Real estate time-sharing is a concept based on the sharing of vacation properties between different owners. Purchasers of vacation intervals receive the right to use a vacation home, such as a condominium, for a specified number of years, or in perpetuity. In the plain-vanilla form of time-sharing, a purchaser buys into a vacation property in intervals of weeks and obtains the right to occupy the interval purchased during the same week each year.
Typically, ownership of a time-sharing unit is divided into 50- or 51-week interval interests, with one or two weeks reserved for maintenance. Accordingly, each real estate time-sharing unit would have 50 or 51 owners. Exhibit 7.1 depicts a time-share property with seven units; each unit is divided into 51 intervals.
In addition to the purchase price, the buyer is also responsible for an annual fee to cover the management, maintenance, and operations of the resort, which generally provides a variety of amenities, such as parks, swimming pools, playgrounds, tennis courts, and golf courses.
Customer demand for flexible arrangements prompted time-share companies to introduce floating weeks,1 exchange programs, and points-based systems.2 Exchange networks, such as Resort Condominium International (now Group RCI) and Interval International ...