A potential new trend in Paradise Valley is sellers dividing up single-family homes into fractional ownership or timeshares, possibly for commercial purposes.
This past summer, we had a diligent resident who strives to protect our town heritage who contacted me to report her discovery of a home being sold with fractional ownership in her Paradise Valley neighborhood.
Approximately a month later, I was contacted by the president of a homeowners association in our town who also was experiencing a house in the HOA being listed for sale with fractional ownership.
Fractional ownership or time shares could be used for a variety of purposes that could include commercial rentals, short-term rental business, assisted living, group homes, etc.
In both instances, I worked with the town manager, town attorney, and mayor to address the situation and determine options regarding this new trend. This will be an evolving issue that also involves the assisted living proposals that have recently ramped back up in our town.
The town regularly addresses and evaluates this type of situation within the parameters of the state laws and Town Code. If the town identifies gaps in laws or rules, then it may make recommendations or bring the issue to Town Council to address any policies.
Town Council addresses policy issues, and the town manager and staff addresses administrative issues.
Generally, our town already prohibits more than five unrelated people from living in a residence.
Timeshares are prohibited by Town Code section 1026. If a property is marketed as fractional ownership, that could be a violation of Town Code and state law. So, word choice in marketing these properties can potentially be violations and options may include reporting the violations to the Arizona Department of Real Estate.
DRE has indicated that if six or more fractional interests are being offered, then that could be considered a subdivision of land and could require a submittal to DRE or the approval of a public report and other requirements.
As a neighbor, you may want to talk to the owner of the property who is selling it or the Realtor to communicate concerns if this situation arises in your community. You also may need to involve legal counsel to advocate your community’s position.
Again, this is a newer trend in which we all can educate ourselves about and communicate with Realtors and owners in our community to avoid violations and preserve neighborhoods. We all prefer proactive solutions and education outreach to avoid legal issues.
Many HOAs and individual residents have addressed and implemented CCR and rule restrictions against short term rentals and AirBnB type arrangements, but those protections may not cover fractional ownership or timeshare ownership.
HOAs and residents who want to preserve their own neighborhoods may want to seek legal advice and revise and adopt improved CCR restrictions.
In addition, there is a balance to address where there may be multi-member LLCs involving family members owning property together for private purposes, as opposed to commercial uses.
For Town Code violations, please report them to the town code enforcement staff Tina Brindley at firstname.lastname@example.org. So stay tuned and stay engaged in your community as issues continue to arise in our town.
Editor’s Note: Julie Pace is vice mayor of the Paradise Valley Town Council.