Thinking about buying in San Francisco and keep seeing “TIC” in listings? You are not alone. Tenancy in Common can open doors to iconic neighborhoods at a lower entry price than many condos, but it comes with unique rules, financing twists, and shared responsibilities. In this guide, you will learn what a TIC really is, how it differs from a condo, the real pros and cons, and the due diligence steps that help you buy with confidence. Let’s dive in.
TIC basics: what you own
A Tenancy in Common is shared ownership of one parcel by two or more people. Each owner holds an undivided fractional interest in the entire property. You do not own a separate legal unit on a recorded map. Instead, a private TIC agreement gives you exclusive occupancy rights to a specific unit and sets out who pays for what.
Picture a four-unit building where each owner holds a 25 percent interest. Your deed shows that fractional share in the whole property, while the TIC agreement assigns you exclusive use of Unit 3 and defines budgets, voting, and repairs.
TIC vs condo
- Condo: You own a separate legal unit plus a share of common areas. There is a recorded map and a homeowners association.
- TIC: You own a fractional interest in one parcel. Exclusive use of your unit comes from a private contract, not a separate legal lot. Conversion to condos may be possible later, but it is not automatic and requires city approvals.
Key documents in a TIC sale
- Recorded deed showing the TIC interest.
- The TIC agreement or participation agreement that controls occupancy, voting, budgets, maintenance, insurance, and how sales or transfers work.
- Operating budget, reserve information, and any unit entitlement or expense allocation schedules.
- Title report and any mortgages or liens that affect the parcel.
San Francisco rules to know
TICs are common in older multi-unit buildings across San Francisco. Local rules shape how these properties operate and what it takes to convert or improve them.
Condo conversion basics
Converting a TIC or rental building to condos requires approvals, mapping, and compliance with San Francisco Planning Department procedures. The process can be complex and is not guaranteed. If condo conversion is part of your plan, assess feasibility early.
Rent control and tenant status
San Francisco’s rent ordinances and state tenant protections can apply to rented units in TIC buildings. Whether units are owner-occupied or rented can change how local rent rules apply. Verify current occupancy and rental history before you buy.
Building safety and retrofits
Older multi-unit buildings may be subject to mandatory retrofit programs, such as soft-story seismic upgrades, and other Department of Building Inspection requirements. Check permit and violation history and factor in potential upgrade costs.
Financing a TIC in SF
Financing is one of the biggest differences between TICs and condos. You will want a lender who understands TIC underwriting.
Lender availability and structure
Not all lenders underwrite TIC interests. Some offer loans on the fractional interest, while others require shared or cross-collateralized structures. Requirements vary on whether all co-owners must sign loan documents.
Down payments and rates
Expect stricter terms than many condo loans. TIC financing often comes with larger down payments and sometimes higher interest rates. Government-backed options can be limited. Early preapproval with a TIC-experienced lender helps you set realistic expectations.
Title, shared debt, and insurance
- Title: Title insurance is available for TIC interests, but underwriting differs from condos. If one mortgage encumbers the whole parcel, every owner shares risk if a co-owner defaults. Where each owner has a separate loan, lenders may require intercreditor agreements.
- Insurance: Most TICs carry a master building policy, and owners typically add policies for contents and liability. Ask for coverage details and confirm premium allocations.
Property taxes and Prop 13
A sale of a TIC interest can trigger reassessment depending on how the transfer is structured and local assessor practices. Confirm how the county treats fractional transfers and speak with a tax professional about implications.
TIC pros and cons
Pros
- Lower entry point in expensive areas. TICs can make ownership more accessible compared with buying a full building or some condos.
- Community and control. You and your co-owners directly shape budgets, maintenance, and rules for the property.
- Flexible agreements. The TIC contract can be tailored to allocate expenses, occupancy, and dispute resolution.
- Potential to convert. Some groups pursue condo conversion, which can increase marketability if approvals are obtained.
