Where can I find reliable information about TICs (Tenancy in Common)?

Question

I want to research and evaluate TICs--any good sources of info? Thanks!

Thanks for the great info so far. To clarify what I'm asking...I'm looking into properties that are TICs but first want to do more homework to evaluate what the risks/benefits are, types of financing available to minimize risk, etc. Thanks!

Answer 1

TIC is an old term for tenants in common. Someone else has explained how holding title as a tenant in common works.

In the last few years a new 'product' has come into the market. It is called a TIC and the use or meaning is not the same as what has been posted concerning tenants in common.

A little background.

There is a section of the IRS tax code called 1031. It deals with the ability to trade one real property for another and at the same time defer any taxes due on the gains.

Over time a number of investors have built up a portfolio of actively managed property that they wish to sell. They want to reduce the management hassle. They are not opposed to keeping their capital in real estate. As such they would like to trade following the 1031 rules so they can avoid a big tax bill at the present time.

Some innovated property management companies and lawyers came up with a solution. The seller of a property (or multiple properties) sells what they have through an intermediary so they can take advantage of the 1031 tax code. This part is pretty standard for all 1031 deals. The 'trade' looks like a sale but is structured with an intermediary so that it fits the rules on a tax deferred trade.

As part of the 1031 provisions you need to buy something else. There are very specific criteria. The 'new' TIC structures are where you buy a fractional share in a large development that is professionally managed. Hence you are trading out of your prior property that might be management intensive to a larger property (office complex, strip mall, retail complex, etc) where you are likely a tiny minority owner along with other owners who all hold title as tenants in common.

Note the above might look like a partnership where you would be a limited partner. That is how some of these larger properties were owned in the past. The key with the 1031 code is a partnership is not allowed so the TIC structure came into fashion.

There are many details and some are rather subtle. The above should be a good start.

Note the TIC field (the new use of TIC) is still developing and therefore there is a lot of differences in the various offerings. One key factor is there can be no agreement for when all the co-owners will exist as that crosses the line into being a partnership. The specific tax code and the use of TICs has not been tested in a legal case so far. This means there are different opinions as to what is required for a TIC structure.

Like any up and coming market solution there will be changes as the 'product' evolves.

The old use of tenants in common (a way to hold title) continues to have meaning and is the underlying principal to a TIC offering.

Answer 2

You want to research and evaluate what? Perhaps you don't understand what a Tenancy in Common means.

Tenancy in common is the default form of concurrent estate, in which each owner, referred to as a tenant in common, is regarded by the law as each owning separate and distinct shares which may differ in size. This form of ownership is common where the co-owners are not married or have contributed different amounts to the acquisition of the property. Also, if joint owners had attempted to use another form of joint ownership such as a joint tenancy with right of survivorship or a tenancy by the entirety, and the effort was for some reason invalid, the joint owners would then be tenants in common. If conclusive evidence is not available of the desire to create a tenancy with rights of survivorship or a tenancy by the entirety, courts will determine that a tenancy in common has in fact been created.

Tenants in common have no right of survivorship, meaning that if one owner dies, that owner's interest in the property will pass by inheritance to that owner's devisees or heirs, either by will, or by intestate succession.

Answer 3

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Answer 4

I don't believe you know what you are asking. See the above answer