Legal Restrictions on TIC Conversions and Sales

By Andy Sirkin

This article discusses the need for California Bureau of Real Estate (“BRE”) approval for sales of tenant in common interests in real estate parcels containing five or more units, and the procedures and requirements for obtaining such approval.

The main points in this article are:

  • The BRE, which regulates California real estate sales and issues licenses to real estate brokers and agents, believes that governmental approval is required for sale of tenancy in common interests in buildings of five or more units (assuming at least one unit is residential) to prospective owner-occupants regardless of the number of interests sold.
  • The law may not actually require governmental approval if 10 or fewer TIC interests are being sold, so sellers can either take the position that the BRE is wrong and not get approval, or assume the BRE is correct and get approval.
  • Approval is not required for TIC re-sales regardless of building or group size, and may not be required for a new tenancy in common formation if the property was never marketed as TICs.
  • A TIC Public Report costs about $15,000 (of which about $4,500 is attorney fees), and generally takes 4-6 months to get. To date, we have eventually obtained every tenancy in common Public Report we have requested, but there is no guarantee this will continue to be true.
  • If a Public Report is required, a seller cannot advertise, show, enter into a contract to sell, or close a sale until after issuance. If the seller gets a Pink Report, he/she can advertise, show, accept non-binding reservations, and take refundable deposits, but cannot enter into binding contracts or close.
  • Financing-related risks are a major focus of the BRE’s analysis of TIC projects. Proposed financing must be thoroughly described in the Public Report application. If the financing arrangements change prior to closing, the application and all the accompanying documents must be revised and resubmitted for approval.
  • Large TIC financing is extremely complex, and there is no TIC financing option which is best in all situations. Sellers must wiegh the advantages and disadvantages of each option, choose the one that is best under the circumstances.
  • If there is a blanket encumbrance, there must be six monthly payments deposited in a special reserve account at the time the first sale closes.
  • If the seller plans to close fewer than 80% of the tenancy in common sales at the same time, he/she must provide to escrow cash or a bond in an amount equivalent to six monthly homeowner’s assessments, and this amount will be held until 80% of the TIC sales close.
  • If there is a blanket encumbrance, the seller must either close 80% of the tenancy in common sales at the same time, or deposit into escrow (until 80% of the TIC sales close) cash or a bond an amount equivalent to the balance owed on the loan.

I. Is Approval Required for TIC Conversion?

The California Business and Professions Code (the “B&P Code”), which regulates California businesses and provides protection for California consumers, contains a law known as the Subdivided Lands Act (B&P Code ¤11000 et seq.) which was enacted to protect real estate buyers from unscrupulous land developers. The specific concerns underlying the Subdivided Lands Act included the sale of property that was not served by roads, or schools, water or power service, fire departments, or other essential services, or that was otherwise too risky for the average consumer.

The Subdivided Lands Act requires BRE approval prior to sale of certain types of real estate interests. To get the approval, the prospective seller submits a lengthy application which describes the project in detail. The BRE reviews the application and determines whether it satisfies the Subdivided Lands Act and, if it does, the BRE issues its findings in the form of a Final Subdivision Public Report (a “Public Report”, also sometimes referred to as a “White Report”) which must then be distributed to all buyers before they commit to purchasing.

Originally, the Subdivided Lands Act required Public Reports only in situations where a parcel of real estate was legally subdivided into five or more smaller parcels such as entirely independent lots or condominiums. To avoid the cost and delay of getting a Public Report, some developers chose not to divide the lots they wished to sell, opting instead to sell percentage interests. At the request of the BRE, the California legislature responded by amending the Subdivided Lands Act so that it also required a Public Report for the sale of undivided interests.

