There is more and more talk on Maui now of "fractional ownership." It is just what it sounds like, six or fewer parties (so as not to create a timeshare) own a given property as Tenants in Common. Each party has their own deed for their fractional share and their own mortgage against that fractional share. This approach has several benefits, it qualifies for 1031 purposes, lower purchase price for a piece of a high quality property and appraisers are using 140% of a traditional sale as the value for a given property if sold in this manner. The Ritz Carlton project in Kapalua is adopting this approach and certain lenders will make these mortgage loans. But there is a lot left unresolved in this form of ownership like liability, taxation as well as zoning restrictions and the actual timing of the fractionalized ownership for a given property.

Of course, this can only be done in places where CC&R's do not exclude this possibility.

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