Tenancy in Common (TIC)

Disadvantages of TIC

Disadvantages to consider regarding TIC ownership include:

  • Shared financial obligation such as a common group loan, property taxes, and homeowners insurance. The common group loan in particular can be a significant disadvantage as these loans generally require mutual responsibility among the owners.

Difference of Condo vs Co-Op

As it relates to real estate, a “co-op” is a stock corporation where owners hold shares of the corporation which in turn owns the building. Each shareholder owns shares equal to the value of a given unit. These shares come with usage rights to that unit. As such the main difference between a condo and a co-op is that a condo owner owns the individual unit while a co-op shareholder owns shares in a parent corporation which owns the individual unit. Both condos and co-ops are restricted by similar rules governing conversion. That is, it is equally difficult for an apartment building to convert to a co-op as it is a condo.

Common Group Loans

In a TIC, mortgage financing is generally achieved via a common group loan. This is one loan for which multiple owners are responsible to repay and which is divided proportionally among each owner by percentage of ownership. It is best explained using an example:

Advantages of TIC

Tenancies in Common have gained popularity in San Francisco for two main reasons. First, San Francisco is land-locked which curtails new home growth and housing development. Second, housing regulation –specifically condo conversion restrictions- limits the supply of individually owned single unit housing. As such tenancy in common has become more advantageous. Some benefits of TIC include:

Maximization of Buying Power: Buyers are able to pool their resources with other buyers and access much more real estate collectively than they could individually. This gives buyers a greater selection of homes from which to choose as they aren’t limited by only single family homes or condos.