Tenants in Common

My roommate and I are planning on buying a house. First though, we have been told we should get a TIC. I looked it up and it seems like a good idea. Do any of you in dopeland know what it would usually cost? I’ve searched but I cant find any information about price. (I’m in Minneapolis if it matters)

EDIT: I have called a few lawyers, but have yet to hear back from them. I just wanted to get the straight dope first

My guess is that tenancy in common would cost much the same as any other kind of house ownership. It just describes the rights that the owners of the real property have with respect to each other when to comes to such things as selling the property to others or bequeathing it to others when they die. So the wording on the contract will be different from other kinds of tenancy, but you’ll pay about the same amount of money to the lawyer, or whoever draws up the contract, and the same to the seller of the property and the real estate agents.

(The first house that I owned was as a tenant in common with two other friends, in New South Wales, Australia, so the details of the law will vary in other jurisdictions).

The biggest problem you’ll face is if one of you dies, while you jointly own it. Too often I’ve seen things like this and one person doesn’t want the property 'cause he inherited it and demands to sell it.

So the other person has to buy it or the heir can go to court and get an order to sell and divide the assets. This often results in less profit ('cause the sale is rushed) and it leaves the orignal partner up a creek with no place to live, so he’s back to renting.)

Thanks for the reply. I might be missing something, but I was planning on meeting a lawyer with my roommate and hashing out an agreement. What I want to know is what this service will cost me. Are you saying it will be part of the normal closing costs?

Tenancy in common is just a form of joint ownership; in fact, it is the default form, and it will be created when there is a conveyance to multiple grantees without specification and qualifying for the other forms of joint ownership. (The two others are (1) joint tenancies with right of survivorship (JTWROS), and (2) tenancy by the entireties, which is limited to married couples. To create it, the deed will simply convey the property (let’s call it, say, “Blackacre”) to the joint owners.

This deed would convey an undivided one-half interest to you and Roommate. If you put up 75% of the purchase price, and wanted that reflected in the ownership division, the deed would go:

Now, this will establish a tenancy in common. But! You may want an agreement in place that regulates the use of the property and what to do if one of you wants out of the arrangement. It seems there are some people on the internets (not lawyers) who use the term TIC to refer to these usage and partition/buy-out agreements. The nomenclature is sloppy, but it is definitely an idea worth considering.

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You need to have a written contract drawn up, but the clauses in the contract all ought to be pretty standard, so I don’t see why it should cost much more to have different boiler-plate wording put in. You should only be paying something extra if there’s an unusual complication. But that’s really a question that only your lawyer can answer definitively.

Thanks, maybe I do have the nomenclature wrong. I am looking for what is described here

http://realestate.msn.com/article.aspx?cp-documentid=13107770&page=2

Hashing out this sort of ancillary agreement is typically not included in the battery of fees associated with real estate purchases. The cost depends on what rôle your attorney will play (and whether you will have one attorney for both of you or each of you has your own attorney). You could have a very elaborate and expensive, but probably airtight, contract where each of you negotiated the arrangement while retaining your own counsel and had them draw up the document. On the other hand, you could with very little expense work out an agreement between the two of you and document it yourselves. The pitfalls with this method would be your relative ignorance as to property law, which remains a little esoteric to this day. Of course, between these two poles, there’s any number of positions where you can make the expense-expertise tradeoff.

Just a note - be very careful that you are using the terms exactly as defined in your state.

In Massachusetts there is “Tenants in Common” but there is then a different term “Tennants in Common with Right of Survivorship”, having different meanings in the case of a death. Meanwhile In New York those two terms are apparently equivalent.

I really wish I had not had to learn that.

(IANAL and the above writing is my approximate interpreation. The point remains that minor differences in wording can have a major effect on results.)

Another way to avoid such problems is to take title of the home in the form of an entity that you create — a limited-liability corporation, or LLC — in which all parties own an interest, attorney Panaro says. If the LLC owns the property, it’s not so easy for one owner to take actions that would gum up the property for another owner or owners, she says.

  • Deal with the end at the start. All good things come to an end. And so will this joint house — someone wants to move, someone gets engaged. So make sure you plan for the end. How will you agree upon a sale price – perhaps hire two appraisers and average their findings? If one owner wants to sell, does the other get right of first refusal? How about right of first offer (that is, an agreement to negotiate)?

F.Y.I -
LLC memberships, limited partnership interests or corporate shares are not considered to own real estate (unless the entity qualifies as a stock cooperative), and therefore cannot claim the tax benefits of real estate owner-occupants such as the ability to deduct mortgage interest and property tax, and the ability to claim the $250,000/500,000 tax-free gain on resale. If the LLC, limited partnership or corporation can be deemed a stock cooperative, it is likely to encounter regulatory barriers as discussed above.

I’d expect there to be little or no extra fee for a tenants in common ownership.
My SO and I are not married. Every time we have bought a house (just bought number 4) we have been asked if we want TIC or a joint ownership with right of survivorship. It was mostly a matter of using form A or form B. Our last 2 purchases have also been in Minnesota, so the same laws apply.
Talk to the people handling your closing, if that’s a lawyer or a real estate agency. They will have all the info.