TICs and the Problems with Them

adpostal's picture

http://www.nytimes.com/2011/02/04/us/04bcjames.html?ref=sanfranciscobayarea

One of San Francisco's challenges is the cost of housing in the city.  Housing prices are very high, as is well known, but a popular way of finding affordable housing in the city is now toxic.  Tenancies-in-Common (TICs) were once a way of living in the city without breaking the bank.  In the TIC agreement, the tenants of a building all share one deed, which ties the resident's financial success to one another.  However, due to the fall of the housing market, these properties are becoming less desirable and unable to be sold. 

The Board of Supervisors has attempted to step in by using a lottery system, in which TICs are "converted" into condos, which sell faster.  However, 2309 TIC members entered the lottery and only 200 were selected.  This may become a major problem in the SF housing market.  

What should the city government do to remedy this problem?

gcotter's picture

Is this new?

I was once a TIC owner in a two-unit building which we converted to condos.  At that time - about 12 or 15 years ago - any two-unit TIC could convert to condos without going through the lottery process, bu building of foou-units or more had to be in the lottery and it was limited to 200 per year.  I don't know where three-unit buildings fell.

Given the drop in housing values, this would be a wonderful time for young people to have a chance to own a condo, and converting TICs to condos is the most practical way to do this - after all, they are condos in every way except the deed.

If, indeed, there is still as limit and a lottery, then I think it should be framatically changed.  Personally, believe we should get rid of the lottery entirely.  However, I do think that a TIC should be in place for at least a year before it can be converted to condos.  That would prevent get-rich-quick developers brom buying multi-unit buildings and flipping them to condos.  

Owner-occupiers of TICs who have lived there for at least a year should be free to obtain separate condo deeds without going through a lottery, no matter how many units in the building.

Phil Ting's picture

TICs and separate assessment

TICs are a San Francisco phenomenon.  While TICs are a common way to own property, owners can normally convert to condominiums in almost any other county without much problem.  In San Franciso, TICs are seen as a way to displace rent control affordable rental units so they have been seen as anti-tenant.  While the rules around the lottery have not changed recently, I noticed CA Rev and Tax law made it every Assessor's duty to provide separate assessment for TIC owners if they requested it.  At the same time, I noticed our office had a backlog of TIC assessments due to the fact that TICs were being valued differently on the open market.  TICs used to be an ownership structure for investors buying rental property.  Today, they are a way for people to enter into home ownership.    The market pricing was totally different.  The challenge for our office was we did not know if a four unit building had four one bedroom units or one three bedroom two two bedroom and one one bedroom unit.  These would be valued totally differently.  By encouraging home owners to ask for separate assessment, our office was able to request the information we needed to accurately value the property and home owners were able to get a break down so they would know how much in property taxes each unit owed which got more complex as people bought and sold unit TIC shares.

Paid for by Phil Ting for Assembly 2012. FPPC ID# 1343137