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Fractional ownership explained

We explain everything you need to know about this innovative model to acquire your next vacation home.

By Ancana, June 24, 2022

We explain everything you need to know about this innovative model to acquire your next vacation home.

The “Fractional Ownership” is the latest innovative way to share real estate without suffering from the hassles one can go through when buying a whole property on their own.

Its growing popularity can be attributed mainly to the collaborative economy, we put it this way: you are surely familiar with the famous “co-workings”, shared trips in mobility services or perhaps you have heard of peer to peer loans, it’s more… when you go to dinner with your friends, in the end you divide the cost among all those who consumed even if it’s all in the same account, right? Broadly speaking, this is how fractional ownership works.

Sala de la propiedad Vista al Río ubicada en Valle de Bravo en venta por fracciones en
Vista al Río, Valle de Bravo, Estado de México. Propiedad de lujo disponible por 1/10 de fracción en Ancana

In the fractional ownership model, the costs of an asset are divided, such as a luxury vacation home in Acapulco, and you only pay for the portion you plan to use, which for a vacation home is equal to the number of weeks per year the property will be occupied. Once you complete the paperwork, that portion of said property becomes yours to enjoy.

But WATCH OUT HERE! This is not the same as timeshares as one might think, click here to see their main differences.

Buying a fractional vacation home is ideal for buyers who don’t want to own a property in its entirety simply because they wouldn’t use it enough to justify the cost. And while you can certainly afford to buy a high-end summer home, it might not make sense if you only want to spend a limited number of weeks a year with your family, especially if it’s for vacation use.

Considerations to take into account

Man signing paper contract agreement for house with model home.

The fact that this new real estate acquisition model is already happening here in Mexico, allowing growth to be promoted throughout the market and it redefines the concept of real estate. It is gaining much more strength and popularity in the market, so from the outset it is very important whenever you are going to acquire a co-owner vacational residence to review the terms and conditions of the contract on which the model is based.

In Ancana, a contract is concluded through a investment trust, the owner becomes the legitimate owner of the property based on the number of fractions that he has acquired and, as in any other sale of real estate, the cost of legal, notarial and taxes will be added to the total price of the fraction, normally it varies between 5% and 8%. In this way, each owner will have the use and enjoyment of the weeks that correspond to them without depending on the other co-owners.

But what about maintenance?

Electricista joven del servicio de mantenimiento doméstico comprobar la tensión de la toma

Usually, in this fractional ownership model, the management of the property is managed by a company that is in charge of the administration, accounting and management of use by each owner; unlike buying a house on your own, where you yourself would have to take care of all administrative expenses, cleaning and management in general.

At Ancana we remodel, furnish, manage, maintain and clean your property, so you would only worry about reaching your destination and enjoying the incredible experience, we guarantee a turnkey experience for all owners; We can even buy the supermarket in advance if required. In general, the maintenance costs go directly to the co-owners and are divided equally.

Paperwork and legalities

The legality of a contract is dictated by a judge in case of demand.

For each fractional property, a document is made detailing all the rights of the co-owners (which cover assignments of use, rentals and resales) and obligations (which cover fee structure, rules, repairs and maintenance). So that from the beginning there is a concise agreement on the rules of use of each property.

Also… Did you know that a foreigner can buy a property and does not even need temporary residence? In Mexico, foreigners had previously been prohibited from owning property within the “restricted zones”, which basically means any property located within 50 km of the coast and 100 km of the border. The only way a foreigner can own property within these zones is through an investment trust.

Holding the property in an investment trust allows the bank to serve as trustee and is another layer of protection for co-owners. Fortunately, you will not have to go through the entire process of forming an investment trust, since with Ancana you avoid this inconvenient paperwork.

Owning a vacation home has never been this easy.

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Ancana Living © 2023

Ancana Living © 2023