Did you know that Tenants in Common (TIC), also called tenancy in common, is an excellent way for two or more than two individuals to hold title to real property? Below is the meaning or definition of Tenants in Common.
We can define tenants in common as a specific type of concurrent ownership of real estate by two or more parties. Note that while you cannot be a tenant in common on your own, there is really no limit as to the number of individuals who may hold title to the real property with you. It is worth noting that the property can be either commercial or residential.
Note that a typical TIC interest entails a number of parties. In some cases, these parties do not know each other but can own an undivided TIC interest in real property.
Keep in mind that the property passes to that tenant’s estate when a tenant in common dies. Two owners or more than a hundred owners can own a property held by TIC.
It is important to note that even though you might own only 25 or 30 percent of real property as a tenant in common, you have the right to the whole property. This is a great benefit to this arrangement. This is one of the main reasons tenancy in common makes sense for residential properties, especially in parts of the country with a higher cost of living. Tenants in common may decide to sell their ownership share in a property or transfer it to their spouse or another person as well.
It is also worth noting that splitting your share of a property with other individuals can allow you to live in a house or neighborhood you could not otherwise afford. Tenants in common, unlike joint tenancy, can also add owners over time.
Also, using TIC to hold the title allows co-tenants to easily use their share of that property as collateral for obtaining loans for banks and other financial institutions. This also gives tenants the option to diversify and broaden their investment portfolio of real properties by easily investing in several properties.
Applicable law and regulations guide the tenants in common agreement. It typically outlines the implications and ramifications of shared ownership between multiple people on a property’s taxes. The contract will outline the process for distributing the tax liability to each owner.
You can easily and quickly transfer your share in a property at any time under this arrangement without the approval or consent of the other tenants. And you have the right to mortgage as well.
These days, TIC arrangements are becoming far more common in the US rather than a limited or general partnership. This has many uses. For example, a builder may sell portions of a new building project to multiple investors who can all share an undivided interest in the property.