Curious why so many Mission District listings labeled “TIC” are priced below comparable condos? You are not alone. Tenancy in Common ownership can open doors to a prime location and classic San Francisco architecture, but it also comes with unique rules, financing, and responsibilities. In this guide, you will learn what TIC ownership really means in San Francisco, how it compares to condos, what to expect with lenders, and the key due diligence steps to protect yourself. Let’s dive in.
TIC basics in San Francisco
A Tenancy in Common is shared ownership of a single property where you hold an undivided fractional interest. You do not receive a separate deeded “airspace” unit like a condo. Instead, you get exclusive occupancy of a particular flat or apartment through a private TIC agreement that sets out who lives where, how costs are shared, and how transfers work.
TICs became popular in San Francisco as a way to split ownership in older multi-unit buildings without creating a formal condominium. Many Mission District TICs are in historic Victorian and Edwardian buildings, which adds character and also maintenance considerations. Local rules around condominium conversion, rent control, and tenant protections can affect how a TIC operates and whether it might convert to condos in the future. For detailed guidance on conversion and rent rules, consult the San Francisco Planning Department and the San Francisco Rent Board, and engage a local real estate attorney.
TIC vs. condo: what changes for you
Understanding the structural differences helps you plan your budget and manage risk.
Title and rights
- Condo: You own a specific unit in fee simple plus a share of the common areas.
- TIC: All owners share the whole property. Your unit rights come from the TIC agreement, not a separate deed to the airspace.
Governance and voting
- Condo: Formal HOA with recorded CC&Rs and well-established rules on budgets, reserves, and assessments.
- TIC: The TIC agreement controls decision-making, voting, and enforcement. Practices vary widely from building to building.
Budgets and reserves
- Condo HOAs often follow standardized reserve studies and accounting.
- TICs depend on the owners’ agreement and discipline. Reserves and budgeting can be strong or minimal, so review them closely.
Transfer and resale
- Condos tend to be more liquid because title, lending, and insurance are standardized.
- TICs serve a niche market. Financing is less uniform, which can narrow the buyer pool at resale.
Occupancy and rental rules
- Condo rules are set by the HOA and local law.
- TICs rely on the TIC agreement for rental terms, plus local rent-control rules if tenants are present. Tenant status matters for both day-to-day use and any future conversion plans.
Financing a Mission District TIC
Loan options for TICs change and vary by lender, so start with a pre-approval from a lender experienced in TICs.
- Specialty TIC loans: Some portfolio lenders and credit unions offer fractional mortgages for TIC interests. These lenders keep loans on their books and underwrite to the project’s documents.
- Conventional agency loans: Availability for TICs has historically been limited or conditional. Do not assume a standard agency 30-year fixed is available without checking.
- FHA/VA: These programs have project-level approval requirements that many TICs do not meet.
- Cash buyers: Common in competitive situations, cash avoids underwriting complexity.
What to expect in underwriting:
- Down payment: Often 20 to 30 percent, with some lenders preferring 25 to 30 percent depending on the building’s documents and reserves.
- Credit and reserves: Strong credit and several months of reserves are common asks. Lenders may want you to hold reserves for both your loan and your share of building expenses.
- Primary residence focus: Favorable terms are typically for owner-occupants. Investor financing may be more limited.
- Document review: Lenders scrutinize the TIC agreement for any cross-default risk, blanket loans on the building, or language that could expose one owner to another’s default.
- Rates and terms: Fixed-rate products can be available through specialty lenders, sometimes with modestly higher rates or fees compared with condos.
Practical takeaway: Plan to shop lenders and work with a broker who routinely closes TIC loans. The financing path you use today can also shape your future buyer pool when you resell.
Pros and tradeoffs to weigh
TICs often provide access to the Mission at a lower entry price, but they are not a fit for every buyer.
Potential advantages
- Lower purchase price: TIC interests frequently sell for less than comparable condos in the same area.
- Classic architecture: Many TICs are in historic Mission buildings with period details and character.
- Long-term upside: Some TICs later convert to condos, which can improve marketability and potentially value.
- Small-community ownership: A handful of co-owners can mean collaborative decision-making and a more personal sense of stewardship.
Common risks
- Financing complexity: Fewer mainstream options, higher down payments, and potentially higher costs.
- Resale liquidity: A narrower buyer pool can mean longer market time or price sensitivity.
- Co-owner risk: Disputes or a co-owner default can affect the building and, depending on the documents, your position.
- Variable governance: Weak or vague agreements can create uncertainty around repairs, assessments, and remedies.
