13 October, 2007

Fractional Ownership

“Fractional interests” in Anguilla. It was a straightforward question, “I am interested in purchasing a fractional interest in Ocean Terrace Condos. Will I get good title in Anguilla? Is it true there are no taxes?

A fractional interest is a form of shared ownership. For years, friends have come together to purchase a holiday villa together. The resulting industry that has developed is less than 10 years old [link here]. Where it is legal to give individual titles to owners of a fractional interests in real property, each owner receives a deed, either in fee simple or for a lease. When you are ready to sell your shares, you can deed them to a purchaser [link here]. Owners are typically provided with specific rights of use and other entitlements, restrictions, and more importantly, monthly charges. This type of holiday investment has recently become popular in resorts in North America [link here]. This new industry is perfectly legal in the USA and Canada and elsewhere. Not in Anguilla. Anguilla’s legal system does not permit the granting of a freely transferable title to a fractional interest in real property. I have previously published a post on the invalidity of such titles [link here].

I went on line and searched for Ocean Terrace Condos. I found them on The Anguilla Guide [link here]. Ocean Terrace’s websites offering the sale of fractional interests are here [link here] and here [link here] . Their website states that you can purchase a month “structured as a very long term lease (97 years)”. It states that the only cost is a fee of US$250.00 to "write up a contract." I could not believe it! They were still advertising the sale of fractional interests in apartments in Anguilla! So, I went to the enquiries page for Ocean Terrace and sent them an email, “Are you still advertising and selling fractional interests?” I had a response saying that they were. I enquired why they were doing such a thing when it was not legally possible. I have not had a satisfactory answer. I did find an effusive “advertorial” page on the internet claiming that someone called “Bret and Nancy” had bought one of the condos [link here]. They claim that they are entirely satisfied with their purchase. I have not yet found any evidence of anyone purchasing a “fractional interest” at Ocean Terrace.

A further search of the internet for "fractional interests" in Anguilla came up with a number of additional pages. An early promotion from the Flag Resorts project at Rendezvous Bay indicated they would offer “fractional interests” [link here]. Further research seems to indicate that Flag is no longer offering such interests for sale. I found a page suggesting that Rendezvous Bay Hotel would be offering “fractional interests” starting at US$250,000.00 [link here]. I have asked Alan Gumbs to explain what it is he is doing, but have not received a reply. I found a page on the Anguilla Guide which indicated there is at least one real estate company that is advertising “fractional interests” for sale [link here]. When I attempted to contact them it appeared the page was dead.

It is simply not true that you can get a legal title to a fractional interest in fee simple or for a lease of a condo in Anguilla. Four or five friends can join together to purchase an apartment together. They will be registered as “joint owners” or “owners in common”. They can do a lease in the same way. This type of ownership is legal, and has existed for hundreds of years. When the owners want to sell, they all have to join together to sign the Transfer Form or Assignment of Lease Form. This is not required in the case of so-called fractional interests. With a true fractional interest, each owner can sell separately. Anguilla does not recognise such fractional interests in real property. The Registered Land Act limits the kind of interests that can exist in real property in Anguilla. Any interest in real property in Anguilla must be are registered in the Land Registry. The law guarantees the title of all registered interests.

To repeat, fractional interests are not interests that are recognised under the Registered Land Act of Anguilla. The purchaser of such an interest in Anguilla will not acquire a title that can be dealt in, as in North America. The use of a corporation to own the real estate, with the investors holding shares in the company, is not a feasible alternative. Anguilla’s laws control the ownership of real estate through the use of a corporation as strictly as it does direct ownership of the real estate.

The Aliens Landholding Regulation Act says that no non-Anguillian may hold an interest in real property in Anguilla without a Licence from the government of Anguilla. This includes holding shares in a company that owns real estate in Anguilla.

The Stamp Act says that any purchase or transfer of a freehold or leasehold interest in real property in Anguilla attracts stamp duty. Any transfer without payment of the relevant stamp duty is void and unenforceable. The purchaser is not permitted even to produce the document as evidence in court in a dispute.

