Pacaso, the luxury fractional-ownership company founded in 2020, has been involved in a series of lawsuits since it began operating, and the Pacaso lawsuits split into two tracks: cities suing (or being sued by) the company over whether its co-ownership model is really a timeshare, and individual co-owners suing Pacaso over how it manages the homes and their shares. The municipal cases have run in California and South Carolina with mixed results, including a St. Helena settlement, a reported Newport Beach settlement, and a South Carolina appellate ruling in Pacaso’s favor. The customer cases include a 2023 dispute settled quietly and a 2025 case still pending in federal court in Colorado.
The Question Driving Every Case: Co-Ownership or Timeshare?
Almost every Pacaso lawsuit turns on one definitional fight. Pacaso sells one-eighth to one-half interests in a single-family home through an LLC, and the company argues that buyers hold a real estate asset with governance rights, equity, and the ability to set their own resale price. CEO Austin Allison and board chair Spencer Rascoff have pressed that point publicly.1Pacaso. Pacaso vs. Timeshare
Cities look at the same arrangement and see a timeshare: multiple parties rotating through one home on a schedule. Several have rewritten their zoning codes to say so explicitly. Sonoma passed an urgency ordinance in January 2022 prohibiting timeshares and fractional uses citywide, and in April 2023 the Sonoma County Board of Supervisors voted 4-1 to define LLC-based fractional ownership as a timeshare, restricting such properties to lodging and tourism zones. Napa has its own ordinance barring timeshares in residential districts.2Press Democrat. Sonoma County Board of Supervisors Approves New Regulations for Vacation Rentals3North Bay Biz. A Timeshare by Any Other Name At least a dozen municipalities have taken some form of regulatory action against Pacaso since 2021, according to reporting by The Real Deal.4The Real Deal. Pacaso’s Fractional Ownership Model Under Scrutiny by Customers
St. Helena: The First Major Case, Ended by Settlement
Pacaso sued the City of St. Helena in April 2021 in the U.S. District Court for the Northern District of California after the city ordered the company to stop operating. The complaint challenged St. Helena Municipal Code Section 17.112.130, which regulated timeshares. Pacaso argued its model was not a commercial timeshare and that the city was improperly blocking property owners’ rights; St. Helena maintained that regulation was necessary to protect the character of residential neighborhoods.5City of St. Helena. Pacaso Settlement Agreement Fully Executed
The city adopted a new ordinance in April 2022 aimed at fractional ownership and deleted the code section Pacaso had challenged. Pacaso filed an amended complaint. St. Helena re-codified the ordinance again in October 2023.5City of St. Helena. Pacaso Settlement Agreement Fully Executed
On February 8, 2024, the St. Helena City Council unanimously approved a settlement. Pacaso’s four existing homes in St. Helena were designated “legal nonconforming uses,” and the city agreed not to take enforcement action against them so long as each property has no more than eight partial interests. In exchange, Pacaso agreed not to market, sell, or operate any additional fractionally owned homes in the city, and any future expansion would require the city to amend its timeshare ordinance through public hearings. Mayor Paul Dohring called the deal a “good compromise.” Neither side admitted liability, and each paid its own legal fees.6City of St. Helena. Pacaso Settlement Agreement Announcement7Patch. St. Helena Reaches Settlement With Pacaso
Newport Beach: Reportedly Settled
Pacaso sued the City of Newport Beach on September 20, 2023 in U.S. District Court, with Judge James Selna presiding. The 81-page complaint challenged a May 2023 amendment to the city’s timeshare ordinance that expanded its scope to include “fractional home ownership,” subjecting Pacaso properties to the same rules as timeshares and prohibiting them in certain residential zones unless grandfathered. Pacaso argued the ordinance was invalid and preemptive, that the city lacked authority to enforce it, and that any distinction between fractional owners and timeshare users was “legally meaningless.” It sought a jury trial, a ruling striking down the ordinance, and attorney’s fees. Newport Beach called the suit “unfounded and without merit.”8Los Angeles Times. Pacaso Files Lawsuit Against Newport Beach
The matter was still listed as active litigation in Pacaso’s 2024 SEC filing under Case No. 8:23-cv-01762-JVS-ADS in the Central District of California.9U.S. Securities and Exchange Commission. Pacaso Inc. Form 1-K Annual Report Reporting by The Real Deal in April 2026 indicated the case had settled, though the terms were not detailed publicly.4The Real Deal. Pacaso’s Fractional Ownership Model Under Scrutiny by Customers
Sullivan’s Island: Pacaso’s First Appellate Win
