SPECIAL EDITION: What About a Fraction?
We’ve talked about it a lot in French Property Insider, and the idea has been around a long time, but still it seems not everyone knows what Fractional Ownership is or understands the concept. Isn’t it your dream to have a home in Paris or elsewhere in France? Have you thought of just owning a part of a property instead?
The idea all started with the shared ownership of jets — “a way of mitigating the risk of the ownership of a high-value tangible asset.” A man named Richard Santuilli is credited for the concept, but it’s been done for decades where individuals set up LLCs to purchase boats, planes or property. In this case, we’re talking about property in France.
In the mid first decade of this century, fractional properties in Paris and other parts of France became very popular. Developers were popping up like wildflowers as were their properties — with schemes of ownership across the board from four 13-week shares to 13 four-week shares in properties as small as a studio to as large as three bedrooms and more. Meanwhile, owners were looking for an affordable way to own the pied-à-terre of their dreams without the added responsibilities of full ownership.
In most instances, the property is purchased by the developer in the name of an “SCI” — “Société Civile Immoblière” — or French property company which must have at least two members. The two members consist of two U.S. corporations or homeowners associations, normally one with 99% of the shares and the other with 1% of the shares, simply in order to ‘legitimize it.’ The owners then can purchase shares in the U.S. corporation enabling a simple and cost-free transfer of the title deed. (In France, any property transaction in which the title is changed will incur transfer taxes and fees. In this case, nothing changes about the title of the SCI while transfers take place via the shares held in the U.S. corporation.)
Fractional ownership is very different from having the full title to a property. While independent ownership gives one full control over the property, and the ability to retain all revenues, it also gives one full responsibility over the property, including all management and potential losses, if any. With fractional ownership, an owner can share all aspects of responsibility with the others and spend much less money to have a more luxurious property than they might on their own.
Fractionals also make a lot of sense for people who can only spend a limited amount of time in France each year. The accommodations can be virtually cost free as long as the property appreciates over the years so that there is a break-even or profit from the sale of the share in the future.
A fractional property runs much like a co-op does. The owners must adhere to the bylaws. A Board of Directors is elected to oversee the management and normally a professional management company is employed. During annual (or more frequent) owner meetings, the owners vote on the issues and the annual budget. Owners are assessed for their share of the annual operating costs.
Sometimes the owners become great friends and in other instances, they may not get to know one another at all. Each property is distinctly different: the property itself, of course; in the way the calendar of usage operates; how it is managed; its rules and regulations, etc., etc. But they all share in the fact that the owners control every aspect of the management and usage of the property.
We have worked with a number of developers since the beginning and became a developer ourselves in one property – “Le Palace des Vosges.” Because of their popularity, there are only a few shares of fractional ownership properties left in Paris and other parts of France. Once they’re gone, they’re gone for good…or at least until an owner wants to sell his share, and then it goes into the ‘secondary’ market at a fair market value, hopefully profiting the original owner.
In most instances, I have witnessed very happy owners. If the property is well-run, then normally disputes do not arise and the property is happily shared by all. When the owners are a homogenous group, the sharing of the property can become one of life’s greatest pleasures — as I have witnessed personally at Le Palace des Vosges.
Le Palace des Vosges is the property we developed and launched in September of 2009. It is by far our most luxurious fractional ownership property in Paris…and it is also a very special piece of real estate. Located in the second courtyard of what was once the Hôtel des Chaulnes at number 9 Place des Vosges, with direct entry from the cobblestoned courtyard, it is easily accessible like a private home and spacious beyond belief in spite 81 square meters (872 square feet), comprised of two bedrooms each with its own full bath, plus a powder room and a sofabed in the living room for even more family or guests. The open kitchen is more than fully equipped (dishwasher, washer, dryer and all the appliances) and would be considered a ‘gourmet’ kitchen by anyone’s standards — anchored by a five-burner Falcon stove with three ovens that any chef would drool over! The apartment is for wont of nothing equipped with a large flat-screen TV, computer, printer, air-conditioning, etc., etc.
Its total charm and perfection comes from its location on the beautiful courtyard at Paris’ best address, the more than 400 year-old Place des Vosges, and complete renovation and decoration by our accomplished Interior Architect, Martine di Mattéo with three original paintings by French trompe l’oeil artist, Pascal Amblard. Every inch of the apartment is new except for the 400 year-old oak beams and a stone circular staircase leading to the upper level bedroom. A ‘faux’ fireplace adds to the ambience and heats the lower level virtually independently.
The owners came one by one and became good friends along the way. They now visit each other outside of their ownership in Le Palace des Vosges and openly share their time whenever they can. Now with only one four-week share left, this is a premium spot to own in the heart of Paris and Le Marais. When it’s gone, I doubt a share on the secondary market will be available for many years to come.
The last share is priced at 147,900€. The price has never been raised, yet the property value has increased substantially over the years and ownership in Paris’ best address is a guaranteed value. Not only will you love having your time there, you will never be sorry you made this investment.
Visit Le Place des Vosges for more information.