Cons
- Financing friction. Fewer lenders, larger down payments, and sometimes higher rates can limit options.
- Shared risk. A co-owner’s financial trouble or foreclosure can affect the entire property, especially if one loan covers the parcel.
- Smaller resale pool. Many buyers prefer condos, which can mean longer time on market.
- Governance challenges. Disputes over repairs, assessments, or sales can arise if the agreement is weak.
- Regulatory costs. Seismic retrofits, permits, and other city mandates can lead to significant assessments.
- Conversion uncertainty. Condo conversion takes time, money, and approvals. It is not guaranteed.
Due diligence checklist for SF TICs
Use this list to reduce surprises and make a confident decision.
Legal and governance
- Read the TIC agreement and any amendments. Flag transfer rules, default remedies, buy-sell clauses, and rights of first refusal.
- Order a current title report and confirm all recorded easements, mortgages, and liens that affect the parcel.
- Ask whether any co-owner faces foreclosure, bankruptcy, or major liens.
Financials
- Review the operating budget, recent financials, assessment history, and reserve balance.
- Request invoices for recent repairs and a list of known upcoming projects.
- Confirm how utilities, insurance, taxes, and shared expenses are allocated.
Building condition and compliance
- Check DBI records for permits, violations, and any soft-story or other mandated retrofits.
- Get inspections that focus on structure, foundation, roof, plumbing, and electrical. For major items, consider a contractor or engineer review.
- Verify occupancy status and any leases for rented units.
Financing and closing
- Secure preapproval from a lender who finances TIC interests.
- Learn whether an existing mortgage encumbers the whole parcel and how your closing will address that.
- Request the master insurance policy and confirm owner policy requirements.
Taxes and disclosures
- Ask how the assessor treats fractional interest transfers. Consult a tax advisor on reassessment and capital gains.
- Ensure statutory disclosures are provided, including the Transfer Disclosure Statement and Natural Hazard Disclosure. For older buildings, review lead-based paint disclosures.
Who a TIC fits
A TIC can be a fit if you want to buy into a desirable neighborhood at a lower purchase price and you are comfortable with shared decision-making. It also suits buyers who value a smaller building community and are open to more hands-on governance.
If you prefer more lender options, a larger resale pool, and a statutory HOA structure, a condo may fit better. Either path benefits from a clear budget, strong documents, and careful inspections.
Next steps
If a TIC is on your short list, line up your lender early, study the TIC agreement, and dig into building history and reserves. A thoughtful approach helps you avoid surprises and position your offer to win.
Ready to compare a specific TIC with nearby condos or evaluate the cost of upcoming upgrades and staging to maximize resale? Reach out to Minna Real Estate for local guidance that blends neighborhood insight with practical, value-focused strategy.
FAQs
What does “undivided interest” mean in a TIC?
- You own a fractional share of the entire property, and your right to live in a specific unit comes from the TIC agreement, not from a separate condo map.
How is TIC financing different from a condo loan?
- Fewer lenders finance TICs, down payments are often larger, and rates can be higher. Some loans are structured around the fractional interest, while others involve shared debt.
Can a San Francisco TIC convert to condos later?
- It can be possible, but conversion requires city approvals, mapping, and compliance steps. It is not automatic and can take time and money.
Are TIC units subject to rent control in San Francisco?
- Rented units may be subject to local and state tenant protections. Owner-occupied status and unit history can change how rules apply, so verify current occupancy.
What happens if a co-owner stops paying?
- The TIC agreement usually provides remedies against the delinquent owner, but nonpayment can create operational and legal complications for the whole building.
Who pays for major repairs in a TIC building?
- The TIC agreement sets how costs are allocated, often by percentage interests. Adequate reserves reduce the risk of large surprise assessments.
Will buying a TIC interest trigger a tax reassessment?
- A transfer can trigger reassessment depending on how it is structured and local assessor practices. Consult a tax professional for specifics in your situation.
