TICs

Tenancy in Common

A way for two or more persons to own property together. Tenants in common may own equal or unequal shares of the property, and there are no rights of survivorship. That is, when one of the co-owners dies, his/her share of the property becomes part of his/her estate and passes on to heirs. This is an arrangement common in joint business ventures: if two persons own an apartment complex and one of them dies, his/her share of the complex passes to his/her beneficiaries and does not pass to the other co-owner.

TICs (tenant in common properties)

Almost always pronounced as a word and very rarely called “tenant in common properties.”Investment vehicles that allow persons to buy fractional shares of real estate interests directly,rather than shares of stock,bond certificates,or other intermediate ownership mechanisms.The property may be a high-rise office building on the other side of the country, a retail center,a triple-net lease from a national drugstore chain,oil or gas wells,or any other investment properties. Because of securities and tax law limitations, no more than 35 investors may be involved to jointly own the properties. It allows them to invest in high-quality property that would ordinarily be outside their budgets—most properties that are “tic-ified”cost $30 million or more.

The industry has grown from virtually nothing in 2002—when an IRS ruling clarified the status of such an investment—to many billions of dollars of properties today. An investor has the ability to invest in a TIC as a replacement property in a 1031 exchange.