Tenancy In Common (TIC)
Broadly speaking, tenancy in common (which is the same as tenants in common, and often abbreviated as TIC) describes a co-ownership where each owner is free to choose who will inherit his/her interest. But in practice, tenancy in common, tenants in common, and TIC, are commonly used to describe narrow sub-categories of the wide TIC world, leaving the uninitiated confused about how the various types of TICs relate to each other. It is useful to distinguish between TICs that assign each co-owner usage rights to the co-owned property, and TICs that do not. In the category of TICs with usage rights, there are: (i) “space-assignment co-ownerships” (or “SACOs”), which are intended to have the look and feel of condominiums or other legal subdivisions, and assign particular houses, apartments, rooms, offices, stores, or storage spaces to each owner; (ii) “time-assignment co-ownerships” (or “TACOs”), a kind of timeshares often now referred to as a private residence club or fractional ownership, which assign particular usage times or intervals to each owner; and (iii) “equity shares” where one or more owner gets usage rights, and one or more other owner is purely an investor. In the category of TICs without usage rights, there are: (i) investments organized by syndicators or sponsors, frequently as placements for the proceeds of 1031 tax-deferred exchanges; and (ii) less-formal groups of family members and friends, sometimes created through inheritance, that hold property for investment purposes.
Introduction To Tenancy In Common (TIC) With Exclusive Occupancy Rights
Tenants in Common (TIC) ownership is often paired with a tenants in common agreement (TIC Agreement) under which each owner receives the exclusive right to occupy a particular space within the co-owned property, an arrangement we refer to on this website as a SACO (for space-assignment co-ownership). The assigned spaces may be apartments within an apartment complex or building, detached houses on a single lot, rooms within a single house, offices within an office suite or office building, storage areas within a warehouse, or any other part of a residential or commercial property. We have even created space-assignment tenancies in common for a horse stable, a marina, a campground, a vintage car repair facility, and a yurt commune. Assigning occupancy rights in a tenancy in common agreement allows a Realtor, seller, project sponsor, or co-owner group to create an arrangement that feels and acts like a subdivision even though actual legal subdivision is impossible, unaffordable, or too time-consuming. To learn more about SACO TIC legal services offered by SirkinLaw APC, visit Our Services.
Why Do People Form SACO TICs?
By far the most common use of SACO tenancy in common arrangements is to create a “mock subdivision” for a property that cannot be legally subdivided. For example, apartments in a building that cannot be legally divided into condominiums can be converted and sold separately as TIC shares. Similarly, a single parcel of property that cannot be split or subdivided, but that has (or can have) multiple homes, can be converted and sold in TIC “pieces” where each buyer has his/her own home. These types of TICs are not the equivalent of legal subdivisions, but they provide buyers with an ownership that shares many of the most important characteristics of legal subdivision. The result is that sellers receive higher sale proceeds than they would if they sold their apartment building or undividable lot more traditionally, and purchasers are able to buy a home or apartment they could not otherwise afford.
Learn More About Tenancy In Common (TIC) With Exclusive Occupancy Rights
This page is a gateway to many articles on all aspects of SACO TICs, categorized for easy navigation under the links below.
Learn when a SACO TIC is useful, why it makes sense, what makes it different from a condominium or single family home. Then, explore how this type of tenancy in common is organized and functions, discover the risks, and learn how best to avoid potential pitfalls.
Learn details about how TICs organize and operate, how expenses are shared, how budgets are prepared and owner dues are collected, how TIC agreements are enforced, how decisions are made and disputes are resolved, and much more.
Get the tools and checklists you need to decide if a TIC is the right home ownership option for you. Explore statistics on whether TICs are a good investment over time. Learn how to compare one TIC to another, what documents a TIC buyer should request, and what the buyer should look for in these documents.
Get the tools and resources you need to fully evaluate if selling you building or lot as a SACO TIC is possible, and whether it makes sense for you. Find out what TIC financing options will be available for your buyers, and what liabilities you may face as a TIC seller. Explore TIC sales statistics and trends. Read some case studies that describe TIC conversion and sales strategies.
Explore the regulation of SACO TIC formation and sales. Learn when and why you are legally allowed to sell homes as TICs. Find out when you are required to get governmental approval, how long it takes to get that approval, and how much it costs. Read summaries of the law as well as the full legal codes and case law.
If you are interested in buying or selling a TIC in San Francisco, you need to be aware of rent control. San Francisco law restricts both the ability to raise rents and, perhaps more important, the right of owners to evict tenants. Learn how the SF rent ordinance works, and how it might affect you as a TIC buyer or seller.
Additional articles and resources relating to SACO TICs.