Fractional Title

Is Fractional Title Property Ownership for you?

Are you looking to invest in a vacation home or pure investment property, but you can not afford 100% of the cost or 100% of the time?
Would you be interested in owning a portion of a property and be prepared to abide by rules and regulations for the use and function as well as the future sale?

If you have answered yes to the above, you are a good candidate to investigate fractional property ownership.

CEI Overseas Properties offers selected properties that are suitable for this type of ownership.

What is a fractional property ownership?

The concept was well established in the ownership of both corporate and private aircraft and in the 1990's was extended to luxury vacation homes. The concept formalised the practice of a group of friends pooling their resources to buy a holiday home or investment. over the last three years the concept has gained popularity amongst South Africans as it is a convenient way to buy luxury property that may otherwise be unaffordable and maintenance costs are shared. as increasingly, people are questioning the financial wisdom of owning 100% a second or vacation home if it is only used a few months out of the year!

Fractional ownership comes into its own when it offers the opportunity to buy partial ownership of a quality and substantial home in a first class resort area. It is the ideal vehicle to acquire a share in something that would otherwise be out of reach. The ownership arrangements usually divide the ownership into quarters or more with each owner having an equal number of days a year to use the property an an agreed rotational basis. CEI Overseas Properties markets a minimum of a quarter share. (25%) in a property.

How does it work?

CEI Overseas Properties can offer you fractional ownerships from 16.6% (equates to two months) and up to fifty percent (50%) of the actual price of the property. You choose a property we are marketing and decide on what share you would like to own (minimum of 16.6%). On condition that there are other investors for the same property, the property is then purchased by a Company with your ownership secured by way of proportional shareholding in this Company.

You will be responsible for your percentage of the deposit and transfer costs and maintenance charges. We generally do not recommend that the Company is allowed to raise a mortgage, requiring all buyers raise their own finance for their purchase. CEI Overseas Properties can discuss all the financing options with you before you make a final decision.

What are the typical rules and regulations of ownerships?

A typical partnership agreement which must be signed by you and other owners will have the following typical characteristics:

Duration of the partnership agreement.
A projected goal for the sales price to sell or the renewal of the agreement.
The intended usage of the property (restrictions that may be agreed)
Fair allocation of time periods.
Procedures to sell your share if you wish.
Management and maintenance costs.

Once the group's objectives are clear and the attorney can recorded the agreement. Objectives vary depending on your age, long or short term investment goals, usage period, but CEI Overseas Properties has a number of variations and can assist in the creating a tailor-made agreement for the group.

Is it similar to time share?

There are similarities, in as much as the more fractions that are sold, the more it resembles a time share. Both can be bought as deeded properties (some time shares are also sold as club memberships instead of time in a specific unit), and can be rented out, shared with family and friends, sold or left to someone in a will.

The big differences between time shares and fractional ownership properties are prices, financing and fees. While time shares can be had for a few thousand dollars, fractional ownerships are available from about R300,000. Fractional Title is also proving to be a good tool for investment whereas time share is not focussed on investment and the real cost of a unit sold for every week of the year usually represents a total value far in excess of the real value of the unit.

Fractional owners express a greater satisfaction in really owning their home as opposed to the impersonal and 'hands off' time share ownership and management structures with their questionably high levies! There is far far greater control with fractional title in that the four owners (in a 25% structure) can more easily discuss matters such as improvements etc.

What else do I need to know

Selected properties are available for a short time period as the property owner (usually a developer) may not be prepared to wait longer than a month or two to allow the structuring of the group which is essential to effect the purchase. CEI Overseas Properties must qualify each share owner prior to discussion of partnership agreement. If the tailored partnership agreement is not agreed in writing among the partners, the property will not be sold.

Will I be paying more because it is a share?

Here is the essential difference between CEI Overseas Properties and most fractional title property sales being marketed in South Africa! CEI Overseas Properties does not inflate the fractional price or load the price in any way. The price of the 25% share is exactly 25% of the price of the whole. Currently fractional title sales in South Africa typically are offered in small fractions of 8% but represent 12% of the price of the whole.

We are totally transparent and charge a one off administration fee to facilitate the joint purchase - this is another reason we do sell fractions of less than 25%. The commission being charged is also the same as it would be selling the whole property to one purchaser (i.e. 100% share).

I am interested, what do I do to start?

Please complete the Investor Guide form to register your initial interest. All properties we market are suitable for fractional title purchase.