- Conversion uncertainty: Condo conversion depends on local rules, tenant protections, and approvals. It is not guaranteed.
- Insurance and maintenance: Be clear on replacement-cost coverage, liability, earthquake coverage, and who pays for what.
Mission District realities to factor in
- Competitive demand: The Mission draws strong interest from both owners and renters. A TIC that looks like a deal can still attract multiple offers.
- Tenant landscape: If any units are tenant-occupied with rent-control protections, your occupancy plans or conversion timeline may be affected by relocation and compliance requirements.
- Building condition: Older Mission buildings often need seismic retrofit or major systems upgrades. These are shared costs that can be material.
A quick numbers illustration
Numbers help frame expectations. Consider this simple example strictly for illustration:
- If a comparable condo is priced at 1,050,000 and a similar TIC is 900,000, a 25 percent down payment would be 262,500 for the condo versus 225,000 for the TIC. That is 37,500 less cash up front for the TIC.
- Monthly costs will depend on your loan product and the building’s shared expenses. A TIC with low reserves may require higher monthly contributions or occasional special assessments, while a condo HOA might have more predictable reserves. Always compare budgets and reserve balances side by side.
Use this approach to compare real options you are considering. The exact outcome depends on the property’s documents, building condition, and your lender’s terms.
Due diligence checklist for TIC buyers
Assemble your team early and review the right documents before you write an offer.
People to engage:
- Real estate agent with Mission District TIC experience
- Real estate attorney versed in TIC agreements and condo conversion
- TIC-experienced lender or mortgage broker
- Home inspector, plus a structural or seismic consultant for older buildings
- CPA or tax advisor for ownership and basis questions
Documents to request and review:
- Recorded deeds reflecting each owner’s fractional interest
- Full TIC agreement or occupancy agreement, including transfer rules, mortgage provisions, rental policies, and default remedies
- Current operating budget, bank statements for the TIC account, and reserve balances
- Minutes from owner meetings and any special assessment notices for the past 3 to 5 years
- Any mortgage documents affecting the building, including blanket loans
- Building insurance declarations covering hazard, liability, and earthquake
- Preliminary title report to confirm liens or encumbrances
- Property condition disclosures and inspection reports, including systems and seismic
- Tenant documentation if any units are occupied, including lease terms and rent-control status
Red flags to watch for:
- Low or no reserves for a multi-unit building
- Blanket mortgage exposure that is not clearly subordinated to individual loans
- Language that makes your interest liable for another owner’s debt without protections
- Open code violations, unresolved permits, or active litigation among owners
Process tips:
- Secure pre-approval from a TIC-savvy lender before offering.
- Request an estoppel or payoff statement for any outstanding TIC assessments or building debt.
- Have your attorney review the TIC agreement and negotiate clarifications before closing.
- If condo conversion is part of your plan, understand the likely timeline, costs, rent-control impacts, and city requirements before you commit.
What conversion to condo involves
Some TICs eventually convert to condominiums, which can enhance marketability. In San Francisco, conversion requires compliance with city processes and tenant-protection rules. The specifics depend on the building’s history, tenant occupancy, and current regulations. Because policies evolve, confirm the latest requirements with the San Francisco Planning Department and the San Francisco Rent Board, and have your attorney map the steps and feasibility for your particular property. Treat conversion as a potential outcome, not a guaranteed one.
Your next steps
If a Mission District TIC is on your radar, start by clarifying your budget, loan options, and timeline. Then compare real properties using their TIC agreements, reserves, and building condition. With the right team and a careful review, a TIC can be a strategic path into one of San Francisco’s most dynamic neighborhoods.
Ready to talk through options, financing, and due diligence tailored to your goals? Start a confidential conversation with Frank Nolan.
FAQs
Can you get a mortgage for a Mission District TIC?
- Yes. Options exist through specialty and portfolio lenders, though down payments, reserves, and documentation requirements are often stricter than for condos.
Are Mission District TIC units rent-controlled?
- Rent control depends on tenant status and local law. TIC ownership does not remove rent-control protections for qualifying tenancies.
Can a Mission District TIC be converted to condos?
- Many TICs have converted, but conversion requires city approvals and compliance with tenant-protection rules. It is not automatic and can be time-consuming.
What happens if a co-owner in a TIC defaults?
- The impact depends on the loan structure and TIC agreement. Individual fractional loans limit exposure, but blanket loans or cross-default language can create risk.
Do TIC owners pay special assessments like HOAs?
- Yes. TIC agreements allocate shared costs, and owners can be assessed for major repairs or upgrades, which is why healthy reserves matter.
