Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Tenants in Common (TIC) Agreement?
Old 07-14-2008, 01:18 AM   #1
Recycles dryer sheets
Join Date: Nov 2007
Posts: 54
Tenants in Common (TIC) Agreement?

Was hoping someone could point me in the right direction. I am buying a home in N. LV this Fall (I am financing myself) but will be having my brother live in and be a tenant....but at the same time, he will also be "part owner" in the fact that his monthly rent will actually allow him to be part owner in the property. I plan on putting 20% down on a 15 yr fixed rate mortgage, having him rent at market value with a roommate (will have lease for sure) and I also plan on contribting to the mortgage payments. In the end, whenever that may be, the objective is that when we sell (mid to long term horizon) whatever percentage he applied to the mortgage he would reap the benefits of on the proceeds and the same would go for me. For example, if he contributed 30% and I 70% to the mortgage, maintenance and upkeep of the property, when we sold, he would get 30% and I would get 70% of the proceeds. Please fill me in if that doesn't make sense or I'm missing something.

So, to protect us both in this situation, what's the best type of "contract" to get into? TIC? Other suggestion? Thank you.

LeBlanc is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-14-2008, 05:08 AM   #2
Thinks s/he gets paid by the post
OAG's Avatar
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,603
You by it in your name only. Side written agreement regarding the split at sale and, in case of death, your will spells out his benefit; his will spells out your benefit. Covers most contingencies: Death, his not paying rent, you wanting to sell early, etc. I am sure there are other convoluted way of doing it - but why? Remember this is my idea only and has absolutely no legal or other value to you, me or anyone else.

Vietnam Veteran, CW4 USA, Retired 1979
OAG is offline   Reply With Quote
Old 07-14-2008, 06:35 AM   #3
Full time employment: Posting here.
Join Date: Oct 2006
Posts: 923
I think what you're missing is how "ownership" in your name only or, alternatively, in your name and your brother's name jointly could affect a myriad of circumstances: (1) financing the property as investor property(in your name only) or as owner-occuppied (in joint names) property could affect the interest rate you obtain, (2) allocation of potential tax benefits between you and your brother that might result from your sole ownership or joint ownership such as the mortgage interest and real property tax deduction or the qualified sales exemption from gain of $250K or $500K, (3) potential credit and liability concerns if something goes wrong with debt service or if someone gets injured at your property, nothwithstanding insurance protection and (4) elder care/Medicaid rules that might be tripped if you or your brother might be getting old in the tooth.

I would consult an accountant and lawyer about this and would not take any advice over the internet as providing you with sound guidance. A lawyer might suggest that you eventually drop ownership of the property into an LLC, in which your share and your brother's share in the LLC would be proportionate to the respective contributions you both would make for the property. This might avoid some of the "probate" and title succession issues mentioned by OAG. I would not follow the side agreement approach outlined by OAG, if your intent is to treat your brother fairly. (Wills can always be changed, repudiated, or lost so there's no assurance that benefits spelled out in a current Will -- will in fact remain in tact when probate occurs.) Get a lawyer to handle this for you and your brother so that you can be square with him and not appear to be overreaching.
Someday this war's gonna end . . .
ChrisC is offline   Reply With Quote
Old 07-14-2008, 09:20 AM   #4
Full time employment: Posting here.
Join Date: Nov 2005
Posts: 882
There was an article in today's paper about a real estate TIC arrangement that turned into a disaster for the investors when the deal fell apart. Getting professional advice from a lawyer who specializes in real estate seems like a good idea.
socca is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Earn Out Agreement flpanhandle FIRE and Money 6 09-22-2007 01:23 PM
Tic Tac Toe Outtahere Other topics 5 03-27-2007 10:53 AM
tennets in common bearkeley FIRE and Money 6 05-08-2006 05:35 AM
Pre-nuptial Agreement to Protect FIRE Nestegg Jay_Gatsby Young Dreamers 82 01-24-2006 03:00 PM


All times are GMT -6. The time now is 03:37 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.