I've been approached by a Seller to list his condo under a fractional ownership plan.  This is not a new idea in Kona but it's also not one that has seen much success.  I'm wondering if it's a good idea to get involved with this kind of Listing - what might the pitfalls be? What are the Title issues, Funding Issues, Home Owner Association issues?  This won't be a high-end fractional plan that can be traded as part of a "club" and it's not a high-end property.  The positives are that the unit has been remodeled to a decent standard and the current owner will refurnish with new everything plus he's going to add little extras such as an HDTV.

If you have any advice to offer I'd like to hear it.

Any horror stories?  How about my Hawaii colleagues - have you sold/bought fractionals on other Islands?

Aloha

 
Posted by Alex Davidson on 10/02/2006 01:46 PM   Comments (5)   hawaii  
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5 Comments on Fractional Ownership

OCT
02
2006
297,808 Points 110 Featured Posts Outside Blog

Wow!  that is a lot to ask for in one post.  I'm going to give you a short answer:

1- You shouldn't have any title issues; most national title companies have an office that handles fractional sales. 

2- Funding:  there are little or no companies willing to finance fractional ownership.  Textron Financial is one but they generally handle large projects.

3- HOA:  That needs to be addressed locally.

My guess is that you'd be spinning your wheels on this.  It might make sense if you had 15 units for sale but this is just too much work for the money involved. 
2:11pm • #1
283,284 Points 6 Featured Posts Outside Blog
Be sure you don't need a securities license to sell fractional ownerships in your State before you spend any time on this as if you need a securities license and don't have one you could land in jail.
3:08pm • #2
I'm pretty sure Teri is right.  you need a Securities license in Hawaii or actually someone in your firm would.  Not positive but around 95% sure.
5:44pm • #3
If it's a single condo owner wanting to fractionalize, you'd have to look into whether or not the condo doc sallow it.
Sharon Simms
11:06pm • #4
APR
28
2007
I work for Old Republic Title.  We are doing our best to educate the Real Estate community on Fractional ownership and implications and opportunities.  Most importantly, you should consult an experienced Real Estate attorney to determine if your property is suitable for fractinalizing.  If your propery is a condo or part of a HOA you should have the declarations pulled to determine if it is allowed.  As far as a securities license is concerned, I've seen no information to suggest that this would be necessary.  I would however be careful of any contractual suggestions that could raise any eyebrows (quoted rates of return, etc.) Again, an attorney would be your best resource.
Willie Boughton
1:31am • #5


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Alex Davidson

Kailua Kona, HI

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Commentary and News on the Hawaii Real Estate Market. Alex Davidson R(S) - serving Kailua-Kona, Keauhou and Waikoloa on the Big Island of Hawaii.


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