my Tahoe Home Purchase Contract Offer Confidential?

An often over-looked important detail in our real estate contracts is the confidentiality provision – there isn’t one! Here in the North Lake Tahoe area we typically use the California Association of REALTORS® (CAR) Residential Purchase Agreement (RPA) to buy and sell residential property and the

CAR-RPA document does NOT have a confidentiality provision in it.

Most Buyers and Sellers assume the Tahoe home real estate purchase contract is confidential, when in fact it is not. As real estate professionals we try and remind our clients of all of the little details, but one very important one is that unless otherwise agreed to, the terms, conditions, price offered is not confidential information. Both the Buyer and the Seller, along with their agents are free to share this information with anyone.

As a Buyer, or Seller you’ll find that several of our supporting disclosures and documents specifically remind Buyers and Sellers that the contract and transaction are not confidential unless otherwise agreed to, but it’s always good to ask your Tahoe Real Estate Agent ~ Is this offer confidential?

If you want your Tahoe home purchase offer to be confidential then you need to have a confidentiality and non-disclosure agreement agreed to by both sides of the transaction!

Depending on your situation and your negotiation strategy, using a Confidentiality and Non-Disclosure Agreement may, or may not be in your best interest. When would a Seller or Buyer consider using a confidentiality and non-disclosure agreement? Here are some popular reasons:

The property is not “officially on the market” and the Seller wants to keep things quite until the sale is complete.
The property is a high-end luxury, or a Trophy property and privacy is important to both the Buyer and Seller.
The Buyer doesn’t want their offer shopped around.
The Seller wants a Confidentiality and Non-Disclosure Agreement in place so when multiple offers are being presented everyone knows no information is being exchanged with other parties.

Remember if you’re using the CAR-RPA real estate purchase contract, all parties are free to share any and all information contained in the agreement unless a separate Confidentially and Non-Disclosure Agreement is used and agreed to by both parties!Is my Tahoe Home Purchase Contract Offer Confidential?

Thinking about making Tahoe City, California your second home? Check out the homes that are for sale in Tahoe City here:

Want to see what condos are for sale in Tahoe City? Here are the current listings:

For all of your Tahoe real estate needs –

Laura A. Allen | 530.414.1260 | Laura@TahoeLaura.com
BROKER ASSOCIATE, Tahoe Real Estate Agent
CalRE# 01473598
Coldwell Banker, Tahoe City, CA CalRE#01908304

All information is deemed reliable, but is subject to change, and/or correction without notice.

Is my Tahoe Home Purchase Contract Offer Confidential?

Are Tahoe Home Buyers required to make an Increased Deposit?

April 10, 2013 By Laura Allen, Broker Associate, Tahoe Real Estate Agent, CA RE 01473598 | 530-414-1260

Are Tahoe Home Buyers required to make an Increased Deposit?

In a competitive North Lake Tahoe second home real estate market, savvy buyers are asking how they can make their real estate purchase offer stand out.

Besides price, one way to make your Tahoe Second Home purchase contract stand out is to make sure you’ve offered a strong Initial Deposit, and have addressed the Increased Deposit issue.

Are Tahoe Home Buyers required to make an Increased Deposit?

The simple answer is NO, however, that may not best position your offer with a seller. Let’s take a step back and address the Initial Deposit and then the Increased Deposit.

Here in the North Lake Tahoe area we typically use the California Association of REALTORS® (CAR) Residential Purchase Agreement (RPA) to buy and sell residential property.

The CAR-RPA has specific provisions under Item 3. FINANCE TERMS, Section A. INITIAL DEPOSIT followed by Section B. INCREASED DEPOSIT. As of 04/09/2013 in the CAR-RPA currently reads like this:

3. FINANCE TERMS:

A. INITIAL DEPOSIT: Deposit shall be in the amount of $ ____________________________.

(1) Buyer shall deliver deposit directly to Escrow Holder by personal check, ◊ electronic funds transfer, ◊ Other ________________ within 3 business days after acceptance (or ◊ Other __________________).

B. INCREASED DEPOSIT: Buyer shall deposit with Escrow Holder an increased deposit in the amount of ………….. $ ______________________________

Within ____ Days After Acceptance, or ◊________________________________________________.

If a liquidated damages clause is incorporated into this Agreement, Buyer and Seller shall sign a separate liquidated damages clause (CAR Form RID) for any increased deposit at the time it is deposited.

If a Tahoe Buyer is in a Seller’s Market, or expects to be in a multiple offer situation, the initial deposit and the potential increased deposit can be factors used to help, or hurt their offer.

As a buyer, you with the help of your Tahoe agent, will determine

the initial deposit amount.

In the Tahoe area that typically runs from 1% to 3% of the purchase price that is offered, but can be any amount. The Initial Deposit/Increased Deposits are known in other parts of the country as “Good Faith, or Earnest Money”.

Real estate is local, and here in the North Lake Tahoe region,

Buyers need to remember they are negotiating not only with the Seller,

but also with the Sellers’ Agent.

When your offer doesn’t follow with what is typically done in the local area, a Sellers’ Agent is going to report back to their Seller that this is not what they would expect. A Buyer can actually hurt their offer and chances of acceptance by doing less than what is typical for the area.

