Foreclosure in 94133>Question Details

We350z, Real Estate Pro in San Francisco, CA

What happens in a TIC between two individuals if one dies or defaults on their loan?

Asked by We350z, San Francisco, CA Wed Aug 26, 2009

Help the community by answering this question:

Answers

4
You have to separate the issues of death and default.

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
415-627-3607
jeff.woo@sdma.com
1 vote Thank Flag Link Wed Aug 26, 2009
For a new agent who wants to work at a fee for service or discount broker you definately seem to need direction of a knowledgeable broker mentor.
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.
0 votes Thank Flag Link Wed Aug 26, 2009
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
MVP'08
Contact
We,

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.

Regards,

Lance King/Managing Broker
415.722.5549
lance@fixedrateproperties.com
0 votes Thank Flag Link Wed Aug 26, 2009
We350z

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.

Speaking of TIC's - There are only two units left at 1286-1298 Treat - These come with a great fractional loan package and a well written TIC agreement! Incredible finishes, beautiful kitchens and baths, polished wood floors, gas fireplace and storage. Check them out.

http://www.GarfieldSquareHomes.com

Mike Ackerman, CRS, e-Pro
Zephyr Real Estate
ABZ@ZephyrSF.com
415-695-2715
"We're all about San Francisco"
0 votes Thank Flag Link Wed Aug 26, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer