Fractional Ownership Comes To TCI

Condominium and villa investors will have a more affordable, flexible and attractive opportunity to invest in the Turks and Caicos Islands' (TCI) real estate following the enactment of the Fractional Ownership Ordinance. The Ordinance has not yet come into force, but shall do so once a notice has been published in the gazette, to this effect.

The Ordinance allows investors to buy a fractional interest, akin to schemes elsewhere in North America, in a property in the Turks and Caicos Islands; allowing the purchaser a deeded interest in the property as opposed to a simple right to use, which provides a better capital investment for the purchaser and a larger market for the developer.

A timeshare or not a timeshare?

The Ordinance is, importantly, not a wolf in sheep's clothing; it does not simply re-invent the timeshare wheel.

Fractional ownership is distinguished from timeshare by the legal nature of the investment as the purchaser obtains a registered proprietary interest and therefore "owns" the property. The basic premise is that a 1/12 interest (the maximum number of interests under the Ordinance) in a property is much easier to sell than the whole. This, of course, could see an investors' initial capital investment increase in value, in a prosperous market, but also means less risk of serious diminution in value in a subdued market, as the risk is shared amongst the fractional owners.

Why is it needed?

Under existing laws, anyone owing a fractional interest in TCI real estate needed the consent of all co-owners to sell or transfer it. Also, all co-owners were entitled to occupy the property 100% of the time. The new Ordinance solves both problems, as well as creating an effective statutory regime for the governance of rights and duties affecting fractional ownership.

Mechanics - how does it work?

Under the Ordinance, an applicant has to submit for registration, at the Land Registry, the fractional interest scheme in respect to a particular property or properties. This includes a private villa ("a Non-Strata Property") or all or some of the condominiums in a development ("Strata Property"). If the fractional ownership applies to Non-Strata Property then the Ordinance sets out prescribed provisions to deal with: the disposition of a fractional parcel; easements; administration of a fractional parcel and the destruction of the property/parcel. The Strata Titles Ordinance (TCI's condominium law) applies to a parcel that is a Strata Property.

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