Is this the same as a timeshare?

No, co-ownership or fractional ownership is different from a timeshare. With co-ownership, you own a percentage of the property, which means you can sell, donate, or transfer your share. You also benefit from any appreciation in the property's value and may be eligible for tax advantages. Typically, you have private use of your home for 4 or more weeks per year.

What are the advantages of co-owning a home?

Many people dream of owning a vacation property but find it financially out of reach or impractical given how rarely they would use it. Co-ownership or fractional ownership offers an ideal solution by allowing you to own a share of a premium vacation home at a fraction of the cost. This approach not only reduces the initial investment and ongoing expenses but also spreads the risks of unexpected maintenance issues and potential depreciation among multiple owners.

Why use a limited partnership to own the home?

A U.S. Limited Partnership or Limited Liability Company (LLC) structure keeps share sales and ownership rights within the United States. The LLC then acquires the legal entity that owns the French property, known as a Société Civile Immobilière (SCI). This multi-entity ownership arrangement allows co-owners to bypass the restrictive tax and inheritance laws in France that would apply if the property were purchased outright. By utilizing an LLC, co-owners are governed by U.S. tax and inheritance laws.

What contract defines the ownership rights?

The Operating Agreement, signed by all shareholders, outlines the rights, obligations, and responsibilities associated with their LLC. It defines the LLC's assets and liabilities, including an initial estimate of monthly operating and maintenance fees, which, after the first year, are adjusted based on actual costs. The Agreement typically covers key areas such as:

What are the monthly fees associated with ownership?

Annual or monthly property fees cover homeowners’ insurance, property taxes, internet and cable, utilities, bookkeeping, cleaning, and a contingency fund or reserve for maintenance. These costs are initially estimated in the LLC contract for the first year in euros per share, depending on the specific property features such as the house size, and whether it has a garden, or a pool.

Occasionally, capital improvements to the property are necessary. One of the key advantages of fractional ownership is that all property costs are shared among the LLC shareholders, significantly reducing the individual financial burden.

A local management firm will handle property maintenance, preparing the home for each shareholder's arrival and cleaning it after their departure. All service charges, including tax reporting and financial record-keeping, along with any replacement costs and expenses are passed through to shareholders as part of their monthly maintenance fees. This ensures a seamless and worry-free experience for all co-owners.

How are the private residency rights assigned to each shareholder?

The contract outlines an equitable process for scheduling home use among shareholders. The scheduling formula is tailored to the location of the home to maximize fairness and enjoyment. In the South of France, for instance, there is a peak summer season, a "shoulder" season in spring and fall (thanks to the region's typical 300 days of sunshine), and a winter "off" season.

Can I rent or exchange my assigned time?

The contract will clearly define your rights regarding the use of your assigned private time. You are welcome to allow family and friends to enjoy your scheduled time, or you can exchange those dates with other shareholders at other homes. Additionally, there are several online platforms that facilitate home exchanges, whether through reciprocal arrangements or guest point exchanges. Notable platforms include HomeExchange and ThirdHome. These barter system platforms require more controlled negotiation between you and the person(s) using your time in your home, as opposed to renting your time through commercial rental platforms like VRBO or Airbnb.

How do we exit the co-ownership?

The contract outlines the process for selling your share of a co-owned home and how ownership is transferred in the event of death or divorce. While you cannot sell your share within the first 12 months of ownership, after this period, Joie de Vivre Homes can facilitate the sale of your share at an agreed-upon market value. Your share can also be inherited by a single entity, such as a trust, when there are multiple beneficiaries. Additionally, existing shareholders have the first right to purchase available shares in their home at market value.

What if a shareholder fails to pay their monthly (or annual) fee?

If a shareholder fails to pay their monthly maintenance fee, the consequences are typically outlined in the Operating Agreement. Common actions include:

1. Late Fees and Penalties: The shareholder may incur late fees or penalties for missed payments, which are added to their outstanding balance.

2. Suspension of Use Rights: The shareholder's right to use the property may be temporarily suspended until the outstanding fees are paid in full.

3. Lien on Ownership Share: The LLC may place a lien on the delinquent shareholder's ownership share, preventing them from selling or transferring it until the debt is settled.

4. Collection Actions: The LLC may take legal action to collect the unpaid fees, including hiring a collection agency or pursuing a lawsuit.

5. Forced Sale of Share: In extreme cases, the LLC may force the sale of the shareholder's interest in the property to recover the unpaid fees. This sale could be offered first to other shareholders or to an external buyer.

The specific remedies and procedures will be defined by the terms set out in the Operating Agreement, so it's important for shareholders to understand these provisions and stay current with their payments.