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Larry and Mary Anne Field wanted a cottage, but not the cost or maintenance head-aches that go along with ownership.

By The Ottawa Citizen

Larry and Mary Anne Field wanted a cottage, but not the cost or maintenance head-aches that go along with ownership.

So, last year they bought part of one: a three-bedroom log beauty at the Frontenac Shores development on Mississagagon Lake, north of Kingston.

The Markham, Ont. couple is among a growing number of Canadians who have discovered the benefits of fractional ownership.

The scheme is a half-century old in Europe, but fractional ownership is a relatively recent import to Canada, allowing the high cost of a recreational property — cottage prices have soared in the recent past — to be shared among multiple buyers.

Buyers typically purchase one share entitling them to five weeks per year in the cottage: one week each season and a floating week. Fractional ownership differs from timeshares, where people purchase blocks of time in a resort. Instead, fractional owners purchase their property with a fee-simple title. This means they can mortgage, buy, sell or pass deeded property to others.

Prices vary, but a per-share price of $59,900 to $89,900 for 1,800 to 2,000 square feet of living space, much like the Fields’ purchase is common.

Fractional ownership in ski resorts is also popular, although share prices tend to be higher.

Owners also pay an annual fee, usually around $2,500, to cover maintenance costs, including provision of fresh linen and even dishes.

Shared: Flexible, affordable ownership

Fractional ownership “just seemed to provide a whole bunch of flexibility,” says Larry Field, who remembers fondly summers at the family cottage on Lake Erie when he was a youngster. “In times of financial turmoil, the risk is less than owning a complete cottage. The only drawback is that you can’t spend three weeks in a row in the summer.”

His wife adds that a sense of community is already starting to develop among those who have bought shares in the first six of the planned 34 cottages at Frontenac Shores.

“This is ultra-convenient,” she says. “We didn’t want all the packing up every time you leave for the cottage. This way we just bring food.”

As in most fractional ownership deals, the Fields can rent out unused time, trade weeks with other owners on the site or even swap time with other owners around the world through an international exchange organization.

They have the option of upgrading to a larger cottage with a loft: with three children and one grandchild, that’s an attractive possibility.

Fractional ownership usually means luxury: the cottages by Confederation Log Homes at Frontenac Shores include vaulted ceilings, hardwood and ceramic floors, screened porches with private saunas, gas fireplaces, and other goodies.

The Fields are not alone in snapping up a share in a second home. According to Ragatz Associates, a U.S.-based international consulting and marketing research firm to the resort industry, the total sales volume of the fractional property industry in North America was $571 million in 2007.

With a basic cottage within reasonable driving distance of Ottawa commanding at least $200,000, fractional ownership makes sense. That’s especially true considering that most families reportedly use a cottage an average of four to six weeks per year.

There are variations on the cottage theme. Clermont Venture Corporation Ltd. has already sold 60 per cent in the first phase of its villa-style Wolfe Springs Golf & Waterfront Resort at Wolfe Lake, 15 minutes outside of Perth (www.wolfespringsresort.com). Hickory floors, soaker tubs, Wi-Fi Internet services, waterfront access and close proximity to a nine-hole golf course are among the amenities.

Phase two will bring the total number of units to 15. That phase will feature one-storey units ideal for older buyers, says Clermont president Matthew Derbyshire.

Priced from $69,900 to $104,900, the villas, he says, are attracting a wide demographic, from “active 55-plusers” to young families who want a cottage experience, but can’t justify forking over hundreds of thousands of dollars.

Other Ottawa-area fractional ownership projects include Whitewater Village on Lac Rocher-Fendu west of Ottawa (www.whitewatervillage.ca). A joint project between Windmill Development Group and Wilderness Tours, the cottages are being built to exacting green standards, including the use of geo-thermal heating, Energy Star appliances, and low-VOC paints and stains.

Owners also have preferred access to Wilderness Tours’ adjacent white-water rafting and kayaking operations.

For developers, fractional ownership can be the difference between building on a piece of property and seeing it sit vacant.

“As a developer, it’s too hard to carry the capital,” says Frontenac Shores co-owner Patricia Storms. “This way, you have a clientele before you build. The key is to build it as you sell it.”

For buyers, securing a mortgage on a fractional ownership is likely a no-go. After all, how could the lender repossess the property if the borrower defaulted?

Says Storms, “Often people just use a line of credit or borrow against another asset.”

© CanWest MediaWorks Publications Inc.

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