Understanding TIC in San Francisco: A Comprehensive Guide

Buying in San Francisco can feel like solving a puzzle. If you’ve seen alluring prices on multi‑unit flats and wondered how they compare to condos, you’ve likely stumbled across TICs. You want clarity, not jargon, so you can decide if this path fits your budget and goals. In this guide, you’ll learn what a TIC is, how it differs from condos and co‑ops, how financing works, the key risks and benefits, and the steps to buy confidently. Let’s dive in.

TIC basics in San Francisco

A tenancy in common, or TIC, is a form of co‑ownership where two or more people hold undivided fractional interests in one property. Instead of owning a separately titled condo unit, you own a percentage of the entire parcel, such as 25% or 33%.

In practice, you live in a specific unit based on a contract. A written TIC Agreement assigns exclusive occupancy to each owner, outlines maintenance and cost sharing, sets voting rules, and governs how sales and transfers work. These agreements vary in quality, so reviewing the exact terms is essential.

Unlike some ownership forms, a TIC interest does not automatically pass to your co‑owner if you die. Your share transfers according to your will or state law unless you make other arrangements. In San Francisco, TICs are common in older multi‑unit buildings and can offer a lower entry price compared to similar condos.

TIC vs condo vs co‑op

Ownership and title

• Condo: You own a separately titled unit plus a share of common areas through the HOA.
• TIC: You own an undivided percentage of the whole parcel, and your unit is assigned by contract.
• Co‑op: You purchase shares in a corporation that owns the building and receive a proprietary lease.

Financing and marketability

• Condos are generally the easiest to finance due to clear, unit‑level title.
• TIC loans are more specialized. Lenders underwrite a fractional interest and may be cautious about cross‑liability or complex agreements.
• TIC interests usually have a smaller buyer pool, which can affect time on market and price trends compared with condos.

Governance and decisions

• Condos follow statutory HOA rules and recorded CC&Rs, which help standardize decisions and processes.
• TICs rely on the private TIC Agreement. Some require unanimous consent for major work or include complex cost allocations, which can slow decisions or limit financing.

Liability and mortgages

• Some TICs have a single “blanket” mortgage that covers the entire property. If owners are jointly liable, one default can impact everyone.
• Other TICs use separate loans secured only by each owner’s fractional interest, which limits cross‑exposure. The structure you buy into matters.

Conversion potential

• Certain TICs may convert to condos, but the path can be costly, time‑consuming, and dependent on owner approval and local rules. Treat conversion as a possibility, not a guarantee.

How TIC financing works

Common loan structures

• Individual fractional loans: A lender issues a mortgage to you and secures it against your TIC percentage. This is often preferred but requires a lender experienced with TICs.
• Assumption or payoff of a blanket loan: If a blanket loan exists, you may need lender consent to assume it, or the seller may need to pay it down or off at closing.
• Blanket loan for the property: All owners may be borrowers or co‑signers. Transfers can be complicated, and one owner’s default can affect others.
• Portfolio and specialty lenders: Many mainstream banks avoid TICs. Local banks, credit unions, and specialty lenders are more common in these deals.

Lender expectations

• Down payment: Expect higher down payments than condos, often 20% to 30% or more, depending on strength of file and lender policy.
• Underwriting: Stricter debt‑to‑income ratios and reserves are common. Lenders review the TIC Agreement, budgets, reserves, insurance, and any mortgages tied to the property.
• Rates and terms: Rates may be modestly higher and underwriting more conservative than comparable condo loans.

FHA/VA and insured programs

• FHA and VA loans for TICs can be available but are more restricted. Confirm eligibility early with a lender who regularly closes TIC loans in San Francisco.

Title, escrow, and insurance

• Title insurance is available for TIC interests, but coverage depends on how title is structured and any blanket financing.
• Escrow must handle proper vesting of your fractional interest, recording of the TIC Agreement, and any lender payoffs or assumptions.
• Building insurance should protect all owners for property and liability. Gaps or inadequate policies increase risk and can derail financing.

Local transaction practicalities

• Request estoppel letters from sellers and, if applicable, lenders. These confirm payment status, defaults, and encumbrances.
• Check San Francisco Assessor‑Recorder records for deeds and TIC documents, and the Department of Building Inspection for permits, code compliance, and occupancy.
• Plan for a longer marketing and escrow timeline than a similar condo. Factor resale liquidity into your decision.

