This post is for informational purposes only and does not constitute legal or financial advice. Tenants in common arrangements involve legal and financial considerations that vary by situation. We recommend consulting a licensed real estate attorney before entering into any ownership agreement.

Purchasing Property as Tenants in Common: What Buyers Need to Know

Buying a home with another person raises an immediate question: how will ownership be structured?

For many buyers, tenants in common is the answer. It is one of the most flexible ways to share ownership of real property, and it is commonly used by unmarried couples, family members, business partners, and co-investors.

But flexibility comes with complexity. The structure affects how title is held, how the mortgage works, what happens if one owner wants to sell, and what occurs when an owner passes away. Before you move forward, it helps to understand what tenants in common actually means, how it works in practice, and what it means for your financing.

This guide covers the full picture. Each section links to a more detailed post in this series for buyers who want to go deeper on a specific topic.

What Is Tenants in Common?

Tenants in common (often abbreviated as TIC) is a form of property ownership in which two or more people each hold a distinct, undivided share of the same property.

The word “undivided” is important. It does not mean the ownership is equal. It means that no single owner has exclusive rights to a specific physical portion of the property. Every owner has the right to use and occupy the entire property, regardless of what percentage they own.

For example, if two people own a home as tenants in common with a 60/40 split, neither owner gets to claim 60 percent of the square footage. Both have full access to the entire property. The percentages reflect financial interest, not physical space.

Each owner also holds their share independently. They can sell it, transfer it, use it as collateral, or pass it on through their estate without the consent of the other owners. This independence is what makes tenants in common distinct from other forms of co-ownership.

How Tenants in Common Differs From Joint Tenancy

The most common alternative to tenants in common is joint tenancy. The two are often confused, but they work very differently.

In a joint tenancy, all owners hold equal shares and the right of survivorship applies. If one owner dies, their share automatically passes to the surviving owners. There is no probate and no ability to leave the property to someone outside the ownership group.

With tenants in common:

• Ownership shares do not have to be equal
• There is no right of survivorship
• Each owner can leave their share to anyone they choose through their will or estate plan
• Each owner can sell or transfer their share independently without the others’ approval
• New owners can be added over time with different ownership percentages

For buyers who are not married, who have made different financial contributions, or who want control over what happens to their share after death, tenants in common is usually the more practical structure.

Joint tenancy tends to work better when all owners want equal shares and prefer a simple transfer of ownership at death. Married couples often choose it for that reason.

For a side-by-side breakdown of these two structures, see Tenants in Common vs. Joint Tenancy: What’s the Difference?

How Ownership Percentages Work

One of the most useful features of tenants in common is that ownership does not have to be split equally.

If one buyer contributes a larger down payment, the ownership split can reflect that. If one owner plans to cover a greater share of ongoing costs, the percentages can account for that as well. Common arrangements include 50/50, 60/40, 70/30, or any other division the owners agree to.

To put this in concrete terms: imagine two buyers purchasing a $800,000 home in California. Buyer A contributes $120,000 toward the down payment and Buyer B contributes $40,000. They agree to split mortgage payments equally going forward. To reflect the unequal upfront contribution, they structure ownership as 65/35. That split is recorded on the title and documented in their TIC agreement.

These percentages matter when it comes time to sell. If the property sells for $1,000,000, each owner receives proceeds proportional to their share, minus any outstanding mortgage balance and costs.

The percentages can also matter during ownership if one party wants to refinance, sell their share, or borrow against their interest.

All of this should be clearly documented before closing. That is where a TIC agreement comes in. While it is not legally required to hold title as tenants in common, it is strongly recommended. Without one, disputes over costs, maintenance, and exit scenarios can become difficult to resolve.

For more on what a TIC agreement covers and why it matters, see What Is a TIC Agreement and Do You Need One?

Who Uses Tenants in Common?

Tenants in common is used in a wide range of situations. Some of the most common include:

• Unmarried couples who want to protect their individual financial contributions
• Friends or family members buying together to share costs in an expensive market
• Real estate investors co-owning rental or income-producing property
• Adult children purchasing a home alongside a parent who is contributing funds
• Heirs who inherit property jointly and choose to hold it as tenants in common rather than sell

In California, there is also a specific use case that has become increasingly common in cities like San Francisco and Los Angeles. TIC ownership is sometimes used to purchase individual units in multi-unit buildings that have not been converted to condominiums. In these situations, each buyer owns a percentage of the entire building, along with a separate agreement that grants exclusive occupancy of a specific unit.

This is a distinct and more complex version of TIC ownership with its own financing requirements, city-specific regulations, and considerations around conversion to condominiums. Both San Francisco and Los Angeles have neighborhoods where this model has taken hold, particularly in areas with older multi-unit housing stock and limited condo conversion opportunities. If this is the type of purchase you are considering, see TIC Properties in San Francisco and Los Angeles: How They Work.

More broadly, co-buying has grown as a strategy in high-cost California markets where combining income and down payment funds is the only realistic path to ownership for many buyers. Tenants in common gives those buyers a legally sound framework for doing that.

For more on the co-buying angle specifically, see Buying a Home With Friends: What You Should Know About TIC.

How Financing Works for Tenants in Common

The mortgage side of a tenants in common purchase is where many buyers encounter unexpected complexity, and it is worth understanding before you get into the process.

