Marin Real Estate Insider » TICs

Are TICs Condominiums?

Bob Ravasio — Thu, 06 Dec 2007 22:59:20 +0000

Continuing to pick up information from the Andy Sirkin seminar on TICs, one of the questions he addressed, and one of the ones I get all of the time, is “So are these condominiums?”

At Pacific Trail Townhomes , we are very careful to explain these are not condos. However, living in this development is very similar to living in a condo.

For openers, it looks like a condo - two buildings, multi-units, nicely landscaped and cared for, unlike most apartment buildings. Every unit gets it’s own parking space and storage unit, just like a condo. There’s common areas that everyone can use, like a condo.

And probably most similar to a condo, there is a TIC agreement that creates a Homowner’s Association, just like in a condo. This one is very heavily regulated by the state, and is therefore pretty conservative - something we haven’t always seen in Marin County Homeowner’s Associations. The funding for reserves is very strong, and now that it is up and running, the reserve fund will probably build quickly.

Each unit is individually financed, and you are free to buy, remodel, and sell when you want to - just like in a Condo.

There are more similarities than differences, so the overall experience is, we believe, like living in a condo.

Pacific Trail Townhomes: Learn More About Marin County TICs Now With This Simple Video

Bob Ravasio — Mon, 26 Nov 2007 03:02:01 +0000

One thing we learned pretty quickly in selling TICs in Marin County is that the learning curve, for realtors and buyers both, is quite steep. There is a lot of detail, lots of questions, lots of unknowns.

We’re trying to make it easier by creating this video that explains the details of TICs, and shows how they compare to living in a condo. Not to tip our hand here, but guess what: living in a TIC is just like living in a condo!

Andy Sirkin on TICs: Will TICs Work For Marin County Real Estate ?

Bob Ravasio — Mon, 26 Nov 2007 02:56:23 +0000

TICs are now a major part of the San Francisco real estate market. Last year, 25% of the units sold were TICs!

The TIC agreement for Pacific Trail was developed by Andy Sirkin, the leading attorney for TICs in San Francisco. Andy has done over 5500 joint ownership agreements, so he really knows what he is doing.

We were fortunate enough to have Andy come to Marin County recently and give a seminar on TICs. I’ll summarize his thoughts on the topic in the next few posts.

First, TIC is short for tenants-in-common, which is a way of taking title when you purchase property. When a married couple purchases property, they often take titel as joint tenants. Tenancy in common allows unrelated people to own property more easily, as it does not have the right of survivorship. That means if one of the owners dies, the property does not automatically pass on to the other tenants.

So a TIC is not a kind of real estate, like a house, or a farm, or an office building, It’s a way to own real estate. Every owner owns a portion of the property, and it can be divided in different ways. For example, it can be divided by time - every owner gets to use the property for a certain week or month. Sounds like a timeshare, doesn’t it? That’s because that is exactly what it is.

The typical TIC unit we’re talking about divides property by space. Every owner owns a percentage share in the buiding. In the case of Pacific Trail Townhomes, it’s a 1/16 share. When the owner closes, that is what gets on title.

A separate agreement, called a TIC agreement, divides up the space. At Pacific Trail, everyone gets a living unit, parking space, patio or deck, and storage space. So in many ways, it’s like a condominium, only less expensive. In fact, Andy pointed out repeatedly the TIC industry is where the condo industry was 25 years ago - new, interesting, but to many people, untested.

Well, this one has been tested - and like condos, early adopters will reap the benefits.

Opportunity for TICs occur when the price of an individual unit in an apartment building is significantly less than a condo. We’re at that point in a number of markets in Marin.

More to come on Andy’s comments on TIcs.