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Time-sharing Summarized
By arlene | March 10, 2008
Time-sharing was invented in Europe in the early 60’s because of the high cost and scarcity of resort facilities and limited choices for holiday-conscious European families. Time-sharing thereafter came to America and South Africa and has become one of the fastest growing holiday alternatives. In South Africa there are resorts ranging from game farms to beach villas, flats and hotels offering utilization by way of time-sharing.
This concept has also been applied to caravan parks and even yachts. Time-sharing is a term that was originally borrowed from the computer industry where clients shared time on expensive computers.
What is it?
Time-sharing is simply a way to ensure exclusive use of accommodation for a particular period of time annually; it is usually sold by the week but many resorts, particularly game farms, offer use by the day or weekend. Well managed resorts ensure that rooms are prepared and cleaned for each owner, and completely furnished from linen to crockery and cutlery.
How it works
Each residential unit is divided into periods (time modules), usually weeks, that are sold separately.
A time-sharing interest is therefore the exclusive use of accommodation in property for determined or determinable recurrent periods of time (time modules) annually. Time-sharing units are priced according to the size of a unit, the amenities provided by the resort, the location of the resort and the season in which the week is sold
For example, “in-season” weeks will cost more than “out-of-season” weeks.
Time-sharing projects are maintained and managed by annual levies paid by the owners to the Management Association—a nonprofit body made up of all the owners of the resort.
Methods of purchasing
Projects offer various methods for purchasing. All time-sharing projects fall within two broad categories, namely:
Schemes in which the interest is based on ownership, which in turn constitutes an undivided share in a Sectional Title Unit. Ownership is registered in the Deeds Office.
Schemes in which the purchaser’s time-sharing interest is based on a right of use. These have evolved into several variations:
2.1 An interest in the property is a share in a company (which either owns or leases the land) and the right to use the residential unit for the time module, based on the Share Block Control Act;
2.2 club membership schemes;
2.3 lease schemes;
2.4 schemes where the acquirer lends the equivalent of the purchase price, interest free.
“Right to use” schemes are not registered in the Deeds Office.
An important aspect of time-sharing in South Africa is the fact that all time-sharing schemes are controlled by the Property Timesharing Control Act. A contract of sale of a time-sharing interest must contain certain statutory information such as:
- a description of the immovable property;
- whether the property is owned by the developer or not;
- if the property is bonded;
- the purchase price and interest;
- the annual rate of interest (if any);
- if the architect’s certificate in respect of the accommodation has not been issued, the latest date by which the certificate will be issued and delivered;
- an inventory of any movables.
The Act also has regulations which govern aspects such as:
- floor layout particulars;
- management agreement;
- facilities available;
- amount of levy, how calculated, and a budget of income and expenditure;
- rules of the scheme.
The regulations contain specific provisions dealing with management. These provisions do not apply to schemes based on sectional title or share block which are managed in terms of the Sectional Titles Act or the Share Block Control Act.
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Topics: Company, Contract, Europe, Land, Property, Residential, Sale, South Africa | 5 Comments »
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