Home Buying in Mission Bay>Question Details

Claire Bajur…, Home Buyer in San Francisco, CA

What does TIC mean? I see it in the property details for loads of places up for sale.

Asked by Claire Bajurny, San Francisco, CA Sat Mar 20, 2010

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Sally Rosenman’s answer
Dear Claire,

Good answers. I see David Gellman's site was mentioned. If I were you, I would go to the website of David Gellman, a real estate attorney here in San Francisco. His firm is Goldstein, Gellman, Melbostad, Gibson & Harris. His website is http://www.g3mh.com and he has a section on TICs and Condo Conversion. You can also connect to it throught LINKS on my website http://www.sallyrosenman.com. I think you will find it very helpful.

Andy Sirkin is good too. Also Ross Madden - http://www.rossmaddenlaw.com. Contact information for all 3 are on my website.

Good luck,

1 vote Thank Flag Link Sat Mar 20, 2010

It's a bit complicated, but the short version is this:

TIC stands for Tenancy in Common, which is a legal form of ownership. Essentially it's a workaround to the tough condo conversion laws here, and there are several distinct differences between a TIC and a condo.

1. With a condo you own 100% of your unit and a share in the common area. With a TIC you own a share in the entire building.

2. With a condo you get your own tax bill. With a TIC you get one tax bill for the building and each owner (called co-tenant or co-owner) pays their share of the bill according to their percentage of ownership (there is some talk about offering individual tax bills on TIC units with fractional loans but it hasn't happened yet).

3. With a condo most lenders can finance. With a TIC the only lender currently offering individual fractional loans is Sterling Bank, their loan products are substantially more expensive, making reseal more complicated due to limited financing options (the rates can be bought down to as low as 5.75% though).

4. The number of units in the building and eviction history have huge impact on ability to condo convert, rent a unit(s), and resale.

5. With TICs there is generally a lot more interactivity between the co-owners, which can lead to interpersonal frictions that are not as prevalent in condo situations.

6. Because the financing is more expensive a TIC should be less expensive than a similar sized condo in the same neighborhood.

An excellent resource for TIC info is http://www.andysirkin.com. If you'd like more in-depth info or explanations of the above feel free to call. We deal with these types of units all the time both for sellers and buyers (we currently have two TIC Listings in Nob Hill & the Marina), so feel free to call for no-strings advice.

The bottom line on TICs - they must be sufficiently discounted over what a similar condo in the same neighborhood would cost to make sense, and we apply this barometer to both our buyer and seller clients.
Best Regards,

Lance King/Managing Broker
DRE# 01384425
2 votes Thank Flag Link Sat Mar 20, 2010
Hi Claire,

TIC is an acronym for tenancy in common. This is a form of fractional ownership in which each owner owns a percentage of the property rather than their individual unit. A kind of example of a TIC would be a 4 unit Victorian building that was used as rentals. The owner decides to sell each individual unit, but they must be sold as TIC's not condos per the city. As a buyer, the ultimate goal is to then convert these units to condos, but there are certain conditions that must be met and a lottery process that can take a very, very long time. Furthermore, a lot of TIC's might not even be eligible for condo conversion. Very generally speaking there is a 20% premium to condos over TIC's.

Banks look at TIC's as having a much higher level of risk and only a few banks even write loans for them; so the interest rates are much higher. There are also several other pitfalls of TIC's that you should be aware of. One of the best resources for TIC issues and a really solid FAQ section can be found on the Andy Sirkin website.


Please feel free to contact me at peter_brunton@yahoo.com or call 415 728 5580 if you would like to discuss your options regarding TICs and the San Francisco real estate market in general.

Peter Brunton
Prudential CA Realty
One Daniel Burnham Ct. #260C
San Francisco, CA 94109
415 929 5829
DRE 01789498
1 vote Thank Flag Link Sat Mar 20, 2010
HI Claire: I have a series of blog posts that both explain the basics of TIC ownership and also chart the difference in value between TIC's and condos. They're entitled: "TIC's: San Francisco's Involuntary Reflex." You can find the first of my posts here, and just click on the TIC tag to find others:

Web Reference: http://www.realdatasf.com
0 votes Thank Flag Link Tue Mar 23, 2010
This is a perenial favorite question for all San Francisco agents. There are few other markets that hacve this product.
Tenants in common is a legal term that is used to denote certain rights in how real estate ownership is held. That might sound confusing but it really means that each individual owns a part of a property and they can sell it or will it as they like without the other ownees havinig any rights to inherit the property.
As to what it is in SF, Cheryls answers are usually spot on. (I admit I haven't read this one but she knows what she's doing so I feel confident) I always write in these questions that if you are going to consider buyiing a TIC you need to be working with an agent and an attorney so that you become a Totally Informed Client. That is my TIC program. There are advantages and disadvantages and as long as you are totally informed and can make the decisions it can be the right thing for you.

Personally I like them becasue it provides an opportunity to own a unit in the nice older buildings.

Look for the TIC Coalition and Plan C on the web. Look for the http://www.3gmh.com web site. It is a group of attorneys that work in the CIty on the issue and they write papers to inform.

Good luck and talk to your agent about the situation. Remember you need to be totally informed so if that isn't happening and you wnat more contact someone that can answer your questions.
0 votes Thank Flag Link Sat Mar 20, 2010
Jed Lane, Real Estate Pro in San Francisco, CA
Hi Claire,

In San Francisco, TIC is used as a noun, adjective and sometimes even a verb! Really, a TIC or Tenancy in Common is a legal form of ownership. You and I could go out and buy a single family home and be TIC partners if we wanted. It has nothing to do with a specific type of real estate!

However, in San Francisco, a TIC most commonly refers to a type of building for sale where there are multiple units that have not yet been subdivided.

Take a typical SF 3 unit Edwardian building, for example. There are 3 flats, apartments, or units in the building, right?

If the building has been officially subdivided, the 3 units are actually 3 separate condominiums. The building can been sold as 3 individual condos to different owners with different loans. The owners will co-own the common areas and abide by the HOA's rules but their apartments are their own.

If the building has not yet been subdivided, it still has the same living spaces but it is not 3 separate condos. The building can be sold together as a 3-unit building OR it can be sold separately as 3 TIC interests. Technically, it is still one building (b/c it has not been subdivided into condos) but the use of the Tenancy in Common method of home ownership allows 3 separate groups to come together as one group to buy the building.

Buildings sold as "TICs" have many complexities and and limitations when it comes to financing. Some will require a group loan (or 1 loan for the entire buildling) while others will have fractional financing (individual TIC loans for each unit).

Bottom line: They can be a great way to buy property in San Francisco & you'll get more for your money but a TIC is not for everyone. Talk to an experienced TIC agent (me or someone else on this panel) to see if it makes sense for you.

TICs and Condos are apples and oranges when it comes to pricing so figure out if you're open to a TIC before you start the house hunt. It will make your search much more efficient and successful!

Check out the PDF articles written by local real estate attorneys who specialize in TIC partnerships: http://g3mh.com/articles.htm

Hope this is helpful!

Web Reference: http://sfhotlist.com/
0 votes Thank Flag Link Sat Mar 20, 2010
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