Tenancy in Common (TIC)

By Gordon Friedman

2008 has been a tumultuous year for the mortgage industry. What started out as a "subprime" crisis has now spread to all types of mortgages, including those intended for well-qualified borrowers. It's now harder to qualify for a loan and many loan programs and lenders have disappeared. The good news is that fractional TIC loans have escaped relatively unscathed. They are still available at rates and terms similar to what was in place before the crisis hit. In addition, larger FHA loans have been introduced making them, for the first time, a viable option for group financing for TIC's.

By Gordon Friedman

Many of my clients are first-time homebuyers. When we start the pre-approval process they usually tell me they're interested in looking at condominiums and single-family homes. However, it's often the case that our discussion ends up including TIC's as well.

Buying a home in San Francisco is arguably one of the biggest –if not the biggest financial decision- most people make in their lives.

San Francisco home ownership is rife with complex ownership and financing arrangements.

What is it? Wrap-around financing is a type of seller financing that is common for TIC sales. In wrap-around TIC financing, the owner of a given building will have a mortgage loan that pre-dates the formation of a TIC. The owner then sells the building to the TIC ownership group. The seller “lends” the funds to the TIC owners who then pay back their mortgage loan directly to the seller. The seller than uses a portion of the payments he/she receives to pay the original mortgage on the building.