The portion of the Subdivided Lands Act which applies to sales of undivided percentage interests does not require a Public Report for the sale of four or fewer shares. When between five and ten shares are to be sold, the Lands Act requires a Public Report, but also provides for an exemption from this requirement:

“The Real Estate Commissioner shall grant an exemption from this part if the undivided interests are to be purchased by no more than 10 persons, each of whom furnishes a signed statement to the commissioner that he or she (1) is fully informed concerning the real property to be acquired and his or her interest therein including the risks involved in ownership of undivided interests, and (2) is purchasing the interest or interests for his or her own account and with no present intention to resell or otherwise dispose of the interest for value, and (3) expressly waives protections afforded to a purchaser by this part.” (B & P Code ¤11000.1(b)(2))

For many years, most experts believed that sale of 5-10 undivided interests did not require a Public Report so long as the signed statement described above were submitted to BRE. Even the BRE itself seems to have held this view as evidenced by the following article written by BRE staff counsel P. H. Werner in the December 1988 edition of the Subdivision Industry Bulletin, BRE’s own publication:

“[Section 11000.1(b)(2)] provides a mandatory exception. The Commissioner shall grant an exception if ten or less persons are to buy the interests and each submits the statement defined in law.” (Emphasis in original.)

Support for this view is found in the legislative history of B & P Code ¤11000.1. The initial version of the legislation, prepared by the BRE for sponsorship by Assemblyman John Knox in February of 1971, included a discretionary “sophisticated investor” exemption but did not include the mandatory exemption for small groups quoted above. Over the next several months, Assemblyman Knox received a series of letter from constituents, industry representatives, and other legislators, expressing concern about the burden which the legislation would impose on groups of 10 or fewer co-owners. Ultimately, two amendments were proposed to address this perceived problem: the first made the Subdivided Lands Act applicable only to the sale of more than 10 undivided interests, and the second created a mandatory exemption for groups of 10 or less. The BRE opposed the first proposal but accepted the second, resulting in the language quoted above.

Based upon the language quoted above, those interested in creating TICs involving 5-10 undivided interests typically did not obtain a Public Report. Consistent with this approach, the focus was on the number of group members rather than the size of the building, and tenancy in common groups purchasing a building consisting of more than 10 units avoided the need for a Public Report by involving only 10 purchasers and retaining the other units as rentals. Avoiding the need for a Public Report in this manner was important because the BRE historically refused to issue Public Reports for TICs involving group loans (the only type of financing available until recently) on the grounds that such financing was too risky. This policy effectively meant that TICs involving more than 10 undivided interests were legally impossible.

The BRE’s position changed dramatically in 2001, when they decided that (i) a Public Report was always required for sales of undivided interests in buildings of five or more units to prospective owner-occupants regardless of the number of interests sold, and (ii) they would issue a Public Report for such projects under certain circumstances. The new BRE position is described in the Spring 2003 issue of the Subdivision Industry Bulletin.

Several nuances of the BRE’s current position are worthy of note. First, the BRE’s position on the necessity of a Public Report focuses on the number of units on the property, not the number of undivided interests being sold. This means that the BRE considers a Public Report necessary for a sale of four shares in a six-unit building, but does not require a Public Report necessary for the sale of six shares in a four-unit building. Second, the BRE’s position on the necessity of a Public Report focuses on the prospective use of the property, meaning that four investors jointly buying a six-unit building would not need a Public Report, but four homebuyers would. Third, the BRE has been inconsistent in its position on the need for a Public Report in instances where a property is being sold as undivided interests but was never marketed that way. It is therefore unclear whether the BRE considers a Public Report to be required when a group of acquaintances buys a six-unit apartment building that was only marketed as an apartment building. Fourth, the BRE has decided that re-sales of undivided interests do not require a Public Report even if the original sales did require a Public Report and even if no Public Report was ever obtained. The question of what is defined as a “re-sale” under this exemption is discussed in a BRE letter addressing the issue.