I have asked the Anguilla Registrar of Lands, Gifford Connor, to explain if he is registering fractional interests. He has responded that the Land Registry is only permitting joint owners or owners in common, up to a maximum of four in number, to be entered on any one Land Register. The result is that any non-Anguillian who thinks he is purchasing an unregistered, unlicensed “fractional interest” in property in Anguilla is acquiring no property at all. The purchaser will have nothing better than a common law contract for the use of a property. If something goes wrong, there is no recourse, except perhaps to sue someone.

Any investment property in Anguilla that advertises that a non-Anguillian can purchase an interest in property in Anguilla without obtaining an aliens’ landholding licence, or paying the transfer tax, is saying something that is not true.

One would have to be brain-dead to believe that you could get legal title to property in Anguilla, or anywhere in the world for that matter, on payment only of a US$250.00 fee to “write up a contract”.

The old rule is that if it sounds too good to be true, it probably is.

Could it be simple ignorance at work here, or is it something worse?

Are investors really flying in to Anguilla, and buying these “interests” for upwards of a quarter of a million dollars United States currency, without getting legal advice?

Are they innocents who are mistakenly relying on the Government of Anguilla to shut down misrepresentative schemes, as would happen in the US and Europe?

Do they mistakenly believe that Anguilla has some kind of consumer watchdog that is looking out for their interests?

Or, do “investors” in Anguilla still check their brains at Kennedy Airport together with their baggage?


  1. My compliments on your Fractional piece. Well researched and most informative. Plenty of red flags and potential pitfalls. One of the hottest methods of marketing today and sure to be a controversial issue in AXA.

    When slick developers invade an area they are three steps ahead of local governing authorities. Most times, locals are unable to regain control before much havoc has been wrought and good people disadvantaged.

  2. Don,

    A very interesting piece but be careful of people using this blog for legal advice. It would not hurt to indicate that you are not providing legal advice to anyone but merely engaging in dicussion and writing in genral terms. They should do their own due dilligence.

  3. Timeshares, also known as fractional interests, are not a controversy in Anguilla. The Chief Minister has made clear and unequivocal statement in the past that they are not and will not be allowed in Anguilla.

    What I find strange is that the CM/Minister of Lands has been very attentive to this website when he is accused of corrup...uh, sorry...deficiencies in his work, but hasn't bothered to take action following the previous blog about timeshares. If ripping off foreigners has become acceptable practice, it is only one step further to burglarise their villas. Our leaders have a moral responsibility to do what is right, and not take years to do it.

  4. There was an article in The Anguillian about Ocean Terrace in the 16 January 2003 issue: http://tinyurl.com/yongxh

    The article reported on the ceremony held at the project's opening, at which Mr. Victor Banks said, "I would like to tell Mr. Fleming and his family that the Government of Anguilla will support him to the extent of our capacity to do so."

    Perhaps this explains everything.

  5. I have now heard from Alan Gumbs of Rendezvous Bay Hotel. He is travelling. He telephoned me from overseas.

    He assures me that Rendezvous Bay is not advertising selling fractional interests. He is unaware who has made this claim. It is not a promotion that he has authorised. He has always been opposed to timeshare and fractional ownership for Anguilla since the days that he was Chairman of the Tourism Board. He is well aware that the law of Anguilla does not permit this type of property title to be granted or transferred.

    He is considering some sort of Club membership for long term guests of Rendezvous Bay Hotel who may want some special rights and priveleges. There will be no question of ownership of any interest of a freehold or leasehold nature. But, he has not finalized the concept as yet. Nor is it being marketed.

  6. Believe what you wish. Jerialan Gumbs has run for cover.

    Let no man say Don Mitchell is wasting his time with this blog. Thank you!

