TIC vs. Condos and HOAs: What You Need to Know Before Making a Purchase

When it comes to financing a TIC property, the loans are different than conventional loans because the property is not considered a single entity. Instead, each owner’s share of the property is considered a separate legal entity, which can complicate the financing process.

It’s important to work with a lender who specializes in TIC financing in order to secure the right loan for your situation. A TIC loan typically requires a larger down payment and has a higher interest rate than a conventional loan. However, the benefit of owning a TIC property is that it is typically more affordable than owning a single-family home or condo.

Overall, a TIC property can be a great investment opportunity, but it’s important to understand the unique ownership structure and financing requirements before making a purchase. Working with an experienced real estate agent who specializes in TIC properties can help ensure a successful and smooth transaction.

A TIC property differs from a standard HOA or owning a condo in a few ways. In a condo, each owner owns their individual unit and shares ownership of the common areas with all other owners. In a TIC, each owner owns a share of the entire property, and they all share responsibility for the upkeep and maintenance of the common areas.

One key difference between a TIC and a condo is that TIC ownership is not considered real property ownership. Instead, each owner has a fractional interest in the property, which is similar to owning stock in a company. This means that financing a TIC can be more complicated and require a larger down payment than financing a condo.

Another key difference is that in a condo, each owner has the right to occupy their unit, whereas in a TIC, each owner has the right to occupy a specific space within the property. This can make it more difficult to sell or refinance a TIC, since each owner’s share is considered a separate legal entity.

Lastly, the legal and financial structures of a TIC can be more complex than a standard HOA or condo. Each TIC is governed by its own set of bylaws, which can vary from property to property. Additionally, TIC financing typically requires a lender who specializes in this type of ownership structure, which can limit the number of lenders available and result in higher interest rates.

Overall, owning a TIC property can be a great investment opportunity, but it’s important to understand the unique ownership and financing requirements before making a purchase. Working with an experienced real estate agent who specializes in TIC properties can help ensure a successful transaction.

By Brian Maser

Founder / Broker of THE CONDO EXPERTS