The main points of this Section are:

  • The BRE, which regulates California real estate sales and issues licenses to real estate brokers and agents, believes that governmental approval is required for sale of TIC interests in buildings of five or more units to prospective owner-occupants regardless of the number of interests sold.
  • The law may not actually require governmental approval if 10 or fewer TIC interests are being sold, so sellers can either take the position that the BRE is wrong and not get approval, or assume the BRE is correct and get approval.
  • Approval is not required for tenancy in common re-sales regardless of building or group size, and may not be required for a new TIC formation if the property was never marketed as TICs.

II. How to get a TIC conversion approved

The first step in getting a tenancy in common Public Report is assembling and submitting an application. The application material comes from four sources:

  1. An attorney, who prepares a Tenancy In Common Agreement, Memorandum of Agreement (short-form of agreement to be recorded in public records), Regulatory Check Sheet, Sample Purchase Agreement, Financing Explanation and, in some cases, sample note and trust deed;
  2. A budget preparer, who prepares a budget for the TIC group establishing the monthly dues including a savings for replacement of the paint, roof, and other major building components;
  3. A land surveyor, who prepares a drawing showing how the possessory rights in the building will be allocated among the owners; and
  4. A title company subdivision specialist, who prepares Sample Escrow Instructions and various BRE application forms, and obtains proof that schools, water and power companies, fire departments, and other essential service providers, will serve the property.

The cost of assembling this application varies depending on the professionals employed, but a general rule of thumb is about $15,000 including all professional and governmental fees (of which about $4,500 is attorney fees).

About two weeks after a package containing all of this material is assembled, the BRE issues a written acknowledgement of receipt which officially begins the BRE’s 60-day period for substantive review of the application. The BRE generally takes the full 60-days to review the application, but is rarely late. At the end of the review period, the BRE issues either an approval letter or one or more “Deficiency Notices”. In our experience to date with TIC applications (unlike with other types of applications such as condominiums), the BRE always issues at least one Deficiency Notice, even if the application is identical to a previous application that it approved. Each Deficiency Notice will contain questions or requested changes relating to the application. Depending on the nature and amount of items on the Deficiency Notice, it generally takes the applicant’s team 2-4 weeks to submit a response.

Once the applicant responds to a Deficiency Notice, the BRE has a 30-day period to review the response. At the end of that review period, the BRE issues either an approval letter or another Deficiency Notice. Although the BRE is theoretically only checking the responses to the previous Deficiency Notice at this point, it is common for the agency to issue a subsequent Deficiency Notice relating exclusively to issues that were not raised in their previous Deficiency Notice. For this reason, it is not uncommon to receive two or even three rounds of Deficiency Notices on a project. BRE’s explanation for this pattern is that tenancy in common projects are relatively new, and it is only gradually determining its policies and practices. This situation will resolve over time (the BRE is an excellent agency with personnel who are mostly smart, motivated, and responsive), but we currently advise clients to allow 4-6 months for obtaining a TIC Public Report.

To date we have successfully obtained a tenancy in common Public Report on each occasion we have applied. But BRE has somewhat broad discretion in interpreting the many requirements imposed by the Subdivided Lands Act, and their application of those requirements to TIC projects is in its infancy and evolving rapidly. Consequently, there is no guarantee that a particular TIC application will be approved, or that the BRE will not impose requirements that cannot be satisfied by the applicant for practical or economic reasons. It is therefore possible that someone could spend $15,000 on a TIC application, wait 6 months, and still not get a Public Report.

When a Public Report is required by the Subdivided Lands Act, the Act prohibits an owner from offering interests for sale, or selling them, until the Public Report is issued. This means that, in general, a seller and his/her real estate agent cannot advertise, show, enter into a contract to sell, or close a sale until after issuance. There is a narrow exception to this general rule that applies when a seller obtains a Preliminary Public Report (also sometimes referred to as a “Pink Report”), which allows the seller to advertise, show, accept non-binding reservations, and take refundable deposits. The Pink Report can be obtained in less than 60 days at an additional cost of $500.

