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Tenancy in Common TIC
"TIC", or Tenancy in Common, is a way of owning real estate where multiple people take title to a property with a percentage undivided interst in the entire property without right of survivorship, meaning their interest passes to their heirs upon their death, not to the other owners. Each individual interest can be conveyed separately
TIC has become a major success in the San Francisco area and is rapidly spreading to other parts of the state. Tenancy in Common is an excellent way for multi-family homeowners to maximize the value of their property while reducing or eliminating thier management, maintenance, and tax burdens. It is also a very viable and inexpensive way for individuals, families, or other entities to own real property and have control over their investment.
The end result of owning a TIC share of a multi-family property is somewhat similar to a condominium in that the owner has the exclusive and uninterrupted right to a specific unit in a building, (not an interval ownership, as in fractional vacation homes) and pays a monthly assessment (similar to HOA dues) which covers property taxes, maintenance, group utilities, and reserves for repairs and upgrades. The major difference is that TIC owners do not have CC&R's (Covenants, Conditions, and Restrictions) regulating the use of the property. A private TIC agreement , drawn up by a qualified attorney, will set forth stipulations about how the owners make decisions regarding the use and management of the property, allowing the owners to agree on how they will handle their property.
In the past, TIC interests were purchased by several owners under one loan, which proved to be challenging when one owner decided to sell or stop making payments on their portion of the loan. However, with recent growth in the industry, several lenders have introduced individualized financing for these types of properties. This development has facilitated the resalability of each owner's share, and protects the other owners from default or foreclosure from another co-owner. In fact, TIC lenders are expanding their business because of their reportedly impeccable payment history with TIC borrowers.
For a more thorough explanation of TIC ownership, please refer to the following article, written by Andy Sirkin, real estate attorney and broker in San Francisco, California. (Click here)