Waterfowl Ownership Shares: An Affordable And Often Overlooked Opportunity For Buyers
Waterfowl properties are often set up with multiple owners to distribute annual costs and keep them low. This creates an opportunity for buyers to own part of a great hunting property with less money. They can be solid investments for those wanting their own piece of waterfowl heaven. These properties also raise uncertainties for both buyers and the remaining owners, in this article, I’m going to break down some of the most common questions I get about waterfowl ownership shares so you can have a better understanding of how they work.
In most cases the “by-laws” of the club are the fundamental breakdown as to what can be expected from each owner and are the foundation to keeping the club intact, operating correctly. As a potential buyer this is one of the first things you should request to see and read before moving forward with a purchase.
1) How many ducks are harvested each year?
This sounds like a fair question, but it is not the easiest one for me to answer at times. In many cases, I have found that harvest records are not always kept on these properties. Keeping detailed records can be difficult as there are many owners hunting at different times. As a buyer it is important to remember that total past harvest numbers don’t represent what the club has to offer in the future. For example, I sold a share to a buyer into a duck club four years ago and the club usually harvested less than 100 birds annually up until that time, fast forward three years and with a newly implemented management plan, that club harvested 647 ducks in 2017.
2) Annual Dues and Assessments
Do the annual dues cover the taxes?
In my experience, annual dues almost always cover taxes and most other aspects of the property such as annual maintenance, fuel costs and caretaker salaries. I have also found that most annual assessments are slightly higher than most annual costs, which helps the club set money aside each year to help offset and pay for any unexpected expenditures when they occur.
Are there any future costs anticipated that will raise the annual assessment?
This is a great question and one that a knowledgeable broker would address when they initially pick-up the listing. In most cases current owners try to keep annual assessments as low as possible, but there are certainly unexpected situations such as emergency levee repairs or club house repairs that may not be anticipated. As a buyer, you would certainly want to know if the fees are going to be raised the next year due to planned work or repairs.
What is an Initiation Fee?
In some instances, an initiation fee is collected up front when a property is purchased by a new owner. This is a one-time payment of a set amount that every owner had to pay when they were initiated into the club. It is different than an annual assessment and is usually placed in a slush fund with other initiation money to help protect owners from unexpected costs. A slush fund is a great way for clubs to keep future annual assessments as low as possible.
3. Guest days and work days:
Am I limited to the number of guests that I can bring to the property?
In most cases, clubs are set up where the number of guests and amount of times you can bring a guest to the property is strict. These clubs try to keep things fair for the owners and owners take precedence over guests. There are many reasons for strict guest days and rules. First and foremost, it protects each owner from other owners abusing and overusing the property. There is almost always a rule that no guests are allowed on the property without one of the owners. Often times there are exclusions for immediate family, especially children under the age of 18, which helps introduce young hunters to the sport.
What are work days and what are my responsibilities as a new owner?
Each club is set up differently, but many of these clubs try to keep annual costs as low as possible by doing the bulk of the annual work themselves as opposed to hiring a care taker to do the work. The scope of work usually ranges from mowing, clearing and repairing levees, brushing and building duck blinds, and planting food plots. Some clubs have a set number of hours established that each owner needs to work each year to ensure the club is ready for hunting season. This is usually addressed in the by-laws.
4. Right of First Refusals:
What is a right of first refusal and what does it mean for me as a potential buyer?
In most cases, there is an option for a right of first refusal for the other current owners in the club. This means that a seller may want to accept an offer price from a buyer but is required to give the other shareholders an option to buy the share at that price before he or she can finalize the deal with an outside third party (the buyer). This is usually a security clause in the by-laws to help protect the current owners and integrity of the club, though it can be frustrating for a potential buyer.
As a buyer, you may spend several days with your broker negotiating a price that you are comfortable with, only to find out that one of the other owners is willing to buy the share for that price. It can be frustrating, but when a seller comes to me to sell their share, it is usually because the other owners are not willing to pay the amount that the seller is trying to get for their share. An experienced broker will help guide buyers and sellers throughout this process.
5. What do I receive, when I take over ownership of the share?
Again, each club is different. I have dealt with many different scenarios while selling shares in duck clubs, but the two most common ways to prove ownership are a certificate of stock or a deeded undivided interest in the property. This is established in the by-laws and varies based on the club being established as an LLC, corporation, or just owned as individual owners.
In both situations, the buyer should take the time to have a simple title search done to ensure there are no liens or encumbrances against the property that could otherwise be unknown. The deeded undivided interest in a property is recorded at the courthouse and you will receive a deed after closing. If the property is set up with shareholders, you will receive a signed and executed certificate of stock proving you are a shareholder and it will be recorded through the corporation paperwork.
Although there is more nuance with waterfowl ownership shares than properties with a single owner, these properties offer excellent value. An owner can get into a waterfowl property for a lower upfront investment and have access to great hunting opportunities right away.