There is considerable debate in the real estate community about whether obtaining a Pink Report is advantageous. In a rising market, the seller may find him/herself selling below full value in order to honor the non-binding reservation pricing, while in a falling market the buyers may insist on renegotiating the price as a condition of closing. Moreover, a project’s marketing capital, consisting of both its advertising budget and the cache it has when it is first offered on the market, is limited, and there is a risk of expending too much of it too early. The project may ultimately be stigmatized as “old news” or “troubled” by the time it can actually sold if there is a sense that it has been on the market forever.

The main points of this Section are:

  • A TIC Public Report costs about $15,000 (of which about $4,500 is attorney fees) and generally takes 4-6 months to get. To date, we have eventually obtained every tenancy in common Public Report we have requested, but there is no guarantee this will continue to be true.
  • If a Public Report is required, a seller cannot advertise, show, enter into a contract to sell, or close a sale until after issuance. If the seller gets a Pink Report, he/she can advertise, show, accept non-binding reservations, and take refundable deposits, but cannot enter into binding contracts or close.

III. Legal Requirements For TIC Financing

Financing is correctly viewed by the BRE is the major source of TIC risk, and is therefore a central focus of its analysis of TIC projects. The BRE pays particularly close attention to two aspects of proposed tenancy in common financing arrangements: (i) the likelihood that one owner’s non-payment will harm another owner, and (ii) the practical ability of owners to meet balloon payment obligations. To understand the BRE’s emphasis on these issues, it is necessary to understand certain historical aspects of large TIC financing, and the portion of the Subdivided Lands Act and BRE Regulations addressing “blanket encumbrances”.

Until very recently, the only type of bank financing available for TICs was an apartment building loan secured by the entire property. This type of loan is referred to in the Subdivided Lands Act and BRE Regulations as a “blanket encumbrance”. When a blanket encumbrance exists, it is possible that non-payment by one owner will cause other owners to lose their property and/or investment through lender foreclosure (the “default risk”).

Apartment loans for buildings of five or more residential units have generally been classified by institutional lenders as “commercial loans” rather than “residential loans”, and this classification affects appraisal methodology and loan-to-value ratio (the amount a lender will lend in relation to appraised value). Appraisals for “commercial loans” have primarily been based on a building’s actual and potential rental income rather than the recent sale prices of similar properties, and loan-to-value ratio is generally limited to 75% of appraised value rather than 80%-90%. The result of these customs is that appraised value has generally been far less than TIC sales price, and the loan amount, at 75% of appraised value, has often been 50% or less of the TIC sales price. Low bank loan amounts, coupled with average residential down payments of 10%-25% of TIC purchase price, have meant that the TIC seller has had to provide a significant amount of seller financing, and most sellers do not want to carry this financing for 30 years. Consequently, most large tenancy in common financing packages have involved seller financing with a balloon payment, creating a risk that the buyers will loose their property and/or investment because they cannot pay the balloon payment when payment is due (the “balloon payment risk”).

The Subdivided Lands Act and BRE Regulations generally prohibit the issuance of a Public Report when a blanket encumbrance exists unless “alternative arrangements” satisfactory to BRE are made to insulate the owners from this risk. The vagueness of the “alternative arrangements” requirement presents obvious problems for both the BRE and the applicant, and partially accounts for the unpredictability, delay and cost of obtaining a TIC Public Report. The “alternative arrangements” needed to satisfy the BRE concern about the default risk usually consist of a large reserve fund and a significant number of simultaneous sales (both discussed below). The “alternative arrangements” needed to satisfy the BRE concern about the “balloon payment risk” usually consist of requiring the seller to delay repayment of balloon payment financing until adequate replacement financing can be found.

The proposed financing for the tenancy in common sales must be thoroughly described in the Public Report application, and the Public Report will be issued based on the proposed financing. If the financing arrangements change prior to closing of the last sale, the application and all the accompanying documents (including the TIC Agreement, Budget, Sample Sales Contract, and Sample Escrow Instructions) must be changed and resubmitted for approval.

