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Choosing The Best Legal Structure?

Establishing your resort around the best legal structure from its inception will mean it is fit for purpose and ensure its future success.

FNTC can help developers structure their fractional development to meet all legal requirements of the country in which it is located. It will also ensure the protection of developers and owners alike.

However the following tips offer a starting point for meeting legal requirements:

  • Investigate the laws and legislation in place in the country in which your property is located.
  • Consider the structure of the fractional offering. Is to be ‘right to use’ like traditional shared ownership models or is it a form of property investment? Different rules apply to each structure.
  • Consider the property you choose - you need to ensure that the original terms of sale do not restrict its use to that of a single family home or include ‘no shared ownership’ clauses.
  • Check planning restrictions - the property may be listed or there may be restrictions with neighbouring properties and access. Be sure you can legally do what you want to.
  • Consider carefully the seasonality and demands on occupation. For example under UK law only four people can be named on a property title, if you have more owners it will require a different structure to the ownership title, perhaps using a specialized trustee like FNTC.
  • Although different to timeshare, fractional properties are impacted by timeshare legislation in some jurisdictions. If developers are selling within the EU, they need to consider the cooling off period, prohibition on taking deposits during this time, and the provision of necessary disclosure information at point of sale.
  • Spend time on the documentation to ensure it is clear and future-proof.
  • Organise consumer finance. In the present economic climate this may mean that the developer provides in-house finance to his buyers. FNTC can assist by setting up a compliant consumer credit administration service. This will reduce infrastructure costs to an absolute minimum and add considerable value to the business.

An initial, no obligation chat with FNTC’s business development team will give you all the insight you need to explore the fractional market. Call us on +44 (0) 20 7397 5275 for Europe, or on +1 866 978 2571 for the Americas and Caribbean.

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