  7. Why is the poster so suspicious? Alan, the perfectionist former lawyer, allowed persons unknown to send out unauthorised press releases in Alan's name. Alan wouldn't lie to Don, would he? Lawyers don't lie to each other, do they? :)

  8. That our leaders have allowed the long-continuing drama of Ocean Terrace to continue for so long is proof of what the retiring Governor of Bermuda said this week:

    [A two-party system] "tends to presume systems of accountability that are not necessarily going to be in place in small jurisdictions." Sir John Vereker, KCB, FRSA (Royal Gazette 13 October 2007)

  9. Timeshare and " Fractional Interest" are not necessarilly one and the same. Mr. Mitchell's basic point holds, however; namely, that the registered land Act does not admit of "timeshares" but admits of "fractional Interests" if by that is meant "Tenancy in Common".
    On another note, Mr. Connor, the Registrar of Lands , does not have legal authority to limit Tenants in Common, or Joint Tennants to four.
    That simply is not a position founded in Law.
    The Authorities do as they wish until they are challenged in Court.
    Unfortunately in Anguilla, since Lawyer Lake has retired, there is only one Lawyer left who has the
    guts, and for that matter the ability, to challenge the Authorities on their actions. We all know who he is, he is the go-to-lawyer when we find ourselves in a very serious situation with the law.
    There is nothing wrong with either Timeshare or fractional Ownership once proper legislation and a regulatory scheme are in place.

  10. Look at how the Temenos Estates on the FLAG Project are constructing pools and spas between the estate home structures and the ocean. It would appear that these structures (pools and spas) are infringing on setback areas.

  11. My understanding of the setback requirement is that it only applies to buildings, not pools or patios. I've heard two reasons for having a setback. One is the visual impact, looking from the sea. Another is to protect structures from storm damage. I don't know what the real reason is, and I don't know if this is written anywhere, or if it's like the limit on 4 tenants in common for real property. As a practical matter, most people are likely to comply than fight.

    But there is a deeper problem. I was told by a frustrated civil servant that neither Viceroy nor Flag were required to obtain Planning permission, so no conditions were imposed upon them. Thus they can pretty much do what they want as long as it's within our very limited existing laws.

    Which leaves the rest of us shouting at the wind.

  12. A population of six thousand is the size of a small American town. Like small-town politics everywhere, Anguillan politics appears to an outsider an inscrutable tangle of personalities, old grudges, and bad habits. The island, for instance, is geographically divided into the East End and the West End, and white and mulatto East Enders dominated the drive for independence. Is this resented? Anguilla surely is one of the most color-blind places left in an increasingly racist world, but an egalitarian tolerance bred by centuries of colonial obscurity may well be strained by the opportunities and adversities of independence. And what of nepotism, where every third person is named Rey, Richardson, or Gumbs? We attended a political rally on the cricket field and heard a young man called Artlin Harrigan try to defend, under some vicious badgering, his newspaper, the Beacon, which had asked for new elections and an expanded council, and had implied graft and log-rolling in the present council. "I am in a fearful bind," he said into the microphone, "for if I print half of what I know, I fear Bradshaw will use it to prove that Anguillans cannot govern themselves." In turn, a council member, Mr Wallace Rey, rose up and claimed it was highly improper for the Beacon to be printed on the Anglican Church's duplicator. This demand for separation of church and state strikes a rather new note on an island governed for generations as an adjunct of the Anglican church, and may not be unrelated to the whiteness of the present rector. Although the crowd of several hundred acted much like any bored and amused small-town rally, two old ladies came to blows beneath a mahogany tree, and some of the speakers, including an urbane refugee from one of Bradshaw's jails, seemed all too expertly demagogic. When the council secretary spoke suavely of the council's right to secret discussion and of its wisdom of choice as to what ',the people" should know, I myself, as children scampered around the mustered trucks in the tropic twilight, felt chilled by a whisper of Fascism. The crowd seemed puzzled and somewhat cynical, and voiced unity only at the mention of the hated name of Bradshaw, a bogey whose usefulness cannot be infinite.
    --John Updike. Letter from Anguilla in Picked Up Pieces, Deutsch 1976

    We have not changed.

  13. A previous poster wrote:
    "Timeshare and " Fractional Interest" are not necessarilly one and the same."
    Can s/he further inform and educate us as to what the differences are?

  14. There are quite a few differences between timeshare and fractional ownership. These include:
    1. The time period. Generally a timeshare is the right to use for one week. Fractional ownership is generally titles ownership to multiple weeks (usually in the range 4 - 13 weeks)
    2. Quality. As a general rule fractionals are higher quality properties in better locations, with more services and amenities than timeshares. (Note this is not always the case, and high end timeshares overlap with low end fractionals).