The following four financing options that have been employed in most large TICs to date.

  1. Individual FinancingIn the Individual Financing Option, each TIC owner has his/her own loan secured by a deed of trust on his/her interest in the property, and there is no blanket encumbrance. Until recently, these individual loans were always originated by a private person (typically the seller), and only then in instances where the property was owned free and clear prior to the TIC sale. Beginning in the spring of 2005, several banks began offering individual TIC loan products. By the spring of 2006, individual TIC loans had become by far the most popular form of financing for TICs in 5+ unit buildings, and today virtually all such buildings are financed this way. The main advantages and disadvantages of Individual Financing for the tenancy in common buyer are:
    • Advantage: Easier re-sale if his/her individual loan can be assumed or, even better, replaced with a new individual TIC loan which is proportional to the re-sale price;
    • Advantage: Lower risk, since a loan default by one owner will not affect the other owners;
    • Disadvantage: More difficult re-sale if individual tenancy in common loans cease to be available in the future and the TIC Agreement does not provide a method for the selling TIC owner to force the group to replace the individual TIC loans with a group loan; and
    • Disadvantage: More difficult to qualify for the purchase because individual loans will be available from limited sources and these sources may have stringent underwriting guidelines.

    The main advantages and disadvantages of Individual Financing for the TIC seller are:

    • Advantage: Higher sale prices due to the desirability of this type of financing for the TIC buyers;
    • Advantage: Easier BRE approval because there will be no blanket encumbrance concerns at the BRE, and easier closing because the buyer group won’t have to qualify for one big group loan;
    • Advantage: Substantially lower reserve funding and guarantee requirements (discussed below); and
    • Disadvantage: Risk that individual tenancy in common loans will not be available after the Public Report is issued, and the seller will incur cost and delays in resubmitting the Public Report application.
  2. New Group FinancingIn the New Group Financing Option, the buyers get a new group loan at the time of purchase. If some but not all of the TIC shares are sold and ready to close, the seller acts as a co-borrower on the new group loan until the remaining TIC shares are sold. If the new group loan is too small to accommodate the buyer down payments, the seller carried individual seller financing for each buyer that needs it, subject to the “balloon payment risk” management issues described previously. It is essential that any group TIC loan (i) be partially assumable so that re-sales can occur without refinancing the property, and (ii) allow subordinate financing so re-sellers can carry seller financing if their share of the group tenancy in common loan is not enough to accommodate their re-sale price and re-sale buyer’s down payment.The main advantages and disadvantages of New Group Financing for the TIC buyer are:
    • Advantage: Widest possible choice of loan products and easiest loan qualification (financially strong buyers can compensate for weaker ones); and
    • Disadvantage: Greater risk, since a loan default by one owner will affect the other owners.

    The main advantages and disadvantages of New Group Financing for the TIC seller are:

    • Advantage: More compatible with a tax-deferred exchange;
    • Advantage: Easier BRE approval than with other blanket encumbrance options because the details of the new loan do not need to be presented to the BRE as part of the approval process;
    • Disadvantage: Most difficult to close because of need to manage closing of sales and closing of new loan simultaneously;
    • Disadvantage: Stringent reserve fund and simultaneous sales requirements; and
    • Disadvantage: Seller may need to participate (at least temporarily) as co-borrower on group loan (but this may also be an advantage from the standpoint of protecting the seller’s position with regard the seller financing he/she is providing).
  3. Assumption Of Existing FinancingIn the Assumption Of Existing Financing Option, the buyers assume the seller’s existing apartment loan. Obviously, this approach is only possible if the seller can demonstrate that the bank will permit this type of assumption. If the seller’s existing loan is too small to accommodate the buyer’s down payments, the seller carries individual seller financing for each buyer that needs it, again subject to the “balloon payment risk” management issues described previously.The main advantages and disadvantages of Assumption Of Existing Financing for the TIC buyers are:
    • Advantage: Easier loan qualification (financially strong buyers can compensate for weaker ones); and
    • Disadvantage: Greater risk, since a loan default by one owner will affect the other owners.

