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