    For more details see http://www.sherpareport.com/prc/fractionals-cf-timeshares.html

  15. ON a different point. Can anyone verify that SOmbrero officially still belongs to Anguilla. The UK has made it official to extend the BVI territory.

    DO we have Sombrero in writing now. I know it was still on the books as belonging to BVI.

  16. Sombrero was listed as a part of the Virgin Islands throughout the seventeenth and eighteenth centuries. All that period the island remained uninhabited.

    During the nineteenth century, with the discovery of the valuable phosphate of lime deposits, the Crown found it convenient to insist that Sombrero was an unassigned island. The Crown issued the various leases and licences to US and British companies to permit their exploiting the mineral deposits throughout the 1850s to the 1870s. For some two decades, the island was inhabited by the men who worked the mines. The phosphates were exhausted in the early 1870s, giving rise to the well-known company law case of Baron Erlanger v New Sombrero Phosphate Company.

    With the growing importance of Britain’s maritime trade through the Caribbean Sea, and with the 1859 wreck of the Royal Mail vessel Paramatta on the island, a lighthouse on Sombrero became British policy. Lighthouses were run by the Board of Trade. The one on Sombrero was completed in 1868. Several men manned the lighthouse, mainly recruited from Anguilla. Few if any workmen from the Virgin Islands were interested in the solitary work of lighthouse keeper. In 1921 by Act of the St Kitts legislature, Sombrero was removed from the Virgin Islands and transferred to St Kitts. This was in recognition that the lighthouse was regularly serviced from Anguilla, then an integral part of St Kitts.

    With St Kitts preparing to go independent in 1981, Britain negotiated the separation of Anguilla from the Associated State of St Kitts, Nevis and Anguilla. Anguilla was to be separated from St Kitts and Nevis and to revert to a British Overseas Territory. As such, it would be more convenient for the British government if Sombrero was officially a part of the British Overseas Territory of Anguilla. St Kitts agreed to sever Sombrero from its territory and to vest it in Anguilla. This vesting was achieved by the simple device of including the name of Sombrero in the definition of “Anguilla” in the 1982 Constitution of Anguilla. This transfer was completed with no fanfare, almost surreptitiously.

    Sombrero has thus been a part of Anguilla only since 1982.

  17. Many in Anegeda believe the Paramatta was wreck on their island. The story about Sombrero appears in many books, but that doesn't make it true. Her loss did influence the construction of a lighthouse on Sombrero, however

    She was one of the last great side-wheel steamships. Carrying a cargo of coal on her maiden voyage, she was abandoned to the reefs of Anegada in July 1859 after almost a month of salvage efforts failed to refloat her. She lies off the island’s eastern shore on the windward side of the reef and is only accessible in calm conditions.

    As far as is known to anyone locally, there are no wrecks at Sombrero.

  18. What are the LEGAL differences, if any, between fractional ownership and timeshares?

  19. What is the legal difference between “timeshare” and “fractional ownership”? I will attempt an answer. Since we do not have the appropriate legislation in Anguilla, I am a novice, a babe in the wood. What I am about to say is subject to correction by someone more knowledgeable than I am.

    A “timeshare” is an interest in time that is recognised as a type of interest in land. It is not an interest in land. You own time, not land or building. If there were a law that recognised this interest, it would be valid. Without such a law, such an interest cannot exist and cannot be sold or transferred. Such an interest as a “timeshare” cannot exist without a special statute or law that permits title to be given to time. There is no such law in Anguilla. Anguilla has registered title. The Registered Land Act limits the types of interests in land that can exist. Neither “timeshare” nor “fractional interest” is an interest in land recognised by our law.