Benefits and tradeoffs

Why buyers choose TICs

• Lower purchase prices than comparable condos in similar neighborhoods.
• Access to areas where condo prices may be out of reach.
• Flexibility in structuring deals with co‑buyers or investors.

Key risks to weigh

• Financing hurdles: Fewer lenders, higher down payments, and stricter underwriting can lengthen timelines.
• Liability exposure: Blanket loans or unclear agreements can expose you to another owner’s default.
• Contract complexity: Weak TIC Agreements can lead to disputes, inadequate reserves, or stalled maintenance.
• Liquidity: Smaller buyer pools can mean longer resale times and more price sensitivity.
• Conversion uncertainty: Condo conversion can be uncertain and expensive.

What to review before you write an offer

Use this checklist to guide your due diligence:

• Full TIC Agreement and all amendments, plus occupancy or use‑rights documents for each unit.
• Preliminary title report with all recorded instruments, including any blanket mortgages, liens, or easements.
• Mortgage documents and lender contact for any blanket loan; obtain estoppel confirming status.
• Financials: budgets, reserve studies, meeting minutes, and assessment history.
• Insurance policies for property and liability; confirm any loss assessment coverage.
• Seller disclosures, rent rolls, and leases if any units are tenant‑occupied.
• Building inspections, pest reports, seismic retrofit history, and permit/violation records from the Department of Building Inspection.
• Litigation searches for pending claims involving the TIC or building.
• City and County registration or occupancy records to confirm lawful occupancy.

Offer strategy and negotiation tips

• Financing contingency: Tailor your contingency for TIC underwriting, and allow extra time to secure final approval from a TIC‑savvy lender.
• Blanket loan resolution: Make the seller’s payoff, lender release, or approved assumption a condition of closing.
• Deliverables and review periods: Require delivery of the complete TIC Agreement and estoppel letters early, and allow time for attorney review.
• Credits and reserves: Negotiate credits for known repairs or insufficient reserves. Tie credits to inspection findings or reserve shortfalls.
• Seller representations: Ask for representations that the TIC is in good standing, there are no known defaults or violations, and the financials are accurate.

Red flags that warrant caution

• Unrecorded or inconsistent ownership documents or unclear occupancy assignments.
• Blanket mortgage with vague liability allocation or no clear payoff/assumption path.
• TIC Agreement that requires unanimous consent for essential repairs or sales.
• Insufficient reserves or documented deferred maintenance.
• Pending or threatened litigation related to the TIC or major building systems.

Is a TIC right for you?

If you value location and price access and are comfortable with extra due diligence, a TIC can be a smart entry into San Francisco homeownership. The keys are clarity on title and mortgages, a strong and well‑drafted TIC Agreement, financing from a lender who understands TICs, and a careful review of building condition and financials. Build extra time into your timeline and keep your decision grounded in your long‑term plans.

You do not need to navigate this alone. If you want a seasoned, local perspective and a streamlined path from search to closing, connect with the team at Bay Group for a private consultation tailored to your goals.

FAQs

What is a tenancy in common in San Francisco real estate?

• A TIC is co‑ownership of one property where you own a fractional, undivided interest and get exclusive occupancy of a specific unit by contract rather than separate condo title.

How does TIC financing differ from a condo loan?

• TIC loans are specialty products with fewer lenders, higher down payments, and stricter underwriting, and they review the TIC Agreement and building financials closely.

What is a blanket mortgage in a TIC and why does it matter?

• A blanket mortgage covers the entire property; if owners share liability, one owner’s default can jeopardize others, so payoff, release, or clear allocation is critical.

Can a San Francisco TIC convert to a condo, and how predictable is it?

• Some TICs convert, but the process can be costly, require owner approval, and depend on local rules; treat conversion as uncertain and verify feasibility early.

Are FHA or VA loans available for TICs in San Francisco?

• FHA and VA options can be more limited and require strict compliance; confirm availability with a lender experienced in TIC underwriting at the start of your search.

What should I include in a strong TIC purchase offer?

• Include a TIC‑specific financing contingency, early delivery and review of the TIC Agreement and estoppels, clear terms for any blanket loan resolution, and repair or reserve credits where needed.