When purchasing property with another person or group of people, one option to consider is tenancy in common (TIC). TIC is a way to share ownership of a property, where each owner has a separate and distinct share. This means that each owner can sell, mortgage, or transfer their share without the consent of the other owners.
One important consideration when entering into a TIC agreement is the cost. The cost of a TIC agreement can vary depending on several factors, including the complexity of the agreement, the number of owners, and the location of the property.
One of the main costs associated with a TIC agreement is legal fees. It is recommended to hire a real estate attorney to draft the agreement, which can cost several thousand dollars. The attorney will need to review the purchase and sale agreement, title report, and any loan documents to ensure that the TIC agreement is properly drafted and legally binding.
Another cost associated with a TIC agreement is recording fees. The TIC agreement must be recorded with the county recorder’s office where the property is located. The cost of recording fees varies by location but can range from a few hundred to a few thousand dollars.
In addition to legal and recording fees, owners in a TIC agreement may also be responsible for ongoing expenses related to the property. This can include property taxes, insurance, maintenance, and repairs. It is important to establish a clear agreement among the owners on how these expenses will be divided and paid for.
It is also important to consider the potential costs associated with a TIC agreement in the future. If one owner decides to sell their share, there may be fees associated with transferring ownership and updating the TIC agreement. Additionally, if one owner defaults on their mortgage or fails to pay their share of expenses, the other owners may be responsible for covering the cost.
Overall, the cost of a tenancy in common agreement can vary depending on several factors. It is important to consult with a real estate attorney and establish a clear agreement among all owners to ensure that all costs are identified and allocated fairly.