13 Aug, 2022
MODELS OF FRACTIONAL OWNERSHIP
While you need to know the co-ownership agreement structure and the process as a first step towards buying a property, it is also important to know the different models offering several benefits. The first model is known as the Pay-to-use model, in which the co-owners make a payment of a pre-agreed usage fee for a daily or weekly usage. This usage fee, in addition to any other income through the rent for the property, is used to pay the expenditures of ownership.
The second model is used to allocate usage rights called Usage Assignment model, wherein every owner is given the right to exclusively use the property for a certain period of days, weeks or even months within a year. The periods of such usage can be variable or fixed or even a combination of the two. Moreover, during every co-owner's allocated period of use, the property can be used by the co-owner to be rented out, swapped, or even leave it unoccupied.
Essentially, the types of usage as part of the fractional ownership model involves the different ways of sharing the benefits of the usage of the asset, the rights involved for every member, ensuring priority access, and providing those at reduced market rates. The only difference between fractional and timeshare ownership is that fractional ownership is where the investor gets to own a part of the property instead of units of time. This means if the asset grows in its value, the benefits and surplus shared by the co-owners increase as well.