    The main advantages and disadvantages of Assumption Of Existing Financing for the seller are:

    • Advantage: As with New Group Financing Option, compatible with a tax-deferred exchange;
    • Advantage: Easier to close because loan is already in place;
    • Disadvantage: Seller often needs to carry more seller financing because the apartment loan he/she has or is able to get before the TIC sales is usually smaller than the one the buyers could get in the New Group Financing Option;
    • Disadvantage: As with New Group Financing Option, stringent reserve fund and simultaneous sales requirements, and seller will need to participate (at least temporarily) as co-borrower on group loan.
  4. Wraparound FinancingIn the Wraparound Financing Option, the seller remains responsible for the entirety of his/her existing apartment loan, and makes individual loans to each buyer for the difference between each buyer’s price and down payment. The buyers pay the seller, and the seller pays the bank and keeps the difference between what he/she collects from the buyers and what he/she pays the bank. As with the Assumption Of Existing Financing Option, this approach is only possible if the seller can demonstrate that the bank will permit this arrangement.The main advantages and disadvantages of Wraparound Financing for the TIC buyer are:
    • Advantage: Lower risk, since a loan default by one owner will not affect the other owners; and
    • Disadvantage: Generally higher interest rate than with other financing options.

    The main advantages and disadvantages of Wraparound Financing for the TIC seller are:

    • Advantage: Seller can make money by charging a higher interest rate than he/she is paying to the bank;
    • Advantage: Seller position regarding seller financing is more secure than with New Group Financing or Assumption Of Existing Financing because seller controls the payments to the bank;
    • Advantage: As with Assumption Of Existing Financing, easier to close because loan is already in place;
    • Disadvantage: Seller often needs to carry more seller financing because the apartment loan he/she has or is able to get before the TIC sales is usually smaller than the one the buyers could get in the New Group Financing Option;
    • Disadvantage: As with other blanket encumbrance options, stringent reserve fund and simultaneous sales requirements; and
    • Disadvantage: Not compatible with tax-deferred exchange, but does qualify for installment-sale tax treatment. Consequently, the seller will not be able to defer his/her capital gains tax indefinitely, and will not have control over when the tax becomes due.

The main points of this Section are:

  • TIC financing has historically been comprised of a combination of (i) a shared apartment loan secured by the entire building, and (ii) seller financing. This type of TIC financing package creates significant risks for TIC buyers.
  • Financing-related risks are a major focus of the BRE’s analysis of TIC projects. Proposed financing must be thoroughly described in the Public Report application. If the financing arrangements change prior to closing, the application and all the accompanying documents must be revised and resubmitted for approval.
  • Large TIC financing is extremely complex, and there is no financing option which is best in all situations. Sellers must weigh the advantages and disadvantages of each option, choose the one that is best under the circumstances.

IV. BRE Risk Management Requirements

As a condition of approving a tenancy in common project, the BRE imposes several significant requirements designed to manage the risks inherent in TIC ownership. These requirements can be broken down into two categories: requirements intended to protect the buyers from each other, and requirements intended to protect the buyers from the seller.

The “mortgage reserve” requirement is intended to protect the buyers from each other by providing a fund that can be used to make payments on the group loan if one or more buyer does not pay his/her share. This requirement applies whenever there is a blanket encumbrance. Under these circumstances, there must be an amount equivalent to six monthly payments on the loan secured by the blanket encumbrance deposited in a special reserve account. The full amount of the mortgage reserve must be deposited in the reserve account at the time the first sale closes. The timing of this requirement generally means that the seller must fund the majority of the mortgage reserve. Whether the seller can recover the amount from the buyers will depend on pricing, market conditions, and the amount of cash each buyer has at close. The need for a mortgage reserve is eliminated when the Individual Financing Option is used.

