FRACTIONAL OWNERSHIPS- TIMESHARES FOR THE TWENTY-FIRST CENTURY?

In the last 25 years or so, vacationers, whether sojourning in Hawaii, visiting the desert, or any ski resort in the known universe, have most likely been accosted by the timeshare salesperson.  Weekend resort packages, chances to win television sets, free meals with promises of the proverbial fatted calf and the whole enchilada- all these lures have been used as inducements to sit through a spiel about the benefits of purchasing a timeshare in (fill in the blank).

Timeshares eventually fell out of favor with purchasers, however, as people came to realize that not only did the timeshare have very little resale value; sometimes it has even proved difficult to give one away.  You see, along with the chance to spend a few weeks at a resort, or the chance to trade for a different location, comes fees- ownership dues, management fees, maintenance costs- however the charges are characterized, they're still expenses, and they have an annoying habit of spiraling up.  

Savvy developers, seeing the end of the timeshare gravy train, came up with a way to repackage timeshares for the new millennium, and a clever way to wring millions out of a condominium that might have an actual street value of $800,000, or less in today's falling markets.  Here's the wrinkle- instead of selling the right to use a place for a set amount of time, developers now divide the title up into twelfths or fourteenths, and sell the actual property rights.  Charge $350,000 for a twelfth- selling the whole interest yields $4,200,000.  Obviously the numbers change as the price and the fractions change- either up or down.  And of course, premium locations, whether on the coast, or at popular ski resorts, command a higher price.  

Why would someone pay an amount in the vicinity of $300,000 for a very small ownership interest in a property that is probably worth $700,00 to $900,000?  That's where the developer's ability to sell the Brooklyn Bridge comes in.  The developer loads the condominium down with "luxury" finishes- granite counters, steam showers, high-end appliances, and pushes the unit at people who crave status, but who couldn't possibly afford the purchase price of $700,000 or so.  The developer, in essence, sells very expensive ambience.  

What fractional purchasers don't realize, though, is that they've bought more than a fractional share in a property.  They've also purchased the same escalating fees encountered by traditional timeshare buyers.  Moreover, they have perhaps unwittingly bought a whole selection of unresolved legal problems.  What happens if another fractional owner of the unit they bought is adjudged bankrupt, or has a monetary judgment entered against them in a lawsuit, and all of their property is ordered sold?  Will this force the sale of the entire fractional ownership unit?  What happens if another owner dies, and his heirs wish to liquidate their interest in the property?  Will the entire unit have to be sold?  What happens if the management corporation goes bankrupt, fails to maintain the units properly, or doesn't follow through with providing and maintaining promised amenities, such as ski lifts?   It doesn't take much to imagine many permutations on these questions.  Every cloud has a silver lining, though.  The complications built into fractional ownerships should provide full employment for lawyers.

Here's the real question for purchasers, though.  A fractional ownership unit comes pre-decorated, and is basically run like a hotel.  The purchaser may have one or two locked boxes in which to store personal items, but is otherwise unable to change anything about the unit purchased.  When one looks at all the hidden fees and complications inherent in fractional ownerships, and the chance that visiting the same location might become boring after a few years, wouldn't it be more prudent to save the purchase fee, and to indulge in staying in a luxury hotel occasionally, instead of splashing all that money out on something that may become as difficult to unload in a few years as yesterday's timeshare?