How Do Partnerships Work?
Fractional Ownerships
We get a lot of questions about Fractional ownership and how Dewees Island partnerships work. A partnership means that you own a share in a house that gives you a certain amount of vacation time per year. It is a way to cut your expenses if you aren’t planning to use the home as a primary residence, because you share the costs of maintenance, dues, taxes, insurance, and other expenses between partners. If you are not sure that island living is for you, a Dewees Island partnership is a way to explore the possibilities without all of the expenses and hassle of your own house.
FAQ’S:
Technically, you buy a share of an LLC. The house is held by the LLC, and members pay a portion of the shared expenses based on the partnership agreement.
Lots of people feel this way. But in truth, it’s probably easier to be in a partnership with people where there isn’t a relationship at stake. You are not usually using the house at the same time (though some partnerships have all members stay on the island for the big POA meeting in March). So it’s like having your own house, at a quarter of the cost, for 13 weeks a year (for a quarter share.)
Most partnerships on the island plan their calendar years in advance. Then partners can call each other and switch around. You can ask for the calendar for any partnership for sale.
Most partnerships have either a standard list of cleaning tasks that each member does upon checkout, or they have a housecleaner. Sometimes cleanings are billed to the partnership; sometimes to the individual using the week– each partnership is different.
That depends on the partnership. Some allow rentals; most do not. Some allow you to rent your week, others take the most lucrative weeks of the summer and rent them and apply those earnings to the LLC’s expenses, thus reducing the cost of the bills. This is one of the questions you should get answered when you are thinking of purchasing.
Each partnership has a managing partner who manages the bills and collects the money. Some do this quarterly, some do it monthly.
Aerial view of Dewees Island partnership house 38
Some legal things to think about:
- The partnership should have an attorney draw up a legal partnership document or LLC and it should meet the requirements of the SC timesharing Act, to minimize any potential liability with buyers and future partner/owners.
- Rental or no rental must be decided by covenant in advance. No in-between or annual decisions from one year to the next, unless of course a unanimous change in the covenants.
- Partner’s should have first right of refusal to buy out partners, and the ability to vett new partners.
Some other questions to ask:
- What day do the partners switch?
- What time is check-out? check-in?
- What dedicated space is there for each partner in the house? Is it locked?
- Who is the managing partner and how are decisions made?
- What are the cleaning requirements?
- Can I rent my weeks? If so, who gets the proceeds: me or the partnership?
- Are pets allowed in the house?
- How do partners settle disputes and conflicts?
- What are the operating costs? Does the partnership keep a reserve for major repairs?
- How flexible are the partners about switching?
- If the air-conditioning (or elevator, or golf cart) breaks during my stay, who fixes it?
- How are decorating decisions made? How often are things “freshened up?”
- Do owners have dedicated storage spaces in partnerships: locking pantries, or fishing closets, or clothes closets?
One should always consult an attorney when forming, joining or buying in to a partnership/share/fractional ownership interest in real estate, and Dewees Island Partnerships are no different.
updated August 2018
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