The “assessment guarantee” requirement is intended to protect the buyers from the seller. This requirement applies whenever the seller plans to close fewer than 80% of the TIC sales at the same time. Under these circumstances, the seller must deposit into escrow cash or a surety bond an amount equivalent to six monthly homeowner’s assessments (which, in a TIC, typically consist of property taxes, insurance premiums, shared utility charges, maintenance costs and maintenance reserves). These funds are held by the title company unless the seller fails to pay the monthly homeowner’s assessments on the unsold TIC shares, in which case the cash or bond can be used for this purpose. Once 80% of the TIC sales close, the cash or bond is released to the seller.

The “presale requirement” is also intended to protect the buyers from the seller. Like the “mortgage reserve” requirement, this requirement only applies when there is a blanket encumbrance. Under these circumstances, the seller must either close 80% of the TIC sales at the same time, or deposit into escrow cash or a surety bond an amount equivalent to the balance owed on the loan secured by the blanket encumbrance. If a cash or surety bond is used, the funds are held by the title company unless the seller fails to pay his/her loan payments, in which case the cash or bond can be used for this purpose. Once 80% of the TIC sales close, the cash or bond is released to the seller.

The main points of this Section are:

  • If there is a blanket encumbrance, there must be six monthly payments deposited in a special reserve account at the time the first sale closes.
  • If the seller plans to close fewer than 80% of the TIC sales at the same time, he/she must provide to escrow cash or a bond in an amount equivalent to six monthly homeowner’s assessments, and this amount will be held until 80% of the TIC sales close.
  • If there is a blanket encumbrance, the seller must either close 80% of the TIC sales at the same time, or deposit into escrow (until 80% of the TIC sales close) cash or a bond an amount equivalent to the balance owed on the loan.

About the Author

D. Andrew Sirkin is a recognized expert in fractional ownership and other co-ownership SirkinLaw APC was a pioneer in the area of tenants in common (TIC) arrangements involving occupancy rights assignments, which are often used as a substitute for subdividing a property when true subdivision is impossible or unduly expensive. In 1985, Andy Sirkin created the legal and transactional structure which has become the industry standard for this type of TIC. Over the succeeding years, Andy’s innovations have included being the first state-approved real estate instructor for occupancy-based TICs, being the first to obtain state approval for a large-building TIC sale, being the first to convince institutional lenders to offer individual TIC financing, and being the first to develop the loan documents and lender underwriting guidelines for fractional TIC financing. In recent years, the type of co-ownership arrangement Andy conceived nearly 25 years ago has grown to comprise approximately 1/3 of all attached-home sales in San Francisco.

SirkinLaw APC has prepared close to 3,000 occupancy-based TIC agreements for properties of every size and type, and continues to assist in the vast majority of these transactions in California. This unmatched level of experience allows us to offer time-tested approaches for the vast majority of co-ownership situations, to quickly and effectively solve problems, and to produce documents that are clear, easy to navigate and read, and efficient and cost-effective to enforce. We continue to improve our documents each month as we encounter new situations and learn more about what TIC arrangements perform best in the real world. We also share our accumulated knowledge, and support real estate professionals and the TIC community, by continuously publishing new articles on our website and offering free educational workshops.

Our tenancy in common practice involves general advice and counseling, TIC agreement preparation, loan documents, and ongoing consultation to developers, seller, Realtors and TIC owners, on either a flat fee or hourly basis. We have a well-deserved reputation for returning calls promptly and providing fast turnaround times. But more important, we are known for finding creative solutions, calming fears, and finding common ground, so that transactions and relationships work. Although our role usually begins at the time the tenancy in common is first formed or sold, we are committed to remaining available to solve problems throughout the life of each TIC. Contact us via our contact form.