With a death, the property would fall under the control of the deceased's estate and distributed in accordance with the will or State law if there is not will, or in accordance with the terms of a "living trust" if there was one. Some TIC agreements may provide for a right of the other TIC owners to buy the interest from the estate or the trust. Obviously, if your TIC agreement so provides, that would be controling.
You must look to the loan documents to see if the transfer of ownership due to death is an event which would allow the bank to call the loan due. I believe that so long as the estate continues to hold title, the loan will not be in default.
As for a default, all TIC agreements have mechanisms in place to deal with such occurrances. The basic remedy is the the non-defauting TIC members have to make up the payments to keep the loan out of default and then to pursue the defaulting owner with a law suit or arbitration, procure a judgment and eventually foreclose on his interest in the property. It is one of the major drawbacks of TIC ownership and is often dealt with by requiring a substantial default fund to be maintained by the TIC partners.
Jeff Woo, Esq.
Complex Rental Property Group
Sedgwick, Detert, Moran & Arnold LLP
Do you remember when you were studying for the exam the section on how title is held? The definition of Tenants-in-Common and rights of surviorship. The other factors of how this ownership structure works is defined by the contract between the parties. The contract can have first right of refusal clauses or any number of other exit stratgies set up. To protect each from the other's default a fund is usually set up to allow for a transition rather than default.
This is a legal question that should be answered by an attorney who is familiar with this area of law. Although it is likely covered in your TIC Agreement and you should read it thoroughly, this is not something you should determine on your own regardless of how clear it may seem in the agreement. Happy to give you some names if you like.
Lance King/Managing Broker
What happens? Well those two issues are typically spelled out in their TIC agreement. I'd suggest READING THEM THOROUGHLY. More importantly so should the BUYER read them as well.
If the agreement is over five (5) years old, the TIC group may wish to consider updating the TIC agreement through the same attorney who wrote the original agreement.
As someone who has helped many buy and sell TIC's I've noted several variations in agreements, not unlike the differences I've noted in Condominium Association CC&R's. It is always best to READ THEM THOROUGHLY and consult with an attorney.
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Mike Ackerman, CRS, e-Pro
Zephyr Real Estate
"We're all about San Francisco"