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