A real estate multiple owner agreement, also known as a tenancy in common, or TIC agreement, defines the relative rights and responsibilities of two or more owners of a parcel of real estate. TIC agreements help avoid disputes among owners by addressing in advance various issues arising from the ownership of real property. Without a TIC agreement, resolving a dispute might require filing a lawsuit and forcing a sale of the property.
One of the owners will often be appointed to manage and maintain the property on behalf of all of the owners or they can hire a third party professional property manager.
Income and Expenses
The TIC agreement allocates items of expense and income among the owners, defines the timing for distributions of cash flow and when owners must contribute funds to pay expenses that exceed property income, and identifies what expenses require advance approval of some or all of the owners.
If one owner wants to sell his interest in the property, the real estate multiple owner agreement might include a right of first refusal in favor of the other owners. Some agreements also grant purchase options for certain triggering events, such as an owner's failure to pay his share of expenses.
TIC owners usually record a memorandum of the TIC agreement in the office of the county recorder where the property is located. Recording a memorandum gives notice to third parties that the agreement exists and may contain terms that affect a sale or other proposed transaction involving the property.
Anyone considering acquiring a tenancy in common interest in real property should consider whether another ownership vehicle better suits their needs and consult with a real estate attorney to evaluate their options.
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