BY Nick Walton on 13 May 2024

The concept of fractional ownership in the superyacht industry presents a fascinating blend of luxury and legal complexity, says Roy Chan

In the realm of superyachts, ‘fractional’ doesn’t just divide ownership; it multiplies legal intricacies. Drawing from my extensive experience as a superyacht lawyer, I provide insight into the unique complexities that emerge in these shared luxury arrangements.

The Attraction of Fractional Ownership

The concept of fractional ownership represents a highly appealing option for those looking to enjoy the lavishness of a superyacht without bearing the immense costs associated with sole ownership. Since the average superyacht usage spans only three to five weeks annually, the notion of shared ownership emerges as a logical and economically viable solution. This enables owners to enjoy the unique experience of superyacht ownership at a ‘fraction’ of the total operating cost and expense.

However, the legal intricacies begin to unfold when drafting the co-ownership agreement. This vital document outlines each co-owner’s rights and responsibilities, detailing the usage schedules, maintenance responsibilities, cost sharing and procedures for selling shares, among other things.

Essentially, this agreement forms the cornerstone of the fractional ownership scheme, providing a clear framework within which each co-owner can navigate their shared ownership while fully understanding the extent of their individual and collective responsibilities and privileges.

The concept of fractional ownership in the superyacht industry presents a fascinating blend of luxury and legal complexity, says Roy Chan

Roy Chan

Overcoming Obstacles in Fractional Ownership

The landscape of fractional superyacht ownership is marked by a spectrum of collaboration and conflict. This is especially evident when fractional ownership includes a mix of individuals from close friends to complete strangers (assembled by yacht management services that require anonymity). These varying relationships can either foster a harmonious atmosphere or ignite significant disputes, especially concerning the allocation of yacht usage during the high-demand peak seasons.

In addressing such disputes, I recalled a challenge predominantly centred on scheduling conflicts. To mitigate this issue, I adapted a strategy from the aviation industry: implementing a credit scoring system for booking priorities. This innovative method brought a new layer of flexibility and compromise, empowering co-owners to exchange their designated time slots to accommodate individual preferences and needs, thereby alleviating tension.

Building on this theme of adaptability, a noted strategy of Meros Yacht Sharing, one of the leading fractional ownership management companies in Europe, further revolutionised the traditional constraints. They granted co-owners the liberty to utilise various yachts across their extensive fleet, rather than confining them to their specific share of a single yacht.

This innovative approach significantly increases co-owner options, showcasing a prime example of how creative strategies can transform the dynamics of shared yacht ownership, enhancing the experiences and mutual satisfaction.

The concept of fractional ownership in the superyacht industry presents a fascinating blend of luxury and legal complexity, says Roy Chan

MY Song

Harmonising Interests in Luxury Co-ownership 

Balancing the delicate equilibrium between individual aspirations and the practicalities of shared ownership is an ongoing endeavour that requires vigilance and flexibility. This balancing act involves aligning diverse interests and adapting to evolving expectations and needs.

Navigating these challenges reveals the true potential of fractional ownership: a path to experience unparalleled luxury in a more accessible and harmonious way. As we refine these innovative ownership models and adopt flexible solutions, we pave the way for a new era of luxury co-ownership, marked by mutual respect, shared joy and collective success.

Roy Chan is a superyacht lawyer with 20 years of experience in the maritime sector, credited with more than 500 ship transactions. He is a trusted advisor for UHNW clients and collaborates regularly with yacht brokers and intermediaries globally

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