Sullivan’s Island, South Carolina has a long-standing ban on vacation rentals, and in 2022 the town moved to block Pacaso from operating there, classifying its arrangement as a prohibited commercial short-term rental. Pacaso and its local LLC, 2 SC Lighthouse, appealed the zoning determination through the town’s Board of Zoning Appeals and then to Charleston County Circuit Court, which sided with the town. Judge Bentley Price dismissed the case in December 2023 and denied Pacaso’s motion for reconsideration in January 2024. Pacaso filed a notice of appeal on January 30, 2024.10Charleston County Judicial Department. Pacaso Inc. v. Town of Sullivan’s Island Case Details
On February 18, 2026, the South Carolina Court of Appeals reversed 2-1. Chief Appellate Judge H. Bruce Williams wrote that the town’s Board of Zoning Appeals had “improperly construed the Zoning Ordinance as prohibiting this type of time-share arrangement.” Because the co-owners do not pay to stay at their own property and the home is not advertised on rental platforms, the court found, the arrangement is not “commercial use of the Property for accommodations in return for valuable consideration.” The court also held that the Board had exceeded its jurisdiction by expanding the case beyond what the Zoning Administrator had originally cited. Judge Thomas dissented, arguing the Board and Zoning Administrator had correctly read Pacaso’s model as a prohibited vacation rental.11South Carolina Judicial Department. Pacaso Inc. v. Town of Sullivan’s Island, 2026-UP-078
One important limit: the opinion is unpublished and carries no precedential value. It resolves the Sullivan’s Island dispute but does not bind any other South Carolina court considering the same question. As of the ruling date, there was no public indication whether the town would petition the South Carolina Supreme Court for review.12Post and Courier. Sullivan’s Island Court Appeal Vacation Home
Lawsuits by Pacaso’s Own Customers
Not all of Pacaso’s legal exposure comes from cities. A separate line of cases involves owners suing the company over how it treats their shares.
Richter v. Pacaso (Aspen)
In September 2025, Nancy and Stefan Richter sued Pacaso in Pitkin County District Court over a property at 709 W. Hallam Street in Aspen. The couple bought a one-eighth interest for $2.6 million in March 2022, along with a side letter that gave them the exclusive right to use the property for 28 consecutive days each year, from late August to early September. The complaint alleges that in May 2025, Pacaso notified them it would no longer honor that side letter starting in 2026 and would move them to standard scheduling. The company also blocked their access to the scheduling system and reassigned their dates to other owners, according to the filing.13Aspen Daily News. Florida Couple Sues Over Aspen Home Rights
The case was subsequently refiled or removed to federal court and, as of mid-2026, was docketed in the U.S. District Court for the District of Colorado as Case No. 1:26-cv-01702, with Judge Gordon P. Gallagher presiding. Pacaso filed a motion to compel arbitration and stay the proceedings in May 2026; the Richters responded in June 2026. No ruling on that motion or on the merits had issued as of the most recent activity on the docket.14PACER Monitor. Richter et al v. Pacaso, Inc.
Allen v. Pacaso (Newport Beach)
In 2023, Pacaso owner Bill Allen sued the company over a Newport Beach property. Allen alleged Pacaso had breached its fiduciary duties by selling another owner’s share ahead of his despite his earlier listing, and that the company had used unlicensed agents to sell ownership interests. The case settled the same year, with Pacaso buying out Allen’s share. Settlement terms were not disclosed.4The Real Deal. Pacaso’s Fractional Ownership Model Under Scrutiny by Customers
Broader Owner Complaints
An April 2026 investigation by The Real Deal reported that Pacaso owners have described significant, sometimes unexplained increases in maintenance and management fees, with one owner citing a 53% cost increase over five years. Owners also reported difficulty reselling their shares and described the resale process as opaque. Because Pacaso serves as the exclusive listing agent for resales while also managing the properties, some owners alleged a conflict of interest, saying the company prioritizes selling new shares over helping existing owners exit. Allison attributed rising costs to inflation and insurance trends and said average resale gains had fallen to about 6%, down from an earlier estimate of 10%.4The Real Deal. Pacaso’s Fractional Ownership Model Under Scrutiny by Customers These reports have not, on the record in the file, translated into class litigation.
Where Things Stand
The municipal front has cooled somewhat. St. Helena is settled, Newport Beach is reportedly settled, and the Sullivan’s Island appeal gave Pacaso its first court win on the timeshare question, even if that ruling binds no one else. Other cities have not sued but have rewritten their zoning to head off the model, which limits where Pacaso can expand rather than clawing back homes already in place. The customer front is younger. The Richter case is the first publicly filed owner suit still in active litigation, and its early motions turn on arbitration rather than the merits, so any ruling on whether Pacaso can unilaterally rewrite a side-letter use guarantee is likely still some way off.