A Tenancy in Common (TIC) Agreement, otherwise known as a “coownership agreement,” is a creature of statute. California Civil Code section 686 provides that, “[e]very interest created in favor of several persons in their own right is an interest in common, unless acquired by them in partnership, for partnership purposes, or unless declared in its creation to be a joint interest, as provided in Section 683, or unless acquired as community property.” When you have an interest in common, best practices dictate that the common interest-holders should execute a written agreement setting forth each party’s respective rights, liabilities, duties and obligations, i.e., a TIC agreement. TIC agreements often include provisions to establish (or confirm) the equitable interest of each party, trigger events for defaults or buy-sell provisions, duties and obligations of various parties with respect to the real property, accounting and record keeping standards, allocations of costs and liabilities, occupancy rights, and much more. At this time the parties will also deal with partition rights and whether those rights will be waived.
In our view, any parcel of land that is co-owned but not as a joint interest or acquired as community property should be made subject to a TIC agreement. Parcels owned by business entities, such as partnerships, LLCs, or corporations, are not “co-owned” for this purpose, even if there are other owners of or investors in that entity. The exception, however, is when one or more of the owners of the parcel is a business entity and there are other co-owners. A TIC agreement is appropriate in that case as well.
Attorney-Broker Justin Lowenthal provides full-service representation in complex transactional and difficult dispute resolution matters through every phase of real property acquisition, financing, development and ownership. Our primary focus is serving buyers and sellers of real property, landlords, developers, lenders, joint venturers, owners, and contractors within a broad spectrum of real estate legal work. We are capable of assisting you with a variety of matters, including complex TIC agreements and issues involving coownership of real property.
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