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Timeshares and Vacation Licenses | Real Estate Exam Prep - YouTube
Channel: The Real Estate Classroom
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hey if we're meeting for the first time
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my name is paul vachesky and welcome to
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the real estate classroom youtube
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channel
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where our mission is simple and that is
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to help you pass your real estate exam
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the first time
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real quick as always before we get
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started give this video a thumbs up hit
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that red subscribe button click on the
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notification
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bell in today's video i'm going to
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discuss
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two key real estate terms that you have
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to know for your real estate exam
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time shares and vacation licenses so
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let's get to today's exam prep video
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so in today's real estate exam prep
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video i'm going to discuss
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two key real estate terms that you have
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to know for your real estate exam
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quite honestly for whatever reason many
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students
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they struggle with these two concepts
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and so what i want to do is make sure
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that you understand the differences
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between the two
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that can be the difference between you
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missing one or two questions on your
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real estate exam
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they are time shares and vacation
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licenses so i'm going to start with a
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time share first what is a time share
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well first of all any type of property
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can be designated as a time share but
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typically we see time shares in those
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really popular vacation areas like key
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west
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myrtle beach uh hawaii those type of
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deals
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and and it can be typically a condo
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or even a single-family home like in
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florida
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it's very common to see single-family
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homes on the beach or single-family
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homes
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in hawaii to be designated as a
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timeshare
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now the purchaser is buying
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an interval ownership in that piece of
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property
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and they are deeded they are given a
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deed
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for fee simple title and then they have
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what's called
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tenants in common ownership with all the
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other owners so let me give you an
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example of what i'm talking about let's
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say that i own a
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single family home on the beach and i
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decide
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to turn this into a time share and i
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want
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one week out of the 52 weeks for myself
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and i'm going to designate two weeks out
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of the 52 weeks
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as maintenance weeks so that means i
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have 49 weeks
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left over that i can sell so i'm going
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to go out and seek 49
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individual owners that's going to
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purchase one week
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and let me show you what that would look
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like so i'm going to go out
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as you can see on your screen here how i
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have the schedule set up i'm going to go
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out and seek 49 people to buy
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one week at a time and so let's say that
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i get sally smith to buy week one which
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is january 1st to january 7th
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week two jim jones buys week three tim
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tush buys week four
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jerry o'neal buys and then week five i
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designate as a maintenance week
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now what that means is all of those four
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people that have purchased
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a week or an interval ownership
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they have fee simple title in that
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single family
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uh property on the beach with me and
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then together
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collectively we hold what's called
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tenants in common
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and i'm not going to explain what
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tenants in common is
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in this video but if you want to
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research that a little further i'm going
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to leave a link right up here in the
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upper right hand corner that talks about
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uh tenants in common all right so fee
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simple ownership
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and tenants in common with all the other
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owners now again typically
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time shares are sold in a one or
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two week interval or time period with
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one week being the most common
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and then as i mentioned usually two or
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three weeks out of the 52-week year is
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designated for maintenance for the unit
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now what can the owner do with their one
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week sally smith bought week one
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january 1st through january 7th
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what can sally smith do with that week
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well she can she can use that week for
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herself
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she can give it to someone maybe a
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relative or a friend so then they can go
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down and use that week she can use it to
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maybe very common if you go to auctions
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for charities
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where people have time shares and they
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are giving away their one week interval
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as an auction item uh sally can also
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will it
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she can put that timeshare in her will
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she can give it away
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remember she has fee simple ownership so
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she can actually even rent it out to
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somebody
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if the terms of that timeshare allow
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all right so each owner also pays what's
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called a
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do or association due or a condominium
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regime do or some kind of fee
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to pay for uh the expenses and the
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upkeep of the property so remember i'm
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one owner and there are 49 other owners
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in our example that i've given you about
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the single family home on that i own on
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the beach that i'm turning into this
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time share
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so what i'm going to do is assess all
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the other owners a certain amount of
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money and this changes every year
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based on the needs of the property to
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pay for things like insurance
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to pay for care and maintenance and and
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gardening services and lawn maintenance
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and so on and so
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forth all right and then also typically
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what happens with
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a time share is when i convert this
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single family home into a time share i'm
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going to establish some kind of
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governing body to oversee the operations
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it can be a
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you know i might hire a property
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management company to do that or
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a condominium regime or an association
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or something to that effect
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that's going to be responsible for
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collecting those dues
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and then making sure that all the the
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you know insurance is paid and the
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maintenance is done so on and so forth
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so the key here with a time share is to
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remember that it's fee simple ownership
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and then all the owners hold title as
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tenants
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in common so the next key real estate
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term i want to discuss is a vacation
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license now if i'm on the outside
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looking in
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a vacation license looks very much like
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a time share
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but there's one distinct difference and
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that is there is
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no fee simple ownership so using the
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example on the timeshare
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let's say that i own a single-family
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home on the beach
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but i don't want to create a time share
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so what i'm going to do is sell the same
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weekly intervals to 49 different people
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because remember two weeks is reserved
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for maintenance one week is mine
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so there are 49 weeks available and i'm
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going to sell 49 weeks
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on a vacation license so if you buy
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week one then what that means is i'm
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guaranteeing you the right to
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use that property between january 1st
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and january 7th it's a guaranteed right
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to use
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but no ownership so basically i'm
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renting this property to you for one
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week
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and you're gonna sign a vacation license
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all right so these vacation licenses can
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also be
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short term or long term they may be year
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to year
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there they may be every three years
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rarely but i have seen some that go out
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as far as 10 years so if you sign that
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vacation license for 10 years you're on
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the hook for 10 years meaning you're
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going to pay those
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you're going to be responsible to pay
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that vacation license fee for the next
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10 years
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now with a vacation license it's all
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going to be determined by the terms
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of what the vacation license has in the
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agreement so make sure on a vacation
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license that you read it
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just like you would a lease agreement
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for some other type of property
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all right so just to do a quick recap
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remember this is important for your real
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estate licensing exam
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time shares if you buy a time share then
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you're buying fee simple title into that
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property and you hold
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title with all the other fee simple
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owners
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as tenants in common and then a vacation
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license you're only purchasing a
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guaranteed right to use that property
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for that specified period of time
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that is listed in the vacation license
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there is no fee
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simple title whatsoever and those are
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the two biggest differences
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if you're going to continue to study
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check out this video right here i think
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it's going to help you clarify the whole
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uh tenants in common relationship
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and if you have not subscribed to the
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channel please do so click the little
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circle to my left
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comments and questions down below love
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both of those all right that's all i got
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i'll see y'all in the next video
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