A New Form of Time Share Is Hitting Single Family Zones.

The Town of Palm Beach recently stopped a national on-line broker from converting houses in residential zones into “fractional vacation ownership”. I visited the Pacaso website at Pacaso.com in June and was shocked to see seven houses listed in my neighborhood. In fact they were in every neighborhood in Boca. It’s downright sneaky. 

I am a member of our neighborhood’s civic association and fractional ownership is exactly the type of quality-of-life downgrade our predecessors didn’t want. Below are the notes and concerns we presented to Boca’s City Council and City Manager. Something happened. Days later, all of the listings in Boca Raton were removed from Pacaso. Where there were dozens in June, by the end of July there were none. But neighboring cities with listings include Highland Beach, Deerfield Beach, Delray Beach and beyond. If you visit the site, towns and cities all over the United States have listings. I saved a number of listings and attached them in a gallery at the bottom of this article.

What is a Pacaso time share?

Pacaso is a real-estate startup founded in late 2020 and co-owned by Spencer Rascoff and Austin Allison. Both are former Zillow executives. Its business plan is to convert houses in residential areas into luxury vacation time share properties.  They choose not to use the words time share or interval ownership.  They prefer the word “Co-ownership” and say the difference between co-ownership and a time share is a co-owner holds a share of the property deed.  Here is how they go about it:

• Step One:  Show glamorous high-end houses on a beautiful website. 
• Step Two:  If enough buyers emerge, Pacaso goes to work and buys the house, refurnishes it to their discriminating standards, and re-sells it in 1/8 shares to high-end vacation buyers or investors.  

That’s basically it. 

The Sneaky Part

The website uses words like crowd-sourcing, “more meaningful family vacations” and co-ownership.   Pacaso advertises houses in choice locations regardless of local zoning.  In Boca Raton, at least $500 million in listed properties are on Pacaso’s site.  $Billions in listed properties in Palm Beach County. How did Pacaso acquire so many listings so fast?  They use the word “curate” instead of “market, or advertise,” and they post properties already listed on third party platforms. The listing party may not be aware Pacaso is marketing their house. One neighbor of mine had no idea, nor did their realtor.       

With multiple buyers, the sale price can be increased substantially by dividing it into more manageable chunks.  For example, townhomes on my street that were bought for $1.9 million less than two years ago, now are advertised in eight shares totaling over $6 million. One townhouse! No wonder real estate people have been calling me. The money will be irresistible to sellers.

A deed divided eight ways is eventually messy. 

But that’s not what I’m writing about. The only thing standing in the way of this genius scheme is municipalities who enforce their single-family zoning. What about THOSE families? The ones whose house is their sanctuary. The ones Boca’s Municipal Code was written for. The ones with mortgages who buy insurance and send their kids to local schools and look out for the old couple on the corner. Don’t they get a say? Don’t those parents get to know who is next door?  Vacationing people – even upscale ones – have different priorities than neighborhood homeowners.  

What’s the concern? 

Unintended consequences, of course.  Neighborhoods are for Neighbors. If fractional time-based co-ownership creeps into Boca’s R1-zoned neighborhoods, is there really any way to stop even ONE copycat plan later? If high prices don’t work, lower prices will appear.  If an eight-share structure doesn’t work, why not more? A competitor could create a mid-range model for luxury houses with a 52-share plan.  Any time-share iteration is possible. Buy a full share or form a group and buy a share of a share. Here for a week?  A couple days? You cannot stop us, City, because we aren’t renting, we are co-owners!

Which brings up the rental market.  Co-owners using social media and Craig’s list need not show up.  They can rent their time slot online to others and catch me if you can.  

I looked for a definition of Single Family in Boca’s municipal code. Unfortunately, I didn’t find one, though it might be there.  I went on line to Realtor.com.  They wrote that all single-family residences have this in common:  One owner.  This home is built as the residence for one family, person, or household, whose owner has an undivided interest in the unit.

I ask the City of Boca Raton to follow the Town of Palm Beach’s lead, and take the steps needed to block Pacaso from converting houses in Boca’s single family residential zones. If you agree, contact your city council using the form below.

Gallery of Boca Listings that disappeared after Mac presented at a City Council Workshop