“What is tenants in common agreement?” is a commonly asked question by people involved in or looking to acquire a real estate property. It is a complex term but one that you need to know what it is and how it works.
Generally, a tic agreement governs or explains the co-ownership of real estate, meaning it helps the involved parties have legal agreements that govern their ownership of a particular property. You can either choose to write your tenancy in common agreement from scratch, that is, if you know how to do so, or choose expertly written tenants in common agreement template.
This article will discuss important things you need to know about tic agreement. So, let’s get started!
What is tenants in common agreement?”
The tenants in common (TIC) agreement refers to a contract where two or more people set out their legal ownership rights, obligations, and terms of property management.
TIC agreement is an important contract help people buy a property for a lower price by sharing real estate costs. This agreement may specify the proportion of each tenant’s legal partition or who will receive each tenant’s shares upon his or her death. The amount of total property, whether commercial or residential, under the ownership of each independent owner, may be equal or different.
One of the three types of joint ownership is tenancy in common. Joint tenancy and entire tenancy are the other two categories. When a tenant in common passes away, their portion of the property falls to their estate, where a beneficiary of the share of property may be named. A TIC has no right of survivorship.
How Tenancy in Common (TIC) Work
An individual may acquire an interest in a property after the other members have already signed into a TIC agreement. Therefore, this means that TIC agreements can be made at any time. Additionally, any renter may sell or borrow against their ownership interest separately.
The property’s owners, who are tenants in common, share rights and interests in all aspects of the property. However, each tenant may own a different proportional financial interest in the building.
NOTE: A tenant in common cannot claim ownership of any particular area of the property, even though the percentages of the property that they possess vary. That means there are no special privileges that you will own this specific part of that property. What governs that are other agreements you may make with your co-owners but can be included in the TIC agreement.
How to Write a Tenants in Common Agreement
Tenants in common contract must feature several things in order to be 100% effective. One of the main points that the tic agreement must cover is the nature of the relationship between co-tenants. This is an important point besides highlighting who the tenants are and which property they own. Other important points that need to be covered by tic include Co-Tenant’s Obligations, Income, Liabilities, etc.
Therefore, writing a tic agreement form will require you to have legal knowledge on several things that affect your property and co-ownerships. Learning all these things will take you time which you might not have. Luckily, you can avoid that by choosing any of these two ideal options:
- a) Hire an experienced attorney to help you write a tic agreement, or
- b) Use a tic agreement template.
The affordable option between this two will obviously be using tenants in common agreement template.
The Nature of Relationship Between Co-Tenants.
The nature of tic agreement between co-tenants is explained and governed by these three key principles:
- a) Tenants in Common Relationship; No Partnership
- b) Reporting as Direct Owners and Not a Partnership
- c) Indemnity
- d) No Agency
To understand what each of these principles states, be sure to check out the Gov archives.
Can tenancy in common be dissolved?
Yes, it can be dissolved, and this action can be completed in a number of ways.
The tenancy in common may be dissolved if one or more of the parties buy out the other parties. The renters must also come to an agreement on how to proceed if they have different ideas about how to utilize the property or whether to sell it. The next stage can be a partition action (splitting up the property and ownership) if they just can’t come to an agreement.
Depending on how well things are going, either this process will be voluntary, or a judge will mandate it. A court will distribute the property among all parties in a way that enables everyone to proceed independently.
Final Thoughts
Overall, a tenancy in common agreement template will be a perfect option if you want to create tenants in common contract. This is because writing the entire contract will cost you much more than choosing a template. Of course, if you aren’t well versed with the legal side of things regarding real estate co-tenancy and want to make sure everything is okay, you can hire an attorney to help you optimize your template, and this will still cost you less.
All tic agreement forms or templates are simple to use, printable and affordable.
