Fractional Ownership

As owners of Chez Mirabel, we have exclusive use of the residence for five weeks a year. Every summer we each choose a three week and a two week period for the upcoming calendar year. During those chosen periods, we may use the house, exchange its use for that of another property, or offer its use to our family, friends or business associates. Owning a part of this Provence property will puts our vacation lodging dollars to work in one of the world’s most insulated and secure property markets. Moreover, buying fractionally offers significant advantages compared with other vacation property options:

Having a Great Trip Every Time
We love coming home to a familiar place on each Provence visit, a place where we know where to find everything we need, and where we can store favorite clothes or possessions for our next trips. Add in the privacy, intimacy and exclusivity of owning a residence that is totally one-of-a-kind, not part of a large resort or hotel complex. We have a unique package that can only be found through single-unit fractional ownership.

Efficient Allocation of Resource
Fractional ownership increases our purchasing power, making it possible to acquire an ownership interest in an asset which we might otherwise not choose to purchase or simply not be able to afford. Studies have shown that the average usage of a solely-owned vacation home is only 4 to 6 weeks per year, but property taxes and operating expenses must be paid year-round. Sharing these costs with our co-owners is an economical alternative.  Time is an increasingly scarce resource as well in our busy lives and keeping up a home in a foreign country can be extraordinarily time consuming for a sole owner. If the property is rented out to make use of some of the time during which the property is not occupied by the owner, the necessary time commitment is increased significantly, not to speak of the excruciatingly time-consuming tax preparation time required for reporting tax revenues and deductions to the IRS, as well as the French tax authorities. We think it is far more practical to share our property with like-minded co-owners who have a continuing interest in maintaining the property to a high standard.

Diversifying Investment Risk
Today, more than ever, prudence governs investment decisions. Allocating too many resources to one investment type, one location or one currency increases risk in an already risky world. By tying up fewer resources in vacation property, fractional ownership frees funds to be held in reserve or invested elsewhere, spreading exposure and opportunity among different currencies and economies across the globe.

So why isn’t this just a timeshare?
Our fractional ownership can be gifted, inherited, or sold freely at any time. We own  a share of a member-formed company holding title to Chez Mirabel through a Société Civile Immobilière (SCI), described in more detail below, rather than just possessing membership or usage rights. This allows us to benefit directly from market appreciation and gives us and your co-owners control over all important decisions relating to the property. The relatively small size of the owner group creates a much closer connection between the owners and the property, translating into a higher standard of care for the property by owners during stays. And although the daily headaches of management are delegated, we retain ultimate control over the level of services, condition of the property, choice of management, and amount of dues.

A safe and sane legal structure
The founding owners of Chez Mirabel hired one of the foremost international fractional share attorneys to set up its legal structure and draft the documents governing operation of the homeowners association. Title to the property that owners purchase is held by a Société Civile Immobilière (or “SCI”), a type of French entity designed specifically for real estate ownership. The SCI is wholly owned by a U.S. homeowners association (or “HOA”), which will consist of the ten fractional owners. With this structure, our Provence home is effectively converted into U.S. property subject to U.S. law, and physically located in the U.S. The documents governing ownership and use are written in English, are governed by U.S. law, and can be enforced in the U.S.

When an owner wishes to transfer his/her share through sale, gift or inheritance, the transaction will occur in the U.S., subject to U.S. law. Title to the house will not change (it will still be 100% owned by the SCI), and ownership of the SCI will not change (it will still be 100% owned by the HOA).  This legal structure offers significant practical benefits:

• Efficient Enforcement. Should collecting ownership dues or enforcing owner obligations ever become a problem, the bylaws can be promptly enforced in the United States, at relatively low cost. By contrast, enforcement of a co-ownership system reliant on French law generally takes years and costs tens of thousands.
• Efficient Transactions. Transfer of an owner’s share can be completed quickly. Inheritance can be accomplished through a will or trust in the same manner as any other U.S. asset. By contrast, transfer of French real estate held in a more traditional form requires specialized professionals and takes many months. Inheritance is subject to special French law that often interferes with an owner’s intentions.
• Familiar Language and Customs. All of the significant documents, functions and activities of the owners can be conducted in English, and can be based upon customs and procedures that will seem familiar and natural to the owners.

More about usage periods
Every year each owner chooses both a 2-week and a 3-week usage period. For this purpose, the calendar year is divided into alternating 2-week and 3-week periods, on a Wednesday afternoon to Wednesday morning reservation schedule. And summer and Christmas holiday blocks are designated as Prime.

The ten Chez Mirabel shares are designated “A” through “J” and when an owner purchased a share, they chose one of the available letter designations. That letter establishes the owner’s order of priority for choosing from that time forward.

Every Summer the usage periods for the following year are chosen in two selection rounds, in a revolving priority order. The first year, share A will have first choice of a period, followed by share B, and so on. In this way, owners choose their first usage period (either a 3- or 2-week unallocated period) sequentially depending on their order of preference for that particular year. After this first round of choosing the first periods, each owner then chooses their second period in reverse priority order. To ease the obtaining of 5 contiguous weeks, if and only if an owner selects a Non-Prime block with their first round selection, they may choose to select a contiguous (and only a contiguous) non-prime block at the same time if one is available, thereby also using their second round selection. Owners are also free to negotiate or exchange chosen periods among themselves. Each subsequent year, the priority order moves up three places. This assures that everyone will have equitable access to early and later choices.

In our experience and the experience of others who share houses in France, owners do not all compete for the same time slots. For example, people who enjoy biking and hiking do not usually want to do so in the summer and prefer spring, fall, and winter. People with children in school will usually prefer summer or school vacations, but people without young children (or grandchildren) may want other times. Those who are interested in the food and wine of Provence will want to experience all seasons and will especially not want to miss the winter holiday season or the truffle season (from November through February). Every month of the year is attractive for one reason or another in this part of Provence, and Mirabel-aux-Baronnies is active all year round. Once you begin identifying with the village, we believe you will want to experience it in all seasons.

Operating Structure
Chez Mirabel’s fractional ownership organizational and operating structure will be familiar to anyone who has ever owned a condominium or gated community home. Each owner pays dues determined by a budget prepared annually based on anticipated operating costs and the need to accumulate reserves for repair and replacement of the property, furnishings and equipment. The budget is subject to review and approval by a board of three directors elected by the owners.

A service ensures that the property is clean, well maintained, and ready for each owner’s arrival. A management coordinator collects the dues, pays the bills, keeps the accounts, and makes all day-to-day operating decisions. When items require repair or replacement, they are free to access reserve funds and complete the work without an owner vote, guaranteeing that consistently high standards are maintained for years to come. Unforeseen issues with more long-term ramifications are submitted to the elected directors, or the owners, for a vote.