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In a major victory for Pacaso, the City of Miami Beach, Florida, has made co-ownership an approved, legal form of real estate possession, according to a joint statement from the co-ownership platform and the city.
City officials last month passed an ordinance that approves co-ownership but requires the presence of a local property manager as well as adherence to a code of conduct. Pacaso already requires shareowners to acknowledge a use code and has long hired only local professionals to oversee the homes it sells.
While Pacaso did not create co-ownership, it’s largely responsible for formalizing it for the modern homebuyer and applying it primarily to second homes.
“Miami Beach’s recognition of co-ownership is a game-changer for second home ownership, and Pacaso is excited to continue leading the way in this innovative approach to owning property,” Pacaso CEO and co-founder Austin Allison said in a statement. “Good things happen when businesses and local governments collaborate sensibly and pragmatically.”
Any controversy about the multi-owner structure within municipalities tends to stem from its association with short-term rentals (STR).
However, co-ownership directly alleviates the risk posed by STRs to local markets by ensuring only property owners have access to the homes and by limiting the number of listings absorbed by second homeowners.
The Real Deal reported that the ordinance also mandates documentation attesting that homes will not be made available to the short-term rental market. Pacaso does not allow owners to put their use time on the STR market.
Miami Beach Commissioner Alex Fernandez said in a statement that the city doesn’t “have the ability to prohibit fractional ownership,” in what might be considered acknowledgment that the city was facing a real estate issue it hasn’t before.
“We’re proactively getting ahead of this new trend to protect residents’ quality of life by making sure that fractional property owners are subject to the same land use regulations as any other homeowner in the city and that we have a way to contact them to address nuisances and emergencies in a timely manner,” he said.
Pacaso’s model typically sells a single home to eight parties, with the stated goal of ensuring a home is used instead of stagnating as empty inventory.
The State of Utah enacted a similar law earlier this year, Inman reported.
Senate Bill 271, which passed unanimously, protects co-ownership companies like Pacaso and local competitor Ember by blocking cities across the state from restricting fractionally owned properties.
In October 2022, Pacaso applauded Park City council members for an ordinance regulating where the residential co-ownership company could purchase and resell homes.
Those rules limited where Pacaso could buy and resell homes in the ski resort town, effectively relegating the company to areas that allowed timeshares and short-term rentals. But lawmakers also specifically recognized Pacaso as something different from short-term rentals and timeshares, and for that, Pacaso lauded the vote.
Pacaso thanked the City of Miami Beach for its willingness to address the issue.
“Moving forward, we remain committed to working closely with all stakeholders to ensure co-ownership benefits the entire Miami Beach community. Together, we can create a brighter future for second home ownership in Miami Beach and beyond,“ Pacaso said.
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