Uncommon Bonds: Exploring the World of Tenancies in Common
November 10th, 2023
Contributor: Mark B. Chernev
A Tenancy in common (TIC) is a form of property ownership with a rich history in California, dating back to the early days of statehood. In a TIC two or more individuals or entities collectively hold an undivided interest in real property with a contractual right to exclusive use of certain portions of the property. Most commonly, the certain portions are individual units in the property. Each TIC owner has a distinct and transferable share of the property typically expressed as a percentage. TIC owners have the right to occupy, rent, or manage the property, and they share the responsibilities and expenses associated with it. Unlike joint tenancy or tenancy by the entirety, TIC owners can be unrelated parties, and their ownership interests do not have a right of survivorship. This means their shares can be inherited or sold independently.
This unique form of property ownership has been influenced by a combination of historical events, legal changes, and evolving social and economic landscapes. Tenancy in common arrangements has played a significant role in shaping how residents and investors navigate San Francisco’s challenging housing landscape. This form of property ownership has evolved over time, influenced by legal changes, housing needs, and economic factors.
San Francisco's unique housing stock, including multi-unit buildings and Edwardian and Victorian homes, has made TIC arrangements particularly popular. The TIC owners’ shared ownership of a building is attractive to individuals who want to invest in the city's real estate market but cannot afford to purchase an entire building on their own.
TIC ownership in San Francisco evolved as laws and regulations adapted to changing needs. The city faced numerous housing challenges, including a shortage of affordable housing, which led to the growth of TICs as a housing option. Additionally, the 1979 San Francisco Rent Ordinance played a pivotal role in shaping TIC ownership by introducing rent control regulations, which impacted the financial aspects of TIC arrangements.
In 2003, San Francisco adopted legislation to facilitate tenancies in common, making it easier for property owners to convert buildings into TICs. This led to a significant increase in TIC conversions, particularly in the city's housing market.
One of the key developments in TIC ownership in San Francisco was the introduction of the TIC lottery system in 2014. This system provided a pathway for TIC owners to convert their properties into condominiums, which are often more valuable and easier to sell than TIC units. The lottery allowed a limited number of TIC owners to bypass the strict condo conversion regulations, offering them a chance to transform their TICs into traditional condominiums.
San Francisco's approach to TIC ownership has often been a topic of debate and policy discussion. The city's rent control laws, condominium conversion regulations, and affordable housing initiatives have a direct impact on TIC owners. For example, TIC owners may face challenges when selling or converting their units due to regulatory restrictions aimed at maintaining the city's rent-controlled housing stock.
Today, tenancies in common remain a popular choice for property ownership in California, offering a flexible and affordable way for individuals to invest in real estate and manage shared property interests. The city's unique housing stock and regulatory landscape continue to shape the role of TIC ownership in San Francisco's real estate market, making it a vital and distinct aspect of the city's housing history.
If you are curious about learning more about tenancies in common, creating them, or if you are having issues with your tenancy in common co-owners, it is important you speak to experienced attorneys who can help you accomplish your goals. Contact us at your convenience to request a consultation.
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