In most cases, all owners are listed on a single loan together. Each co-borrower’s income, credit history, assets, and existing debt are all evaluated as part of the same application. Lenders look at the combined income to determine how much the group can borrow, but they also look at every individual’s credit profile. A lower credit score from one borrower can affect the rate or terms the group qualifies for.

This is an important distinction. Adding a co-borrower with strong income can expand what you qualify for. But adding one with credit challenges can work against the application even if their income is helpful.

There are also situations where co-owners want to pursue separate financing, each carrying their own loan for their respective share. This is possible in some circumstances, but it is less common, not offered by all lenders, and comes with its own set of requirements and limitations.

For a full explanation of how the financing process works, see How Does Financing Work When Buying as Tenants in Common?.

If separate loans are something you are considering, see Can Each Tenants in Common Owner Have Their Own Mortgage?.

What Lenders Look at in a TIC Purchase

When evaluating a tenants in common purchase, lenders review the same core factors they consider in any mortgage application: credit scores, income, debt-to-income ratio, employment history, and available assets for the down payment and reserves.

What makes TIC purchases more involved is that the lender is evaluating multiple borrowers at once. The application reflects everyone’s financial picture, not just one person’s. That can be an advantage when one borrower has strong income that improves the group’s overall qualifying power. It can also create complications if the profiles are mismatched.

Some lenders also pay attention to the ownership structure itself. How title is being held, whether a TIC agreement is in place, and the nature of the property can all factor into how the application is reviewed.

For a detailed look at how lenders approach these applications, see How Lenders Evaluate Tenants in Common Purchases.

What Happens When One Owner Wants Out

Tenants in common ownership can get complicated when one party wants to sell their share or exit the arrangement entirely.

Each owner has the legal right to sell their individual share without the other owners’ consent. In practice, however, finding a willing buyer for a partial interest in a property is not always easy. Most buyers want full ownership, not a fractional stake in a home they will share with strangers.

If a sale cannot be agreed upon, an owner who wants out can pursue a partition action through the court system. A partition action can result in either a physical division of the property or a court-ordered sale of the entire property, with proceeds distributed according to ownership percentages. It is a legal remedy that protects each owner’s right to exit, but it can be costly and disruptive for everyone involved.

A well-structured TIC agreement can prevent many of these situations by establishing a right of first refusal, a buyout formula, a timeline for decisions, or other exit provisions that give everyone a clear path forward.

For a full breakdown of how exit scenarios typically play out, see What Happens If One TIC Owner Wants Out?.

California-Specific Considerations

California has its own rules around tenants in common ownership, and several of them are worth understanding before you close. These considerations apply statewide, but they are especially relevant for buyers in the San Francisco Bay Area and Los Angeles, the two markets where TIC ownership is most common in California.

Property taxes are one area where the structure of a TIC transaction can have real financial implications. Depending on how the transfer is structured, a change in ownership may trigger a reassessment of the property’s taxable value, which can increase your annual property tax bill.

Proposition 19, which took effect in February 2021, also changed the rules around inherited property in California. For TIC owners who plan to pass their share to a child or other family member, understanding how Prop 19 applies to their situation is important. The exclusions that were previously available have been significantly narrowed.

For more on how these California-specific rules apply to TIC ownership, see:

• Prop 19 and Tenants in Common: What California Owners Should Know
• TIC Properties in San Francisco and Los Angeles: How They Work

Key Questions to Ask Before You Buy

If you are considering a tenants in common purchase, working through these questions before you get deep into the process will save you from surprises later.

• How will ownership percentages be divided? Make sure the split reflects each person’s actual financial contribution, including down payment, closing costs, and planned mortgage payments.
• Will you use a shared loan or pursue separate financing? This decision affects your options, your rate, and how each borrower’s financial profile influences the outcome.
• Do you have a TIC agreement? A written agreement covering costs, maintenance responsibilities, use of the property, and exit scenarios is one of the most important steps you can take.
• How will the property be handled if one owner wants to sell or passes away? Without a clear plan in writing, these situations can become legally and financially complicated.
• Have you consulted with a real estate attorney? The legal side of tenants in common ownership involves title, estate planning, and contract law. An attorney can help you structure the arrangement correctly from the start.

Final Thoughts

Tenants in common is a practical and flexible way to purchase property with one or more other people. It gives each owner real control over their share while allowing the group to hold and use the property together.

Like any ownership structure, it works best when everyone involved understands what they are agreeing to, has the right documentation in place, and has thought through the scenarios that can arise over time.

If you are thinking about a tenants in common purchase and want to understand how the financing side works, we are here to help. Reach out to discuss your situation and explore your options.

Explore More: Tenants in Common Series

• Tenants in Common vs. Joint Tenancy: What’s the Difference?
• What Is a TIC Agreement and Do You Need One?
• How Does Financing Work When Buying as Tenants in Common?
• Can Each Tenants in Common Owner Have Their Own Mortgage?
• How Lenders Evaluate Tenants in Common Purchases
• Buying a Home With Friends: What You Should Know About TIC
• What Happens If One TIC Owner Wants Out?
• TIC Properties in San Francisco and Los Angeles: How They Work
• Prop 19 and Tenants in Common: What California Owners Should Know