On a much smaller scale in size and price, for old-world elegance and a bargain “pied-à-terre,” the studio “Le Notre Dame” has location, location, location on the Ile de la Cité where life in Paris began centuries ago. The apartment sits on a charming side street on the island that sits on the Seine River on what was once known as “Lutèce” and is classified among Paris historical monuments. It has been entirely restored to include its original centuries-old wood beams, fireplace and antique touches. From the window in the dining area, there are direct views of Notre Dame herself.
The restoration married old world charm with modern conveniences…air conditioning, a modern elevator that takes you to its second floor level, a well-appointed kitchen and a beautiful modern bathroom with a full shower. It offers all the amenities of a luxury rental property or personal residence.
The location on the island is the geographical center of Paris so you’ll be able to walk almost everywhere in the city center. There are several Métro and bus lines with stops located a few steps from the apartment and Le Marais is just a five-minute walk away onto the Right Bank. Walk in the other direction and you land right in the Latin Quarter on the Left Bank.
Le Notre Dame is a perfect Parisian home for a single or couple or two friends wanting a centrally located home in the City of Light at a “petit prix.” This is the city’s least expensive fractional ownership property and with only a few shares left, the developer is open to discussing a bottom line that will make you both very happy. In fact, at this deal you should buy two!
Shares begin at as little as 14,900€ per two week share and sold as two two-week blocks. The developer is willing to offer his own form of financing, too!
Visit Le Notre Dame for more information.
On the Left Bank, on Rue du Colonel Combes located near the Eiffel Tower and the Seine, this fractional property in the 7th arrondissement is situated on the top floor of what was once a gracious 19th-century private mansion, and is now a small-scale, beautifully preserved apartment building with an elegant entrance. With one bedroom and one bath (with separate toilet) in approximately 47 square meters (506 square feet), it’s on the 6th floor of a building with an elevator (up to the 5th and then one staircase up), and offers sweeping views over the rooftops of Paris.
Windows occupy an entire wall of this charming newly-renovated apartment, providing glorious light with the Eiffel Tower silhouetted against a sweeping expanse of sky. There’s a sense of hovering in the clouds above the city from the apartment’s perfect location — a block from the Seine River and the Hôtel des Invalides as well as the well-known American Church. It’s also a stone’s throw from one of Paris’ best outdoor markets, the Rue Cler and just mere minutes from the avenue des Champs-Elysées, Saint-Germain-des-Prés, or a quick jog to the Champ de Mars and the Eiffel Tower.
Gourmet cooks will find a contemporary, streamlined kitchen, which opens onto the living/dining area without actually being part of it. It’s fully equipped with all the perfect appliances and amenities. When you don’t feel like cooking, you can step just outside the door to some of Paris’s finest eateries, from quaint corner cafés to homey bistros to Michelin-star-ranked restaurants. For evenings just spent relaxing at home, the apartment is equipped with cable TV and a Bose entertainment system.
The usage plan consists of two fixed weeks and two flexible weeks for each share. There are only two shares remaining – weeks number 15 and 16; 23 and 24; or 34 and 35 (April 6-20, 2014, June 1-15, and August 17-31). These are all prime weeks and the listed price for each share is 95,000€
Visit Rue du Colonel Combes for more information.
In the south of France, a way from the urban life of Paris, is “Le Muguet.” This two-bedroom, two-bath medieval fractional ownership property is in the heart of Provence located in a quaint village near the Pont du Gard and only a 10-minute drive from lively Uzes. Le Muguet (Lily of the Valley) is part of an ancient monastery from the 17th-century and the village of Vers-Pont-du-Gard is a typical Provencal village with all the amenities: restaurant and bar, grocery store, “Mairie” (Town Hall) and of course, the village square with a “boules” court, just below the home.
With the charm of small village life, but right down the road from city life in Uzes, Nimes, Arles, and Avignon, what could be more idyllic? Schedule a local cooking class, explore the villages of Peter Mayle fame, or canoe down the river…your life in southern France has just begun at Le Muguet.
Le Muguet has been entirely renovated and includes a 40 square meter (430 square foot) living room with fireplace and vaulted ceiling, a fully fitted kitchen, two bedrooms, two baths and a 34 square meter (387 square foot) rooftop terrace as well as a patio overlooking the village square and the mountains. The stone quarries nearby of Vers were the source for the foundation of the Pont du Gard Roman aqueduct, one of the most visited sites in all of France.
If you’re interested in visiting Le Muguet, apartments owned by one of the seller’s in nearby Uzès are available for rental and if you buy a share in Le Muguet, one week’s worth of your rent will be reimbursed!
Le Muguet has only two shares on the market, November and December of 2014 (then it rotates forward by three slots), priced at 49,900€ each. Now is the time to secure your share!
For more information about fractional ownership or to purchase your share in any of these outstanding fractional ownership properties, contact [email protected].
A la prochaine…
Director of The Adrian Leeds Group, LLC
P.S. Fractional ownership doesn’t suit everyone, but those who have tried it love it! Don’t hesitate to contact us for more information about these and others you will find at French Property Fractional!