Joint or fractional ownership enables a small group of people to get together and buy a valuable asset such as property, boat, mobile home or aircraft. Usually there are between two and twelve partners: three, four, five and six partners are most common.
The advantages are obvious: great value for money, better for the environment, shared responsibility, and the enjoyment of being part of a group of people that loves the boats, car, villa as much as you do. What bothers people most is the fear of falling out with your partners. This usually happens when one sharer wants to do something different to the others, and it is exacerbated, if they actually go ahead and do this.
A successful fractional ownership is one where this risk is reduced to a minimum.
The most effective way of doing this is to ensure the partners are all sufficiently like-minded. They must all want the same key things from the sharing agreement. To achieve this, you need to spend time discussing and drawing up a comprehensive contract.
If you buy a share through a fractional ownership developer, then all aspects of the arrangement will be tightly defined in the contract. But if you want to buy with friends or family, or with strangers found through yours2share, then you have to do this yourself. Bear in mind that most sharing disaster stories are with family and friends, because they haven’t even discussed these issues in advance, let alone written them down.
If this all seems like hard work, then consider this the cost of reducing the price considerably and the contract to be the evidence of like-mindedness. To make sure the deal works you have to invest a little time up front. You can buy template contracts through yours2share. These will get you started. Once you’ve agreed everything, get your solicitor to check it through for you.
So what do you need to consider to find like-minded partners?
Usage – Are you compatible? It won’t work if you all want to use the asset at the same time. Bear in mind school holidays, Christmas, Easter, bank holidays, summer, winter, weekends, and weekdays. Consider how you are going to allocate the use, by a strict rota, by agreeing dates according to some formula at the beginning of the year, on a first come basis.
Who will use it? Is it to be sharers only, plus their family, any of their friends, any acquaintance, and what about letting to strangers? Is the sharer always to be there? This is a particularly important issue that is often not discussed.
Exit strategy – You must agree how the ownership will end; there are many possibilities.
Values You need assurance that the other sharer(s) and their families will treat the asset with the same care and attention as you. How do they treat their own home, car, other people’s property, restaurants or bars or wherever you’ve met for discussions?
Taste If you are sharing property in particular, you need to have similar taste. You are likely to have difficulty if one of you loves chintz and the other minimalist chic. Is your understanding of quality the same? One person’s idea of luxury can be basic to someone else.
Family and pets Families with small children are usually best sharing with other families with small children. Similarly people with dogs are often best sharing with other dog owners and people with asthma may not wish to share with dog owners.
Smoking Generally non smokers don’t want to share assets such as property, mobile homes, cars or boats with smokers.
Financial background To gauge the other person’s ability and willingness to pay unforeseen costs. Ability to pay does not imply willingness to pay. Some people will always look for the cheapest alternative regardless of quality. In general, many sharing arrangements find that they tend to always go for the highest quality maintenance and repairs simply because the cost is on a fraction of the cost if they owned the asset on their own. You need to work out how you are going to agree what improvements, repairs and replacements you will have in the future. If only one sharer wants a particular improvement, and it is really important to them, do you all go ahead and pay your share or not?
Appetite for risk Some people avoid any form of risk, others thrive upon it, and there is a big range in between. You want to find sharers who are all comfortable with a similar level of risk as you are.
Skills – are there any minimum qualifications such as Day Skipper qualifications for sailing a yacht?
DIY or maintenance If you are buying a property, or boat together, if one or more sharers want to get involved in renovations or maintenance themselves, then either all sharers must agree to help in this work or agree how to recompense those who do it. It is also wise to ensure that your standards of workmanship are compatible.
Remember, your gut reactions are usually right and always make whatever checks you can on your potential partners.
Finally relax; if you’ve discussed things properly, drawn up a good contract and taken legal advice, then you should have an excellent sharing arrangement.