Many legal structures exist when it comes to real estate ownership. There’s sole ownership, joint tenancy, partnerships, and corporations, just to name a few. Then there is tenancy-in-common, sometimes known as tenants-in-common.
Tenancy-in-common (TIC) is a legal ownership structure. It’s an arrangement entered into by two or more individuals that share ownership rights in real estate or other types of property. Each individual—or co-owner—holds title to an undivided, fractional share of the property. Co-owners can also independently dispose of their shares or pass them along to named beneficiaries or heirs.
But does a TIC require a court filing? Creating the arrangement itself doesn’t require a court filing. But dissolving the arrangement might be another matter.
Creating a property-owning TIC requires two things:
Neither of these requires a court filing. But it does require an understanding of state-specific requirements. Additionally, a qualified attorney familiar with TICs should be on hand to help.
There isn’t a universal form for TIC agreements, though the agreement should include:
When all co-owners agree to the terms, they take title to the property, with a deed that indicates each owner’s interest in the property.
Most times, TICs dissolve when co-owners agree that it’s time to sell. But there could be one co-owner who doesn’t want to do this. This is where the courts might come in.
If a TIC co-owner refuses to sell, other TIC co-owners can petition a court to conduct a forced sale of the property. The court takes control of the property, forces the sale, then distributes the proceeds among the co-owners, in line with their ownership interest.
The courts might also come into play through a petition to partition. A partition in kind occurs when the court severs individual interests of each co-owner. If the property is divisible, the court divides the real estate between the TIC co-owners. If not, then the court might sell the property, and divide the proceeds among co-owners.
It goes without saying that bringing the court into a TIC dissolution process can be time-consuming, as well as costly. This is why a TIC agreement should consider the likelihood of potential disagreements pertaining to property sales.
Forming and maintaining a TIC can be a straightforward process. Though the TIC is a legal set-up, it doesn’t have to involve courts or court filings of any kind.
But it’s important to make sure the TIC agreement is iron-clad and fully understood by all co-owners. This can help avoid down-the-road time, costs, and frustration.