FRACTIONAL OWNERSHIP

The apartments will be sold on a fractional ownership. We feel it’s the optimum way to own property for the future as it saves many unforeseen initial purchase costs in comparison to standard property ownership and allows you to own and pay the expenses for a luxury property just for the period you use it. If you've never heard of fractional ownership please visit the following websites http://www.fractionallife.com & www.fractionalownership.co.za before you read on as it will give you a clear picture of how it works and clear up any doubts you may have about owning property in this way. Below we have also listed some other websites on fractional ownership and some of our own FAQ's which are not listed on any of the websites but which we feel are very important for buyers to be aware of.

Our proposal would involve one owner of the total freehold property (land and buildings) in the form of a company and various owners of the shares in that company (shareholders). The owners of the buildings and land become the shareholders of 100% of the total property. We will divide each apartment into 8 fractions of 3 weeks (2 weeks in the winter and 1 week in the summer) You will be able to buy any number of fractions of each apartment as you wish from 1/8 to 8/8 (full ownership of the apartment). The specific weeks for each apartment will be allocated on a rotational basis. Chalet Alpina will be open for 16 weeks in the winter and for 8 weeks in the summer. Arrangements can be made to use the apartments in the closed season subject to prior arrangement.

We have set up a seperate company for the purpose of fractional ownership which owns the land and buildings of Chalet Alpina. If you wish you can easily also buy your apartment with friends or family. As the property company also owns all the land (including the swimming pool) you would also be part owner in the land. This would give you complete right of use to the land together with the other owners.

The value of the company depends on the value of the property and land as a whole so just as that increases in value (like any other freehold property) your apartment will increase in value and the value of your shares would consequently increase in value. You can sell your shares at any time in relation to the value of your apartment.

Our company consultants/auditors all speak English. Together with a notary they will draw up all the necessary documentation and contracts in English. These documents will serve as the property rules and regulations agreement and be binding on all owners. Each property will have an equal single vote in major decisions, any future developments and at any general meetings irrespective of number of shares held. i.e. if there are 9 properties in total 9 votes will count as 100%. This will give you peace of mind that no decisions will be taken without the consent of the majority of owners.

The present management company of the hotel business will continue to manage the total property seeing to the upkeep and service facilities. All shareholders will decide on budgets and services offered each year.

ADVANTAGES OF FRACTIONAL OWNERSHIP

There are several significant advantages to the fractional ownership scheme proposed.

1 In Italy, the costs associated with the purchase and sale of freehold property can be high. Costs include notary fees and transfer duties. Usually, property transfer costs run at approximately 10% of the property value but under the fractional ownership scheme proposed, these costs are negligible. In particular there will be:

2 Easily and safely buy your ownership with friends or family. If one of you wants to sell they can easily do so without affecting the other.

3 In addition as an extra protection against any eventual bankruptcy of any owner, ownership of shares can be left in trust with your legal advisor with specific instructions.

How do I know the property owning company is financially healthy you need to see financials and ensure that the appropriate warranties are in place

What stops the director/s of the property owning company and the management company creating debts for the company or signing surety on behalf of the property owning company to someone else The company directors will only be able to act in terms of the Articles and Memo and any shareholders agreement in place. Once you become a shareholder you would need to ask for disclosure in this regard and insist on the appropriate warranties and indemnities.

What happens to my investment if the property owning and management company goes bankrupt This cannot happen as both companies budgets and expenses are decided and controlled by you as the owners. It is imperative that you have all financial information about the company and its debts before you purchase your fraction.

What if another shareholder or worse a major shareholder gets into financial difficulty and the property owning company is taken over by liquidators . The liquidator would only be able to sell the share of the insolvent, not the companies assets, unless the shareholder holds enough shares to pass a resolution for the company to sell its property - at the moment more than 51%. As an extra protection against any eventual bankruptcy of any owner, ownership of shares can be left in trust with your legal advisor with specific instructions.

Should a fractional owned property always have a separate management company it is recommended although not imperative. There is nothing to stop the shareholders managing the company themselves, just the hassle factor to consider. Some developers however make it a condition of sale that a management company be appointed - usually as a means of protecting the investment and to ensure that the owners can enjoy the property without the hassle of day to day management

If so which company is responsible for keeping the property up to health and safety standards

IF I BUY INTO PHASE ONE CAN I LATER SWAP MY FRACTION FOR A FRACTION IN PHASE 2
Yes because of the flexibility and ease of fractional ownership owners of phase 1 will be given first option of buying into phase 2 just paying the difference in apartment price and you will then get right of use to that new apartment. We as the property developers will take back your previous fractions resell that to new buyers. If property prices have increased in the period you have owned your fraction in phase 1 you will also be passed on the value of those increases.

1. HOW DO MANAGEMENT COSTS OF FRACTIONALLY OWNED PROPERTIES COMPARE TO STANDARD OWNED PROPERTIES
Standard owned properties can be cheaper to manage if you look after them yourself but you have to put a value on that time especially if you rent out your standard owned property. If you calculate the time you put in for the time you actually use the apartment and the cost for the extra capital you have to outlay in buying the whole property you will see it's much cheaper to own a fractional property.

2. WHY DO MANAGEMENT COSTS OF FRACTIONALLY OWNED PROPERTIES VARY SO MUCH BETWEEN DIFFERENT PROPERTIES
Some properties offer many extra services and therefore need a larger staff requirement. Some fractionally owned developments will give you a precise yearly management cost and some will also have added charges like housekeeping etc. In many developments you don't really have any choice of deciding how much the management company will spend each year. The management company can only estimate these costs in each yearly budget. The actual costs get calculated at the end of each financial year. In our opinion companies that give a fixed management figure over budget to cover any variation between budgeted and actual. For a larger property this is probably the only way.
In our development you will take part in deciding the budget for the year and the actual yearly costs will shared amongst owners. A small property like ours really gets managed indirectly buy the owners.

3. WHY SHOULD I BUY A FRACTIONALLY OWNED PROPERTY WHEN FOR A SIMILAR MANAGEMENT COST I CAN RENT AN APARTMENT FOR THE SAME LENGTH OF TIME
This is true management costs are similar to rental costs and in some developments even higher than rental costs. The only true advantages are that a fractionally owned property is of much better quality than a rental one and you get the advantage of capital appreciation which in some cases of prime property more than cover all your management costs.