Tuesday, February 17, 2009

A Good Thing About TICs

I've been writing about the economic downsides of TIC financing, so I want to counter those arguments by pointing out what I consider to be the best thing about owning a TIC. Quite simply - you get to choose who your building partners are. In Manhattan, where I grew up, buildings known as co-ops are considered more exclusive (and are priced higher) than condos for that very reason. A co-op is a different legal entity than a TIC, but operates in a similar fashion. (In a co-op, or stock co-operative, you get shares in the building. With a TIC you own a percentage of the property.) Not just anyone can buy into a co-op - and not just anyone can buy into a TIC.

If you are a group forming a new TIC you must meet, disclose your finances and approve of each other before moving forward. I would advise any prospective new TIC owner to make sure that your realtor adds a no conditions contingency clause regarding the meeting of other partners. That means that you require meeting all the partners before closing and if you decide that you don't feel good about them for any reason you can back out. It is best in a new group for all prospective owners to get together and meet at one time. Then you can get a feel for the group dynamic as well as learn about individuals one on one.

After a purchase, all the partners of a TIC building typically have the right to interview any prospective new owner and accept or reject the buyer. The parameters for rejecting a buyer are defined in your TIC agreement. Your group can make those as broad or narrow as you like. (Within the limits of the law, of course. You cannot discriminate based on gender, race, etc.) Usually these clauses in your agreement attempt to strike a balance between what is fair to a selling partner and what is considerate to the remaining partners.

With a condo, you have no choice about who your neighbors will be.


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