What is a Tenancy in Common?
Tenancy in Common (TIC) is a form of ownership that allows two or more people or companies can hold undivided shares in a property.
What does it mean to own property as tenants in common?
– Despite the tenants having unequal shares, they have the same rights over the property. For instance, if Company A has 25% it can occupy or take out a mortgage on the entire building, even if Company B has 75%.
– If Tenant A takes out a loan, the lender will usually require Tenant B to sign the mortgage deed as well, since the loan can’t be secured only by the share of held by Tenant A, but rather by the property in its entirety.
– Should Tenant A take out a loan and then fail to make the required monthly payments, Tenant B is held liable and must cover the losses to avoid foreclosure.
– A tenant can leave or dispose of their share whichever way they see fit. The share doesn’t automatically pass to a co-tenant, unless they sale it to them or designate them as heirs in a will. This give a measure of control between co-tenants in the way the shares get distributed.
– To dissolve a Tenancy in Common, one of the tenants would need to buy all co-tenants’ shares. Alternatively, all tenants could sale their respective shares to an outside buyer.
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