Tenancy In Common (TIC) is a popular form of homeownership in San Francisco. It allows multiple individuals to co-own a multi-unit property, which can be more affordable than buying a single-family home or condominium. In this blog post, we'll explore the ins and outs of TIC ownership in San Francisco, its benefits, risks, and how to go about finding one.
What is TIC ownership?
TIC ownership is a type of shared ownership where two or more individuals own a single property with exclusive rights to occupy a specific unit along with parking, storage, and other amenities. Each co-owner owns a percentage of the entire property, which is usually based on the size of their investment. Ownership interests can be sold individually similar to a condominium or single-family home. Similarly, each owner is responsible for their own fractional mortgage, property taxes-which are based on purchase price, and other HOA expenses.
TIC ownership is especially popular in San Francisco because it offers the opportunity for multiple individuals to co-own a property, which is often more affordable than buying a single-family home or a condominium. Moreover, TICs also offer a sense of community and shared responsibility among the owners, which can be appealing to some.
Financing a TIC
Financing a TIC is a bit different than financing a condominium or single-family home but there are many options for consumers. Currently there are seven (7) lenders that provide loans for TICs, and products range from a 5-year adjustable rate mortgage to a 30-year fixed-rate mortgage. TIC lenders tend to keep their own portfolios rather than selling them on the secondary market, which keeps rates relatively stable.
Why buy a TIC?
If you are new to the competitive San Francisco housing market, a TIC may be a great option. TICs average 10-15% less than its condo cousin, which means you get more for your money. Also, for the first time in history, TIC interest rates are lower than condominium and single family home interest rates. If you are lucky and find a TIC unit in a building with 2-3 units, condo conversion may be an option-although there are restrictions around this process. Contact me for a better understanding of condo-conversion.
What has changed?
Owning a TIC interest has evolved extensively since they first debuted on the scene in the 1980s. Your fractional loan is tied only to your interest in the property, meaning if Joe upstairs decided he didn’t want to pay his mortgage, the bank would foreclose on his interest in the property without disturbing the other co-owners. In addition, there are currently 7 lenders that provide fractional financing at competitive rates.
So what are the main differences between condos and TIC’S?
We discussed lending and types of ownership. What about property taxes? In a TIC, property taxes are paid monthly by all the co-owners and usually a bookkeeper is in place that keeps everyone on track so there is no chance of default. Rent control. All of California is under eviction control but TICs are also under SF’s rent ordinance which allows an owner to rent their ownership interest but limits the amount an owner can raise the rent after the initial lease.
Finding a TIC
The first step in finding a TIC is to find an agent well-versed in TICs and understands the risks and benefits specific to any TIC. If you're interested in exploring your options in TIC ownership, contact me below soI can gain a deep understanding of your personal needs to see if a TIC is right for you.