Tenants in Common (TIC), which is also referred to as Tenancy in Common, is defined as a way in which two or more individuals can jointly own property. Each owner will have a separate title insurance and deed, for their proportional interest in the TIC property. Unlike joint tenancy, with right of survivorship, the TIC property owners, in the event of their death, can bequeath the property to the heir of their choice. Each stakeholder in the property has the same rights to the use of the property as the other owners, regardless of the ownership stake or portion of each individual. The TIC owner can, at any time, sell his interest in the property, without the permission of the co-tenants. However, it is not uncommon for the TIC owners to give the other owners right of first refusal when selling his interest in the property.
Tenancy in Common does not necessarily mean the physical occupation of the property by the co-tenants, but may mean the sharing of revenues generated from the rental of the property. If the TIC owners jointly rent the property, all income and profits are shared proportional to their share in the investment. In general, expenses such as mortgage payments and property taxes are assessed relative to the proportionate ownership of the property.
By its very nature, TIC property ownership is a prudent investment, because the initial and subsequent outlays are proportionate to the whole. It’s also important to understand that each TIC owner has responsibilities to the whole, and one of the drawbacks of TIC ownership is non-familiarity with the other buyers. Disagreements may arise out of property use, unless discussed and agreed to in advance.
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To that end, it’s important to have a TIC Agreement drawn up, preferably by a property or real estate lawyer who is familiar with the TIC laws of the state in which the property is located. The TIC agreement generally will identify the ownership percentages of each of the investors, and make provision therein if the revenues or responsibilities will not be equally divided. It will also identify all financial burdens and physical responsibilities of each of the owners, including the maintenance, improvements, landscaping and repairs, accrual and disbursement of payments and fees.
Sources:
http://www.nolo.com/definition.cfm/term/1209CCFF-3970-4559-A94BDE3B20EC877C http://www.investopedia.com/terms/t/tenancy_in_common.asp http://sparkcharts.sparknotes.com/legal/property/section5.php
