A tenants in common (TIC) agreement is used to establish the rights of people unrelated by marriage who own property together. When unmarried people purchase property, they are considered as tenants in common. A few exceptions to this exist. One can own property with a parent, and may have the property classed in several different ways than as a tenants in common ownership.
Usually, when two or more people own a property together, they need to establish a TIC agreement to fully list the rights of each tenant. It is important to realize that tenancy does not in this case mean physically occupying the property. One could have a TIC agreement with several people who share in the revenues of renting a property. Conversely, one of the owners might occupy the property, while another lives elsewhere.
The problems of joint ownership can become complex and can be greatly eased by TIC agreements. The first importance is stating percentage of ownership. Without such a statement, all owners are considered as equal sharers in the property. Often, someone will purchase a larger share of the property, and that ownership of a larger percentage needs to be declared in writing.
Other key features of a TIC agreement include agreed upon buy-out prices, when a buy-out can be refused and what rights inheritors may have to property if an original owner dies. Usually, inheritors have exactly the same rights to the property as the original owner, but TIC agreements may specify greater ability to buy out the property owned by inheritors if the original owner is deceased.
TIC agreements can also specify what actions may take place on a commonly owned property. For example, one of the owners may wish to add to or modify the property. In these cases the TIC agreement usually states whether this is an acceptable use of the property and what financial obligations this might incur to all owners.
If a tenant chooses to improve the property and undertakes all expenses, he or she may be eligible for a greater share of ownership in the property. This, however, depends upon the original TIC agreement established. Alternately, if a tenant willfully causes damage to property, the TIC agreement may cause the tenant to loose ownership rights.
TIC agreements usually need to be written with the help of a lawyer specializing in property or real estate. Since TIC laws vary from state to state and in different countries, anyone making a TIC agreement should be aware of the state laws, which supersede agreements in many cases. If a provision in the TIC agreement is in conflict with a law regarding TICs, then the law often wins. So before signing, one must be certain that every part of the TIC conforms to the laws in one’s state or country.
