Matt Eade, Home Buyer in San Francisco, CA

Looking to potentially rent a TIC or Condo at a later date after purchase.

Asked by Matt Eade, San Francisco, CA Fri Jun 6, 2008

Do TIC agreements generally stipulate if you can rent your unit? Do SF rent-control laws effect either? Thanks!

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Generally, TIC agreements do not restrict rental. However, each TIC agreement is individually negotiated and you must read it carefully to understand your rights and obligations.

For most buyers, rental is not a financially feasible use for a TIC. Furthermore, the presence of tenants may hinder or disqualify the building from condo conversion, depending upon the number of units in the building and the number of tenant occupied units within the building. Furthermore, if there comes a time when you wish to sell the unit and there is a tenant in it, the presence of a tenant will negatively effect the sales price and days on market. For instance, if it is a five unit building and you own a 20% share of the property as a TIC, neither you nor a potential buyer would have the necessary percentage ownership to do an owner move in eviction.

You should know that if a TIC building has a tenant in it, all of the owners have potential liability for claims of tenants, even if the TIC owner who is doing the renting may have obligataions to the other TIC owners. For that reason, if there are tenants in a TIC building, I recommend a requirement in the TIC Agreement that wrongful eviction coverage be obtained.
0 votes Thank Flag Link Sat Feb 7, 2009
Hi Matt,
I'd opt for the condo as a rental potential; not that you can't rent a TIC, but there are a number of exceptions depending on the history of the property. Rent control covers older buildings built before June 1979. Buildings that work well for corporate rental are The Portside, The Parc Telegraph, The Bay Crest. Two unit buildings are fast-tracking for condo conversion; you may want to go through conversion before renting it out.
Good luck!
0 votes Thank Flag Link Mon Jun 9, 2008
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