4.7 Time-Shares

Time-Shares

Time-share ownership is a fee or leasehold interest in a property where owners or tenants agree to use the property on a scheduled, non-overlapping basis. Time-shares are common for vacation or resort properties and provide for equal sharing of property expenses among owners.

• Time-share lease: The tenant rents the property on a scheduled basis (usually by week or month) for a set number of years. The use schedule and lease duration are pre-arranged.
• Time-share freehold (interval ownership): Tenants in common own undivided interests in the property. Each owner pays a share of the purchase price and annual expenses, and has use of the property for a specific period each year (e.g., one month out of twelve). Rules for usage and expenses are set by agreement. Owners usually waive the right of partition.
• Regulation: Time-share sales and development are increasingly regulated. Laws often require developers and brokers to provide detailed disclosures about costs and risks, allow a “cooling-off” period after contract signing, and require registration of advertising.

Example: The Blackburns buy a one-twelfth interest in a Colorado time-share for $20,000, giving them use of the property for one month each year and obligating them to pay one-twelfth of the annual expenses.