City Preempts Fractional Ownership of Residences
by Carl Wagenfohr
CLEARWATER - Five years after becoming aware of short-term rental activity in the residential area of north Clearwater Beach and taking initial code enforcement action, the City of Clearwater has taken preemptive action against another threat to the character of that neighborhood - Fractional Ownership.
Unlike a timeshare, which is typically sold by the week, the fractional ownerships currently being marketed on Clearwater Beach divide the ownership into seven shares with an agreement on how time is allocated. According to Kenny Hayslett, a realtor who is marketing fractional ownership of several Clearwater Beach homes, seven is a magic number that keeps the sales from being regulated as a timeshare by the state Division of Land Sales.
Hayslett claimed that the fractional ownership has been around since the 70's, having started in Colorado. "It's a wave that's been around for some time; it's just new to our community," he said.
Hayslett is marketing the fractional ownership of four Clearwater Beach properties: 855 Mandalay Avenue, 980 Narcissus Avenue, a townhome at 145 Brightwater Drive, and 739 Eldorado Avenue. Interestingly, the 739 Eldorado property was the subject of Clearwater's initial code enforcement effort on short-term rentals in 2002.
"Fractional ownership is the only segment of the real estate market that is actually growing," Hayslett said. And although he said that no sales have closed, there has been interest; "We have five commitments. These are out-of-state buyers that want to come and enjoy a beach house but basically just want to pay for what they use," Hayslett said.
Assistant City Attorney Leslie Dougall-Sides said she believed that the code already prohibits fractional ownership in residential areas. But as realtors have begun marketing the concept on Clearwater Beach, the city has amended its Development Code to clarify that fractional ownership use is prohibited on residentially zoned property.
Passed by the City Council on second reading on November 1, the ordinance states, among other things, that dwelling units located on residentially zoned property "…shall not be used or occupied in interval ownership, in fractional ownership, or as a timesharing unit." During the Council's October 15th worksession, City Attorney Pam Akin had said, "As soon as we close one loophole, someone finds another one. We believe that this [ordinance] closes those."
Contacted after passage, Hayslett had no comment on the ordinance because he had not yet read it, but he said that he would seek the advice of his attorney. "There are a number of other folks who are going about this approach as well. We just happen to be the first one out there [on Clearwater Beach], and the one that has caused the city to take action," he said.
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