    The classic form of “fractional interest” that is becoming popular in North America is quite different. It is found in Mexico, the USA, and Canada. It involves giving a title deed to a part of a property, eg, “one-twelfth”: It is usually conditional on various restrictions as to use. The other fractional owners have to have their right to use the property recognised. So, if you own one twelfth, you might be limited to use of the property for one month in the year. This fraction is quite different from the usual “tenancy in common”. We have tenancy in common in Anguilla under our law. A tenancy in common between, eg, three brothers, involves one title to the three brothers who each own one third of the property. Such a title is registered in the Land Registry in The Valley. The Registrar of Lands will issue only one certificate of title to the three brothers. When the three brothers want to sell, generally speaking, all three have to join in signing the transfer form. With the classical form of “fractional ownership”, by contrast, each fractional owner gets his or her own title and can deal in it, eg, by selling it. With a timeshare you only own time. With fractional ownership, you own a part or fraction of the land and buildings, even though limited as to how you can use it.


  20. So, can't people simply *agree*, in the absence of legislation, to just share the time in a given building? That, after all, is what a hotel does, right? Or, for that matter, what an apartment landlord does, though not in perpetuity -- at least in places without rent-control. ;-)

    Frankly, law does not emerge, full blown, from the collective skull of the legislature. Most "law" is agreement, pure and simple, written or otherwise. In fact, it can easily be said that legislation is the *last* form of law, and not the first. Legislation happens *after* the fact, not before, the ultimate "lagging indicator", since no legislature can ever actually predict the future, no matter how loudly it declaims to the contrary at election time...

  21. To the person above who asks why we can’t just agree.

    The answer is known to all lawyers. With a contract to buy a car or an airline ticket, the period of the contract is short. With buildings and land, the time is usually much longer. Land and buildings require something extra. Memories fade. People change their minds. Circumstances alter. For over a thousand years, it has been necessary to devise some sort of valid and permanent title. It must outlast the individuals. It must be valid for the heirs and assigns. It must not depend on memories or good faith.

    That is why a simple contract concerning acquiring an interest in property is not recommended. It is only going to put the parties into trouble and into court.


  22. Don:

    You are quite wrong.
    Timeshares are contracts between the promoter and purchasers for the use of the property, more akin to Licences than interests in land, for the use of the property at a given time each year. It comprises a simple contract and does not require either enabling Legislation or Government permission unless you are a foreigner developer who requires a Licence to own land.

    Fractional ownership, likewise, does not require any enabling legislation. It is in fact a Tenancy in Common, and it is coupled by a simple contract between the Tenants in Common as to the use of the property.

    Both types of programs are quite capable of effective existence under the current Laws of Anguilla.

    there is no magic to it.

  23. "Contracts...for the use of the property" are leases. Leases to foreigners are regulated by law. I believe the poster's theory violates this law.

  24. Contracts for the use of property are not leases IDM,as you should know.
    Leases require several elements to be present before they convey an interest in land, such as exclusive possession.
    When you and the missus go to Grenads and stay in a hotel, isnt that a contract? Do you get an Interest in land? Do you require a Licence??
    When you rent an office from John Benjamin at caribbean Commercial Centre on a month to month tenancy, does your argument prevail??

    The interest that the Tenants in Common would acquire would be an interest in the land. The Contract of use would be regulatory inter partes and does not do anything you suggest, and certainly is not a violation of ANY LAW on the books.

    You are quite wrong.

    Refer us to a Law anywhere which creates title in land in Timeshares.

    Are you suggesting that a land owner cannot grant a licence to someone to use his property/

    You have been heard to say in public on occasions that when you do not know something you just go right ahead and make it up as you go along. You should desist in so doing in matters like this which are of Public importance

  25. I am not an expert on timeshare or fractional interests as they exist in the USA or St Maarten, for example. I only know what I have read.

    I would be interested in learning if there are other attorneys who believe that legislation is not necessary for the creation and enforcement of these interests in Anguilla.


  26. Interesting reading. I wonder how that applies to the old Seafeathers resorts?

  27. With the former Sea Feathers units, the structures were individually owned, and each foreign owner had an alien land holding license and their interests were registered at Lands & Surveys.

    The land was leased. The leased land was subdivided into subleases for each unit.

    The units were managed (some say mis-managed) as a rental pool when not occupied by the owners.

    While these two elements were different from the average foreign-own vacation house, there was no element of timesharing or "time ownership."


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