Fractional ownership agreements

Any ericson folks out there utiizing any fractional ownership
agreements with partners and/or corp "shells" set up for
asset management?

If so, how is it working out? Give me the good & bad, and
what you would change to make the situation better for
partners...Thanx !!!

ps: I am a partner in a cessna (hangered in Colorado) and am
considering setting up a corp w/three assets in it...two ericsons
and a boston whaler.....For owners usage.....

Partner ships are only as good as the people in them. I was a partner in a Neptune 24 for four years. My friend and I tested the partnership because we were thinking of buying a larger boat and wanted to see how it would work with a boat we could afford to buy the other half. We set up a spreadsheet to cover all it money spent directly on the boat, slip fees, insurance upgrades and maintenance. We agreed that there would be no residual value to maintenance and all upgrades would have an 80% residual value. The spreadsheet had formulas to calculate any balance owed just by entering the item and the amount listed on the paid by column for whoever made the payment.

At the end of the partner ship we added up the upgrades and half the price paid for the boat plus 40% of the upgrades and that was the price owed for the half.

I sold my half four months after buying the E29.

Have a plan for managing the partnership but also have an exit plan agreed upon and documented before entering into any shared ownership.

We originally bought VOR with 4 partners. I drafted up a partnership agreement and considered placing ownership into an LLC. However, I changed my mind because the tax benefits accrue for an LLC only if there is some income (i.e. you can write off capital improvements, monthly maintenance, etc. against boat income)
It turns out that one of the four had completely unrealistic expectations about boat ownership and the second of the four took a job transfer out of the area. The partnership agreement worked out fine in covering the manner in which the two partners were bought out. The conflict came in that two of us (the two remaining partners) wanted to put money into the boat to make her more comfortable and more competitive and two didn't.

Now my partner and I don't need a written document to tell us how to handle things. We both do what is necessary to keep the boat up. We have no qualms about buying things for the boat that are necessary. If its a new sail, we talk first. If its a new battery charger because the old one went out, we don't need to talk, we just buy it. I paid for it but I have no issues that something else will come up and Mike will pay for it. Its the best kind of partnership.

I have a copy of the agreement if anyone cares to look at it. Oh also, I drafted the agreement myself, but I am a lawyer, if that means anything these days.

Jim McCone
Voice of Reason E-32-2 Hull #134
Redondo Beach, CA

I have to say, I wouldn't ever do this- but that's because I know that I'm the guy who's hard to deal with
In our area they have "timeshare" type boats with no maintenance costs, proffessional upkeep, etc...
Just a thought,
CHris

JIm - I would love to see the agreement, although I have no issues with my current arrangement.

I have an operating agreement with my boat partner which has worked fine for eight years although there's no documentation. I own the boat (having bought it more than 15 years ago) and technically have the right to make "final" decisions, although I've never asserted it. We share maintenance and upgrade expenses down to the penny. He has done about 60% of the maintenance work, although we try to do that equally too. If a tool like a router is involved, I buy it and own it since I have a basement and he doesn't. We cooperate with use of the boat.

Financially, it is not quite an equal partnership but that has worked out well. My capital is tied up in the boat but I view that as a sunk cost (ha ha ho ho) and we both need each other to help with the maintenance and sail with each other when our young families are disinclined to do so.

In eight years we have had zero arguments and no problems. It is really ALL ABOUT THE PARTNERS' TRUST, however. I've known my partner since my freshman year of college and would not take on another who didn't have the same level of mechanical knowledge and common sense. (Sailing ability has almost nothing to do with it, actually.) (And let's be completely honest: he has more common sense than I do.) If he dismasted or sank the boat on his next outing I would know at the very least he was as dumb about it as I would have been in his shoes and it would not come between us.

interesting ideas and comments everyone, thank you !!! examples of agreements and/or spreadsheets would be interesting....