A way to make your Tahoe offer stand out as a strong, clean offer is to eliminate

the Increased Deposit provision and come in with an initial deposit of 3%, or more

of your purchase price.

This sends a strong message to a Tahoe Seller that you are a serious Buyer. You are financially well qualified by putting down a larger initial deposit and eliminating the second step of an Increase Deposit at a later date.

While all items in a contract are negotiable, following your Tahoe real estate agent’s advice as to what you need to do when it comes to the Initial Deposit and the Increased Deposit to best position yourself when making an offer to buy a Tahoe second home is advice that can serve you well.

Knowing how to structure your Initial Deposit and Increased Deposit to

best position your offer with a Tahoe seller are just a few ways to make your

Tahoe Second Home Offer stand out!

To learn more about Initial Deposits check out When does a Tahoe Home Buyers make their Initial Deposit?

Thinking about making Lake Tahoe, California your second home? Check out the homes that are for sale here:

Want to see what condos are for sale in Lake Tahoe? Here are the current listings:

For all of your Tahoe real estate needs –

Laura A. Allen | 530.414.1260 | Laura@TahoeLaura.com
BROKER ASSOCIATE, Tahoe Real Estate Agent
CalRE# 01473598
Coldwell Banker, Tahoe City, CA CalRE#01908304

All information is deemed reliable, but is subject to change, and/or correction without notice.

Are Tahoe Home Buyers required to make an Increased Deposit?

When does a Tahoe Home Buyer make their Initial Deposit?

April 9, 2013 By Laura Allen, Broker Associate, Tahoe Real Estate Agent, CA RE 01473598 | 530-414-1260

When does a Tahoe Home Buyer make their Initial Deposit?

Working with Tahoe Second Home Buyers, I’m asked a lot of real estate questions. One of the more frequent questions I’m asked here in North Lake Tahoe is:

“When does a Tahoe Home Buyer have to make their Initial Deposit?

That question is typically followed by the following questions:

Do you need the deposit right now to present the offer?
I didn’t bring my check book; can I mail a check to you?
Do you take Checks?
Does it need to be a Cashiers’ Check?
Can I pay electronically?
Can I wire transfer the money?
Do you take Cash?

These are all great questions, which are almost all addressed in the purchase contract. Here in the North Lake Tahoe area we typically use the California Association of REALTORS® (CAR) Residential Purchase Agreement (RPA) to buy and sell residential property. The CAR-RPA document will govern how and when a Tahoe Second Home Buyer will make their initial deposit and possible increased deposits.

In the CAR-RPA there is a specific provision under Item 3. FINANCE TERMS, Section A that spells out just how much the initial deposit is, and how that deposit will be paid, along with when the deposit is due.

As of 04/08/2013 it currently reads like this:

3. FINANCE TERMS:

A. INITIAL DEPOSIT: Deposit shall be in the amount of $ ____________________________.

As a buyer you and your agent will determine the initial deposit amount. In the Tahoe area that typically runs from 1% to 3% of the purchase price that is offered, but can be any amount you want to offer.

This means as a buyer you have a choice as to how you want to make your payment to the Escrow Holder. The Escrow Holder in the Tahoe area is typically the Title Company that you have identified in the purchase contract.

You can pay by personal check, electronic funds transfer, or Other. Other might mean delivering your check by express mail, or walking it into the title company office.

Once you determine how you want to deliver you initial deposit to the Escrow Holder, then you have 3 business days, AFTER the date of acceptance to make the initial deposit, or you can select Other, meaning you pick how many days to make your initial deposit. It’s all negotiable.

There is a second option for a Buyer to make their initial deposit 3.A. (2). This second option is used when a buyer presents an initial deposit check to their agent prior to the offer being accepted. This used to be a common practice, but is rarely used today.

As a Buyer, you always have the option to negotiate something, but typically in the Tahoe area, most buyers select 3. A. (1).

As a local Tahoe REALTOR®, I recommend to my buyers to make their initial deposit directly to the Escrow Holder (title company) AFTER acceptance and to use the form of payment that is most convenient for them to make!

A few more housekeeping items when it comes to the initial deposits. I recently had a client that wanted to make their initial deposit payment in cash to the title company. As a practical matter, most title companies will not take cash, but they will take a cashier’s check.

Lastly, if you have a short escrow period, the title company may require that the initial deposit is made by wire transfer. Payment by personal check has a longer clearing period before the title company will consider the funds “good” and ready for payment to the seller.

There are many things to do when you purchase a Tahoe Second Home, and knowing when you’ll need to make your initial deposit is just one of them!

Thinking about making Lake Tahoe, California your second home? Check out the homes that are for sale here:

Want to see what condos are for sale in Lake Tahoe? Here are the current listings:

For all of your Tahoe real estate needs –

Laura A. Allen | 530.414.1260 | Laura@TahoeLaura.com
BROKER ASSOCIATE, Tahoe Real Estate Agent
CalRE# 01473598
Coldwell Banker, Tahoe City, CA CalRE#01908304

All information is deemed reliable, but is subject to change, and/or correction without notice.

When does a Tahoe Home Buyers make their Initial Deposit?