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Accounting for Real Estate Transactions: A Guide For Public Accountants and Corporate Financial Professionals, 2nd Edition by Maria K. Davis

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Chapter 7

Time-Sharing Transactions

7.1 Overview

Real estate time-sharing is a concept based on the sharing of vacation properties between different owners. Purchasers of vacation intervals receive the right to use a vacation home, such as a condominium, for a specified number of years, or in perpetuity. In the plain-vanilla form of time-sharing, a purchaser buys into a vacation property in intervals of weeks and obtains the right to occupy the interval purchased during the same week each year.

Typically, ownership of a time-sharing unit is divided into 50- or 51-week interval interests, with one or two weeks reserved for maintenance. Accordingly, each real estate time-sharing unit would have 50 or 51 owners. Exhibit 7.1 depicts a time-share property with seven units; each unit is divided into 51 intervals.

Exhibit 7.1 Time-Share Property with Units and Intervals

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In addition to the purchase price, the buyer is also responsible for an annual fee to cover the management, maintenance, and operations of the resort, which generally provides a variety of amenities, such as parks, swimming pools, playgrounds, tennis courts, and golf courses.

Customer demand for flexible arrangements prompted time-share companies to introduce floating weeks,1 exchange programs, and points-based systems.2 Exchange networks, such as Resort Condominium International (now Group RCI) and Interval International ...

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