Management, Maintenance, Repairs & TIC
As a TIC is a form of joint ownership, the decision making process for management of the property as well as the responsibilities and accountability of the co-owners is important to define in advance. Typically all decisions affecting the property are made via owner vote. Depending on the severity of a particular issue, decisions are generally made either by majority vote or by a unanimous vote. It’s important that the owners delineate which types of decision should require a majority vote and which require a unanimous vote. As a general rule, the more costly a decision will be to each owner the more likely it is that the decision should require a unanimous vote. For example, choosing a lawn service may simply require a majority vote while choosing a roofing contractor may require a unanimous vote.
All ownership responsibilities should be defined and assigned to an individual owner. Ambiguity about either the responsibility itself or ownership of the duty can result in unnecessary disputes and infighting among the owners. The TIC agreement should definitively spell out the management responsibilities.
Like anything, property management costs money. TIC co-owners typically have to share all group expenses. These can include the group mortgage loan, homeowners insurance, property taxes, utilities, and maintenance/repairs. TIC owners typically open a group bank account which is used purely for collecting deposits from the owners and paying the respective expenses. To keep management simple and protect against cash flow problems among the owners, the total annual expenses for all group expenses are estimated. The total payment is then divided proportionally among the owners and prorated over the 12 months. Each owner then deposits their share of expenses into the account each month. Many TIC owners will require that each owner “seed” the account with 2-3 months worth of payments so that there is both a buffer against default as well as extra cash in the event of unforeseen expenses. One person is generally responsible for the management of the group bank account. This person is generally responsible for keeping accurate records and reporting the financial standing to the TIC owners at previously agreed upon intervals (monthly, quarterly, etc).