What Is a TIC in Los Angeles Real Estate? A Buyer’s Guide

Curious how some buyers get into popular Los Angeles neighborhoods at a lower price point without buying a condo? You might be looking at a TIC. If you want urban character, a smart investment path, or a way to co-own a multi-unit building, understanding TICs can open real options. In this guide, you’ll learn what a TIC is, how ownership and financing work in L.A., the pros and cons compared with condos, and the due diligence steps that protect you. Let’s dive in.

TIC basics in Los Angeles

A Tenancy in Common, or TIC, is shared ownership. You and your co-owners each hold a deeded percentage of the entire property rather than separate title to a single unit. In practice, a recorded occupancy agreement gives you exclusive use of a specific unit while you still own a fractional interest in the whole building.

TICs are well established in California and became common in parts of Los Angeles as a flexible alternative to formal condo conversions. You will see TIC offerings in older, smaller multi-unit buildings, especially in areas like Westlake and MacArthur Park, Echo Park, Silver Lake, parts of Hollywood, West Adams, and pockets near downtown Los Angeles. Local practice has produced standard documents and lender expectations over decades, but each building still runs on its own agreement, so careful review matters.

How TIC ownership works

What you actually own

Title is to a fractional, undivided interest in the entire property, such as an undivided 25 percent.
A recorded TIC agreement or occupancy agreement assigns your exclusive right to live in a specific unit and sets rules for costs, maintenance, voting, and transfers.
Operating rules function a bit like an HOA, outlining how the building is managed and how decisions get made.

What to expect in the TIC agreement

Your percentage interest and how expenses, assessments, and sale proceeds are calculated.
Remedies if an owner does not pay their share, including late fees and potential foreclosure rights as outlined in the agreement.
Transfer rules, which often include notice to co-owners and a right of first refusal.
Voting thresholds for major actions like capital projects or exploring condo conversion.
Procedures for replacing an owner and buyout mechanics if someone wants to sell their interest.

Selling or exiting

You can usually sell or gift your fractional interest, subject to the agreement’s rules. Partition is a legal remedy that can force a sale, but it is impractical for apartment buildings and most TIC agreements include provisions to discourage it. Expect a process that respects co-owner rights and building-level obligations.

Converting to a condominium

Condo conversion can be possible, but it is complex. It requires legal work, compliance with state subdivision laws and local permitting, potential building upgrades, new governing documents, and owner votes per the TIC agreement. Time and cost can be significant, so consider conversion a long-term strategy rather than a quick flip.

Financing, taxes, and insurance

How TIC financing differs

Lenders treat TICs as more complex than condos. There are fewer off-the-shelf loan products, and many buyers need 20 to 25 percent down or more. You may see two structures:

Unit-level loans underwritten to your fractional interest. These are often available through lenders that specifically handle TIC loans.
Building-level or cross-collateralized loans that encumber the whole property and can require multiple owners to sign. This can create shared liability, so read the loan terms closely.

Rates, fees, reserve requirements, and debt-to-income standards can be stricter than for typical condos. Programs from Fannie Mae and Freddie Mac may not neatly fit TIC structures. FHA and VA financing is often limited for TICs and depends on the building and the lender. Connect with a lender who regularly underwrites TICs before you start shopping so you know your options.

Refinancing and resale

Refinancing a TIC interest can be more involved than a condo refi. Lender availability may be limited and approvals can require input from co-owners or a master lender. Resale can take longer since the buyer pool is smaller and financing is specialized. Pricing should reflect these conditions.

Insurance considerations

Most TIC buildings carry a master property and liability policy. You are usually responsible for contents and improvements inside your unit. In Los Angeles, earthquake coverage is not included in standard policies, so factor potential earthquake insurance into your budget.

Taxes and property tax treatment

Property tax: Transfers of fractional interests can trigger reassessment under California’s property tax rules. How title is held and transferred matters. Plan ahead with a tax professional.
Capital gains and 1031 exchanges: TIC interests can qualify for 1031 exchanges if they meet IRS real property criteria. Execution can be more complex than a single-owner property.
Rental allocations: If any units are rented, income and expenses are typically split according to the TIC agreement.

Given the variables, align early with a lender experienced in TICs and a qualified legal and tax advisor.

TICs vs. condos: what to weigh

Reasons buyers choose a TIC

Lower entry prices: TICs are often priced below comparable condos, opening doors in central neighborhoods.
Location and character: Many TICs are in older, small multi-unit buildings near transit, dining, and culture.
Flexibility: Ownership shares and house rules can be tailored in the TIC agreement.

Risks and trade-offs

Financing limits: Fewer lenders, higher down payments, and higher costs can narrow options.
Shared obligations: Depending on the loan, you may share certain building-level liabilities.
Governance quality: Agreements vary. Weak provisions can lead to disputes or surprise assessments.
Resale complexity: Fewer buyers understand TICs, which can slow sales or affect price.
Limited FHA/VA access: Many TICs will not qualify, reducing buyer accessibility.

Why some buyers prefer condos

Separate title to your unit simplifies lending and ownership.
Condo governance is standardized, which can make budgets, reserves, and lending more predictable.
Larger buyer pool can make resale easier.

Due diligence checklist for Los Angeles TICs

Use this checklist to protect your purchase and set clear expectations.

Documents and title
- Review the recorded TIC agreement and any occupancy agreement. Confirm percentage interests, voting rules, transfer and subletting rules, assessments, and repair procedures.
- Confirm you will receive a deed to a fractional, undivided interest. Verify recording details with title and escrow.
Loans and encumbrances
- Identify any master mortgage on the building. Confirm whether you will be a co-borrower or guarantor and what consents are needed for transfers or refinancing.
Financials and reserves
- Request recent budgets, bank statements, reserve studies if available, and records of assessments or planned capital work.
Insurance and risk
- Confirm master policy coverage levels and required individual coverage, including contents and possible earthquake insurance.
Financing plan
- Secure pre-approval with a lender that actively finances TICs. Ask about down payment, reserves, rates, and underwriting criteria.
Building condition
- Order a thorough inspection. Pay close attention to plumbing, electrical, roof, seismic retrofits, and code compliance common to older Los Angeles buildings.
Local rules and potential conversion
- Ask about condo conversion feasibility, owner vote requirements, and local planning and subdivision rules.
Occupancy and rentals
- Verify current leases, rental restrictions, and compliance with local short-term rental rules if applicable.
Dispute and maintenance history
- Review any meeting notes or records of disputes, litigation, or major repairs.
Tax planning
- Consult a CPA regarding property tax reassessment exposure, capital gains, and 1031 strategy.

Is a TIC right for you?

A TIC can be a smart path if you want access to high-demand Los Angeles neighborhoods at a lower price, value the character of small multi-unit buildings, and are comfortable with shared governance. It can also work for buyers who plan to hold long term and who are open to specialized financing.

You may prefer a condo if you want the widest range of financing options, standardized governance, and the largest possible resale pool. Whichever path you choose, the quality of the TIC agreement, the building’s condition, and your lender’s experience will drive your outcome.

Make a smart plan with local guidance

If a TIC is on your radar, start with the right team. Line up a TIC-savvy lender, review the governing documents carefully, and model your monthly costs with realistic insurance and reserve assumptions. With the right prep, TICs can offer real value and lifestyle access in Los Angeles.

If you want help sourcing opportunities, evaluating documents, and coordinating financing, reach out to a local expert who works with both homebuyers and investors. Let’s talk about your goals and your budget, then build a plan that protects your lifestyle and long-term value. Connect with Kenzie Mckinnon to get started.

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