Five Key Differences Between Co-Ownership and Timeshares

By Andy Sirkin

It is often said that co-ownership is like owning your dream vacation home, only better, and timeshare is like endlessly returning to the same mediocre hotel or resort group, only worse. As someone who has prepared legal documents for thousands of co-ownership groups over 36 years, and been part of an eight-family vacation home co-ownership for 16 years, I may be uniquely positioned to explain why this generalization is so often accurate. To do this, I will identify and describe five key differences between co-ownership and timeshare.

Difference #1: Timeshares Have Many Units

The average US timeshare has 130 units, and timeshare members typically occupy a different unit each visit. By contrast, co-owners share a single property, meaning their home-away-from-home feels like home each time they arrive. For those who prefer owning to renting, there is no substitute for returning to the comfort of familiar space, furniture, cookware, etc. And compared with owning alone, co-ownership offers the added benefit of sharing the cost of a professional to keep those familiar things organized and in perfect condition.

Difference #2: Timeshares Have Many More Owners

More than 72% of US timeshares have 52 owners per unit, meaning the average timeshare project has over 6,700 members. And only about 50% of timeshare occupancy is by the members; the rest is rentals and exchanges. These statistics translate into a lot of use by people who have little or no long-term connection to the property, and scant incentive to keep the timeshare attractive and welcoming. By contrast, small co-ownership groups own and share a single property, which they return to throughout the year, and rentals are typically prohibited. 

Difference #3: Timeshares Lack A Fair Cost-To-Value Correlation

On average, 40-60% of the price of a timeshare covers the developer’s marketing costs, and the total price-per-unit paid by timeshare buyers is often more than 20 times the fair market value of the unit. Consequently, there is no relationship between the price timeshare members pay and the market value of what they get. Given the huge marketing investment timeshare developers make to move their product, and the tenuous (or nonexistent) relationship between price and value, it is no surprise that re-selling a timeshare ranges from difficult to impossible. By contrast, almost all of the price of a co-ownership share goes directly to the cost of the co-owned home and its contents, meaning there is always a close relationship between the per-share price and the market value of the home. 

Difference #4: Timeshares Are Not Under Owner Control

Although most timeshare organizations have a nominal owner board or committee, in practice timeshare members have little if any control over operations and costs. The disconnect stems from management agreements with resort operators or developers that prevent the timeshare members from exercising oversight and, worse still, are difficult or impossible for the members to terminate. By contrast, while co-ownership groups usually have professional management, the owners retain ultimate control together with the ability to change managers if the job is not getting done well and at a reasonable cost. 

Difference #5: Timeshares Attract Financially Weaker Owners

The average price for a timeshare purchase is about $20,000 and the median income of timeshare members is about $73,000. The limited financial capacity of timeshare members, coupled with the tendency of member dues to increase dramatically over time and the difficulty of resale, often translates into high rates of member delinquencies. These, in turn, lead to still higher dues and lower accommodation quality. By contrast, the investment and income level of owners in co-ownership groups is much higher, and the level of owner delinquencies is much lower. These factors make co-ownership arrangements significantly more stable and less risky for the owners over time. Despite the fact that only 64% of timeshare members would recommend timeshares to their friends, and despite a seemingly endless stream of horror stories from members who cannot even give away their interests, the timeshare industry has continued to grow. This is likely due to the extraordinary profit timeshare developers generate, the 40-60% of their revenue spent on marketing and the vulnerability of vacationers to customary high-pressure sales tactics and. But the advent of highly organized and functional platforms to help small co-ownership groups coalesce and co-owners to re-sell, together with readily available and reasonably-priced high-quality professional management, is demonstrating that the vacation-home-sharing revolution has arrived, and that there is a new and much better alternative to the timeshare model.

About SirkinLaw APC

SirkinLaw APC has focused on real estate co-ownership since 1985, and has been involved in the creation of more than 5,000 co-ownership arrangements throughout the United States and the world. This breadth of experience allows us to draw on a huge library of fractional project documentation as well as extensive knowledge of marketing and registration requirements for virtually any location where a project might be located or potentially marketed. We pride ourselves on our ability to write legal documents in plain English, develop simple and elegant usage and organizational structures, and offer efficient, reliable and cost-effective services for fractional projects ranging in size from a single house or condominium up to hundreds of factional interests. Our firm has offices in San Francisco California, Evergreen Colorado, and Paris France.

About The Author

Andy Sirkin has been a recognized expert in fractional ownership for more than 35 years. Since 1985, he has focussed on advising and preparing contracts for small groups of families and friends who want to buy and share vacation homes as partners, and on advising and preparing contracts for sellers and real estate agents who want to market and sell fractional interests in a particular vacation home. While work with individual owner groups, buyers, sellers, and real estate agents remains a major part of Andy’s fractional ownership practice, his work now encompasses advising and preparing contracts for web-based platforms (such as Pacaso) that organize, facilitate and manage fractional ownership arrangements for specific homes, and advising and preparing contracts for fractional ownership developers  (who buy properties to renovated and furnish for sale as fractional ownership interests), fractional ownership marketing and sales firms, and fractional ownership management companies.

Andy has worked on fractional ownership of properties located throughout the U.S. and the world, and has also advised fractional ownership startups, platforms, developers and related businesses based in, or focussing on, locations throughout the U.S. and many other countries. However, most of his work has involved fractional ownership in the U.S., the U.K., Western Europe, Mexico, and the Caribbean. He has been a featured speaker at many fractional ownership and timeshare conversions and symposia, an accredited instructor with the California Department of Real Estate, and a frequent interviewee on fractional ownership for podcasts and news coverage throughout the world. Andy is based in Paris, and can be contacted via the contact form.