With seemingly never ending rising home prices, the San Francisco Bay Area has seen increasing use of Tenancy In Common Agreements (TIC Agreements) to make the purchase of real estate more affordable.
Tenancy in Common Agreements are where multiple parties buy one piece of real estate but then execute a private contract between themselves about the use of the property. Most often the parties allocate different portions of the property to different owners, so, each has their own “unit” within the greater piece of property.
Forming a TIC, however, is fraught will all kinds of dangers that need to be accounted for. For example, because all the TIC members will be owners of a single piece of property, if one of the owners incurs liability (such as a lien from the IRS), the all TIC members will be threatened by such liability on the property. Thus, having a written agreement between members that delineates the rights between co-tenants, as well as their remedies if one co-tenant fails to meet their duties, is critical.
One very normal provision in such agreements is an agreement that all the parties will attend mediation and/or arbitration in case of a disagreement. This funnels all disputes to a much quicker but more informal resolution procedure of using a hired arbiter instead of a superior court judge.
Without such provisions a dispute of real estate between Tenant in Common Owners (TIC) owners are generally subject to the laws of a partition action, which, is a woefully inefficient process that tends to impose more draconian resolutions. Although this can actually be useful in some situations, most parties prefer to avoid the broad strokes and lack of precision that the partition process involves.
The San Francisco bay area based firm of Jones & Devoy has experience in TIC law. We can either help you memorialize your current TIC arrangement to minimize liability, or, we litigate a preexisting TIC where a dispute has arisen.
