Tenancy in Common (TIC) Ownership Advisory

🔹 GENERAL UNDERSTANDING OF THE TIC OWNERSHIP ADVISORY

  1. What is the Tenancy in Common (“TIC”) Ownership Advisory form used for?

Explanation:
This form explains the risks, rights, and responsibilities associated with TIC ownership, where multiple individualsown undivided interests in a property but do not own individual units (unlike a condo). It helps educate buyers and sellers about this unique form of shared ownership.

  1. Is the TIC Advisory required in every TIC transaction?

Explanation:
Not legally required, but strongly recommended by most brokers to ensure that both buyers and sellers understandthe complexity and legal implications of TIC arrangements.

  1. What is a Tenancy in Common (TIC)?

Explanation:
A TIC is a form of ownership where:

  • Each owner owns a percentage interest in the entire property
  • Owners may occupy specific units but do not have separate parcels
  • Ownership rights are governed by a TIC agreement, not individual deeds
  1. How is TIC different from condominium ownership?

Explanation:

  • TIC: Undivided interest in the whole property (shared deed)
  • Condo: Individual ownership of unit + shared interest in common areas
  • TIC often involves group financing (or fractional loans), more legal complexity, and co-occupancy agreements

🔹 ZIPFORMS-SPECIFIC QUESTIONS

  1. Where do I find the TIC Ownership Advisory in ZipForms?

Explanation:
In ZipForms, go to:

  • “Add Forms”
  • Search for “TIC” or “Tenancy in Common”
  • It is typically labeled as C.A.R. Form TIC – “Tenancy in Common Advisory”
  1. Can I add the TIC Advisory to my listing or purchase template in ZipForms?

Explanation:
Yes. If you frequently handle TIC properties, add the TIC Advisory to your transaction templates to automatically include it for appropriate listings or offers.

  1. Can I use DigiSign or DocuSign with the TIC form?

Explanation:
Yes. Once the form is added to a ZipForm transaction, you can route it for e-signature via DigiSign or a connected DocuSign account.

🔹 LEGAL & DISCLOSURE QUESTIONS

  1. Who needs to sign the TIC Ownership Advisory?

Explanation:
Typically, the buyer signs it when purchasing a TIC property, to acknowledge they understand the legal and financial implications. The seller may also sign if required by brokerage policy.

  1. Is there a standard TIC Agreement form in ZipForms?

Explanation:
No. CAR does not provide a template TIC agreement. Buyers should receive and review the privately drafted TIC agreement from the seller (usually prepared by an attorney).

  1. Does this advisory replace the need for a full TIC agreement?

Explanation:
Absolutely not. The advisory is for education and disclosure only. A detailed TIC agreement between co-owners is required for defining:

  • Allocation of units
  • Responsibilities (taxes, maintenance, insurance)
  • Dispute resolution
  • Use and occupancy rights
  1. What are the biggest risks with TIC ownership outlined in the advisory?

Explanation:

  • Shared liability for the whole property
  • Difficulty getting financing (especially for individual shares)
  • Challenges with selling an individual interest
  • Co-owner disputes and forced sales
  • Complex tax consequences
  1. What financing issues should I warn my TIC buyer about?

Explanation:

  • Traditional loans may not apply
  • May require group loans or fractional financing
  • Lender choices are limited and may require higher rates or down payments
  1. What tax implications are discussed in the TIC Advisory?

Explanation:

  • Each owner may have individual tax consequences
  • TIC owners should consult with a CPA or tax attorney for capital gains, depreciation, and property tax sharing
  • 1031 Exchange eligibility can be complicated for TIC-held property
  1. What happens if one TIC owner stops paying their share of expenses?

Explanation:

  • All owners may be impacted
  • The TIC agreement should contain procedures for handling delinquencies, defaults, or forced sale
  1. Does the TIC Advisory discuss disputes between co-owners?

Explanation:
Yes. It advises all parties that TICs require coordination and cooperation, and that disputes should be handled via the terms in the TIC agreement (often including mediation or arbitration).

🔹 BROKER POLICY & BEST PRACTICES

  1. Should I require my agents to always use the TIC Advisory in these deals?

Explanation:
Yes. Most brokerages require the TIC Advisory anytime a property is sold with undivided interest or advertised as a TIC. It reduces risk and helps prevent misunderstanding by buyers.

  1. Can I explain the TIC structure to the buyer or should I defer to a lawyer?

Explanation:
You can generally explain the concept, but you should refer the buyer to a qualified real estate attorney for:

  • Reviewing the TIC agreement
  • Legal risks and remedies
  • Entity structures (LLC vs. individual ownership)
  1. Should we attach the TIC Advisory to the RPA?

Explanation:
Yes, it should be included in the offer packet or disclosures when writing on a TIC property, especially if the offer is on a partial interest or shared title.

  1. Do I need a separate advisory for multi-unit TICs (duplex, triplex, etc.)?

Explanation:
The same TIC Advisory can be used, but agents should ensure the TIC Agreement reflects the correct allocation of units and responsibilities for multi-unit occupancy.

  1. What happens if the buyer refuses to sign the TIC Advisory?

Explanation:
You should:

  • Document the refusal
  • Send a written follow-up
  • Consult your broker
  • Consider canceling if the buyer is unwilling to acknowledge the risks

âś… BROKER CHECKLIST FOR TIC ADVISORY

Task Required? Notes
Include TIC Advisory in buyer package âś… Mandatory for all TIC properties
Attach to RPA or disclosure packet âś… Provide early in transaction
Buyer to sign âś… Before close of escrow
Refer buyer to legal/tax professionals âś… Especially for financing or disputes
Save in compliance file âś… Required for broker risk management

Disclaimer:
The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.

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