Talk to an Advisor

Your Guide to Tenancy in Common Agreements

Published on: July 1, 2024

Welcome to 1031 Exchange Place, your trusted partner in real estate investment and 1031 exchanges. Whether you are a seasoned investor or new to the real estate market, understanding Tenancy in Common (TIC) agreements is essential. This comprehensive guide will walk you through everything you need to know about TIC agreements, from their definition to common disputes and resolutions.

What is a Tenancy in Common Agreement?

A Tenancy in Common (TIC) agreement is a form of property ownership where two or more individuals hold title to a property jointly, each owning a specific, undivided share. Unlike joint tenancy, TIC allows co-owners to have different ownership percentages and can transfer their shares independently.

Key Features of TIC Agreements

  • Undivided Interest: Each owner holds a fractional interest in the entire property, not a specific portion.
  • Transferability: Owners can sell, gift, or bequeath their shares without the consent of other co-owners.
  • Flexibility: TIC agreements are flexible in terms of ownership percentages and financial responsibilities.

Learn more about what’s included in a tenancy in common agreement.

How to Create a Tenancy in Common Agreement

Creating a Tenancy in Common agreement involves several steps to ensure all parties’ interests are clearly defined and protected. Here’s a step-by-step guide:

Steps to Create a TIC Agreement

  1. Identify Co-Owners: Determine who will hold title to the property and their respective ownership shares.
  2. Draft the Agreement: Work with a real estate attorney to draft a comprehensive TIC agreement outlining ownership percentages, financial responsibilities, and management duties.
  3. Define Terms: Specify terms for property use, maintenance, decision-making processes, and dispute resolution mechanisms.
  4. Execute the Agreement: Have all co-owners sign the agreement in the presence of a notary to make it legally binding.
  5. Record the Agreement: Record the TIC agreement with the appropriate local government office to provide public notice of the ownership structure.

Learn more on how to create an effective tenancy in common agreement.

Benefits and Drawbacks of Tenancy in Common Agreements

Tenancy in Common agreements offer various advantages but also come with certain drawbacks. Understanding these can help you make an informed decision.

Benefits of TIC Agreements

  • Flexibility: Co-owners can have different ownership percentages and financial contributions.
  • Estate Planning: TIC allows for easy transfer of ownership shares through sale, gift, or inheritance.
  • Investment Opportunities: TIC can enable investors to pool resources for larger property investments.

Drawbacks of TIC Agreements

  • Disputes: Differences in opinions among co-owners can lead to conflicts.
  • Liquidity Issues: Selling a share might be difficult without the consent of other co-owners.
  • Management Complexity: Managing a property with multiple owners can be challenging and may require clear communication and agreements.

Learn more about pros and cons of a tenancy in common agreement.

Legal Requirements for a Valid Tenancy in Common Agreement

A Tenancy in Common agreement must meet specific legal criteria to be valid and enforceable. Here are the key legal requirements:

Legal Criteria for TIC Agreements

  • Written Agreement: The TIC agreement must be in writing and signed by all co-owners.
  • Clear Ownership Shares: The agreement should clearly state each co-owner’s ownership percentage.
  • Property Description: A detailed description of the property, including legal address and boundaries, must be included.
  • Signatures and Notarization: All co-owners must sign the agreement, and it should be notarized to ensure authenticity.
  • Recording: The agreement should be recorded with the local county recorder’s office to provide public notice of the co-ownership structure.

Learn more about the legal requirements for a tenancy in common agreement.

Common Disputes and Resolutions in Tenancy in Common Agreements

Despite careful planning, disputes among co-owners can arise. Understanding common issues and how to resolve them can help maintain harmony and protect your investment.

Common Disputes in TIC Agreements

  • Financial Contributions: Disagreements over financial contributions for maintenance, repairs, or improvements.
  • Property Use: Conflicts over the use of the property, especially if co-owners have different plans or usage needs.
  • Sale of Shares: Issues arising when one co-owner wants to sell their share, but others do not agree.

Resolutions for TIC Disputes

  • Mediation: A neutral third party can help facilitate discussions and resolve conflicts amicably.
  • Arbitration: Binding arbitration can provide a quicker, less formal resolution process compared to court litigation.
  • Buyout Agreements: Establishing buyout terms in the TIC agreement can provide a clear process for one co-owner to purchase another’s share if conflicts arise.
  • Court Intervention: As a last resort, co-owners can seek legal resolution through the courts, though this can be time-consuming and costly.

Learn more about possible disputes and resolutions of a tenancy in common agreement.

At 1031 Exchange Place, we understand the complexities of Tenancy in Common agreements and are here to guide you through the process. Whether you are looking to create a TIC agreement, resolve a dispute, or explore investment opportunities, our experienced team is ready to assist you.

For more information or to speak with one of our experts, contact us today!


Authored By:

1031 Investment Advisor

Nate oversees the daily operations, business development, and strategy for 1031 Exchange Place. He became interested in real estate from a young age due to his father's influence. After earning his real estate license at 18, Nate worked in the 1031 industry, focusing on business development through a unique white-labeling model. Following a religious mission in Taiwan, he continued in the industry until the 2008/2009 real estate crash. During the downturn, Nate pursued entrepreneurship and marketing, working with startups and outdoor companies. As the 1031 market recovered, he returned to work with his father, aiming to provide a more personalized experience for clients. Nate is passionate about outdoor activities and spends his free time with his wife and four sons, enjoying fly fishing, skiing, backpacking, rock climbing, and riding dirt bikes.