TIC Properties in San Francisco and Los Angeles: How They Work

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.

In most of California, tenants in common is used when two or more people buy a single property together. But in San Francisco and Los Angeles, TIC ownership serves an additional and very specific purpose: it allows buyers to purchase individual units in multi-unit buildings that have not been converted to condominiums.

This is a distinct use case with its own structure, its own financing requirements, and its own set of local regulations. For buyers considering a TIC unit purchase in either city, understanding how the arrangement actually works is an essential first step.

In San Francisco and Los Angeles, converting a multi-unit rental building into individually owned condominiums requires city approval through a condo conversion process. That process is competitive, subject to local ordinances, and in San Francisco has historically involved a lottery with limited annual approvals.

As a result, many multi-unit buildings never convert. The units remain rental property or, in some cases, are sold as TIC interests instead. Each buyer purchases a fractional share of the entire building — typically sized to correspond to their unit — along with an exclusive occupancy agreement that grants them the right to live in a specific unit.

The result functions similarly to condo ownership from the resident’s perspective. You occupy your unit, you build equity, and you have a defined ownership interest. The legal structure underneath is different, but the day-to-day experience is comparable.

In a multi-unit TIC purchase, each buyer holds a percentage of the entire building rather than title to a specific unit. That percentage is typically calculated based on the size and value of the unit relative to the whole building.

For example, in a four-unit building where all units are roughly equal in size and value, each buyer might hold a 25 percent interest. In a building where units vary significantly in size or floor level, the percentages are adjusted accordingly.

The TIC agreement is what assigns each owner exclusive use of their specific unit. It also governs shared spaces, common area maintenance, building-wide decisions, and what happens when one owner wants to sell. Without this agreement, the ownership structure does not function practically.

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

San Francisco has the most developed TIC market in California. Decades of housing constraints, limited condo conversion approvals, and high demand for ownership have made TIC units a well-established part of the city’s housing landscape.

TIC units in San Francisco are found across many neighborhoods, including the Mission, Noe Valley, Cole Valley, the Castro, and the Inner Sunset, among others. They tend to be priced below comparable condominiums in the same building or neighborhood, which is part of their appeal for buyers who want to own in the city without paying condo prices.

San Francisco also has a small but established group of lenders who specialize in fractional TIC financing, real estate attorneys experienced in local TIC law, and real estate agents who work specifically in this segment of the market. Buyers pursuing a TIC unit in San Francisco benefit from working with professionals who know the local landscape.

The city’s condo conversion lottery has also been an important consideration for TIC buyers historically. Buildings that qualify and successfully convert give each TIC owner the option to refinance into a standard condo loan and hold individual title to their unit. The conversion process and its current status under local ordinance is worth researching if this is part of your long-term plan.

Los Angeles has seen growing interest in multi-unit TIC purchases, driven by many of the same factors that made the structure popular in San Francisco: high prices, limited condo inventory, and a large stock of older multi-unit buildings where conversion has not occurred.

The TIC market in Los Angeles is less mature than San Francisco’s, which means the infrastructure around it — specialized lenders, experienced attorneys, and agents familiar with the product — is still developing in some parts of the city. That said, interest has grown meaningfully in recent years, and the market is increasingly well-supported in neighborhoods where TIC activity is more concentrated.

Los Angeles also has its own set of local regulations around multi-unit properties, tenant protections, and conversion requirements that affect TIC transactions. Buyers should work with an attorney who understands how these rules apply to the specific property and neighborhood they are considering.

Financing a multi-unit TIC purchase is different from financing a standard home purchase or even a straightforward co-ownership TIC transaction.

Most conventional lenders do not offer loans for fractional TIC interests in multi-unit buildings. The collateral — a percentage ownership of a building rather than title to a specific unit — falls outside standard underwriting guidelines.

Fractional TIC loans are available from a smaller group of lenders who specialize in this product, particularly in the San Francisco market. These loans are secured by the borrower’s fractional interest and typically come with:

• Higher interest rates than standard purchase or condo loans
• Stricter qualification requirements
• Lower loan-to-value ratios, meaning a larger down payment is typically required
• Loan amounts that reflect the value of the fractional interest rather than the whole building

In Los Angeles, access to fractional TIC financing is growing but remains more limited than in San Francisco. Buyers in Los Angeles should expect to work harder to find a lender with experience in this specific product.

That said, financing options in both markets have improved significantly in recent years. Down payment requirements that once started at 25 to 30 percent have come down, and loan amounts up to $2 million are now available through specialized programs. For a closer look at what current TIC loan programs offer, including down payment requirements and qualification guidelines, see TIC Loans With Just 15% Down Payment up to $2 Million.

For a full breakdown of how TIC financing works and what fractional loans involve, see How Does Financing Work When Buying as Tenants in Common? and Can Each Tenants in Common Owner Have Their Own Mortgage?

In a multi-unit TIC building, the TIC agreement functions more like a condominium declaration than a simple co-ownership contract. It is the document that makes the arrangement livable and legally sound.

A well-drafted agreement for a multi-unit TIC typically addresses:

• Exclusive occupancy rights for each unit
• Shared responsibility for common areas, building systems, and exterior maintenance
• How building-wide decisions are made and what level of agreement is required
• Rules around subletting, renovations, and use of shared spaces
• A process for handling a departing owner and bringing in a new one
• What happens in the event of a building-wide casualty or the need for major repairs

Given the complexity involved, these agreements are almost always drafted by an attorney with specific experience in multi-unit TIC transactions in the relevant city. A generic TIC agreement is not adequate for this type of purchase.

If you are considering a TIC unit purchase in San Francisco or Los Angeles, a few things are worth evaluating carefully before you commit:

• The existing TIC agreement: Review it thoroughly with an attorney. Understand what it covers, how decisions are made, and what the exit process looks like.
• The other owners: In a multi-unit TIC, you are entering into a long-term legal and financial relationship with your co-owners. Understanding who they are and how the group has functioned matters.
• The building’s condition and financials: Unlike a condo with a homeowners association, a TIC building’s maintenance and reserves depend on the owners managing these collectively. Review any available records on the building’s condition and how shared expenses have been handled.
• Condo conversion eligibility: If converting to condos is a long-term goal, understand whether the building qualifies, what the process involves in that city, and what the timeline might realistically look like.
• Financing options: Identify a lender with experience in fractional TIC loans before you make an offer. Knowing your financing is in place makes the process significantly smoother.

Multi-unit TIC ownership in San Francisco and Los Angeles is a well-established path to homeownership in two of California’s most competitive markets. It offers buyers access to ownership opportunities that would otherwise be out of reach, often at a price point below comparable condominiums.

The structure is more complex than a standard purchase, and the financing is more specialized. But for buyers who understand how it works and approach it with the right professionals in their corner, it is a sound and practical option.

If you are considering a TIC unit purchase and want to understand your financing options, we are here to help.