What is TIC Ownership? A “tenancy in common” or TIC ownership is a way for 2 or more people to jointly hold title to real property together. The term, “TIC ownership,” is commonly used to refer to joint ownership of a property with 2 or more units, where each owner has exclusive use and possession of a particular unit. TIC ownerships first gained popularity in the Bay Area many years ago in response to the high price of real estate, given that a fractional interest in a TIC ownership is likely to be cheaper to buy than a comparable single-family home or condominium. 

Does C.A.R. Provide Standard Forms for TIC Transactions? Yes and no. In December 2021, C.A.R. released 3 new forms for selling and buying an existing interest in a TIC, as follows: (1) TIC Purchase Addendum (TIC-PA); (2) TIC Ownership Advisory (TIC-OA); and (3) TIC Financial Disclosure Statement (TIC-FD). The TIC-PA is one of the optional “Property Type Addenda” identified in paragraph 4A of the newly-revised RPA. However, despite the availability of these buy-sell forms, C.A.R. does not provide a standard-form TIC ownership agreement that establishes the rights and obligations of the co-owners with respect to each other (see below).

Should a TIC Seller or Buyer Have a TIC Ownership Agreement? Yes. TIC owners would want a written agreement that clearly delineates their respective rights and obligations, such as, among many other things, their exclusive use and possession of their own unit and parking space; how to pay property taxes, insurance, utilities, maintenance, and repairs; and how they plan to deal with any financing issues (see C.A.R. TIC-OA for more information). In theory, a TIC ownership agreement could be as complicated as the governing documents, including CC&Rs and HOA rules and regulations, for a condominium complex. As the real estate agent in a TIC situation, advise your clients in writing to consult with their own attorney concerning the drafting of a TIC ownership agreement. If the seller already has a TIC ownership agreement, then, as the buyer’s agent, you should still advise your buyer in writing to have the buyer’s own attorney review that TIC ownership agreement.

-Thank you to Kathy King (Calabasas and Encino Manager) for suggesting this week’s legal tip!

Copyright© 2022 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of February 7, 2022. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.