Are you weighing a TIC against a condo for your first San Francisco home? You are not alone. Many buyers look at TICs to stretch their budget while comparing them with condos for clarity and resale. In this guide, you will learn how each option works, how financing differs, what to expect at resale or conversion, and exactly what to review before you tour. Let’s dive in.
TIC vs. Condo Basics
Buying a condo means you own your individual unit in fee simple and a fractional interest in the common areas. A homeowners association manages the building through CC&Rs, bylaws, and board decisions. This structure is familiar to lenders and buyers.
Buying a tenancy in common (TIC) means you own a fractional interest in the entire property. You occupy a specific unit based on a signed TIC agreement. That agreement controls how costs are shared, voting works, and how sales and occupancy are handled.
Governance documents you will see
- Condo: CC&Rs, bylaws, rules, budget, reserve study, HOA minutes.
- TIC: TIC or co‑ownership agreement, house rules, financial statements, insurance, and any master mortgage note.
What this means for daily living
- Condo: Clear exclusive title to your defined unit plus standard HOA governance.
- TIC: You occupy a specific unit under the TIC agreement, but legal title is a fractional share in the whole building.
- Decision making: Condos rely on HOA procedures. TICs rely on the contract between owners.
Insurance fundamentals
- Condo: The HOA holds a master policy. You typically carry an HO‑6 policy for interior coverage and loss assessment.
- TIC: Coverage varies by building. Confirm master policy scope and whether you need extra endorsements.
Property tax at a glance
Both forms are subject to California’s property tax rules. Changes in ownership can trigger reassessment. Future condo conversion or transfers can have tax effects. Confirm specifics with local agencies before you proceed.
Financing in San Francisco
Financing is the key difference. Condos are generally easier. TIC loans can be more limited and require bigger down payments.
How lenders view each option
- Condos: Widely financeable with conventional loans. Many projects qualify for loan programs that have defined approval paths.
- TICs: Fewer lenders participate. Loans are often portfolio products with larger down payment needs and potentially higher rates.
Why TIC financing is tougher
- Title form: Fractional ownership in the whole property complicates collateral.
- Cross liability: Some TICs have one master mortgage for the building that can expose all owners if one defaults.
- Project stability: Lenders review the TIC agreement, reserves, owner‑occupancy, and any delinquencies.
- Marketability: A smaller buyer pool affects appraisals and loan‑to‑value assumptions.
Typical underwriting patterns for TICs
- Down payment: Commonly 20 to 30 percent, and sometimes more, depending on lender and profile.
- Rates and programs: Fewer program choices and possible rate premiums compared with condos.
- Documentation: Expect requests for the full TIC agreement, insurance, budget, reserves, and any master mortgage documents.
- Insurance: Lenders want proof of adequate building coverage and owner endorsements.
FHA, VA, and conforming paths
Condo projects can have defined routes for FHA, VA, and GSE eligibility. TICs do not neatly fit those frameworks and approvals have historically been limited. Always confirm current program rules with your lender since policies change.
What this means for your budget
- If you need maximum loan options and predictability, a condo will likely be smoother.
- If you can bring a larger down payment and accept a more specialized loan, a TIC may open doors in target neighborhoods.
- Preapproval with a TIC‑experienced lender is essential before touring.
Resale and Liquidity Considerations
Condos usually have a larger buyer pool, which supports faster sales and easier financing for your future buyer. TICs tend to attract buyers comfortable with the structure or who have cash or specialized lending relationships. That difference can affect days on market and pricing.
TICs have historically traded at discounts to comparable condos after adjusting for location and condition. Exact gaps vary by neighborhood and market conditions. Some buyers accept the tradeoff for a lower entry price in a desirable location.
Condo Conversion: Possibility, Not a Plan
Some San Francisco TIC buildings convert to condominiums over time. Conversion requires legal subdivision, a recorded condominium map, creation of CC&Rs, and compliance with municipal rules. Owners may also need building upgrades to meet code.
Expect costs for legal, surveying, and mapping services. Many conversions require unanimous or strong majority support from co‑owners. Local tenant protection rules can apply. Property tax reassessment is possible. Treat conversion as a possibility rather than a sure thing.
Local agencies involved in the process include the Department of Building Inspection, the Planning Department, and the Assessor‑Recorder. Always get professional advice before you plan or assume a future conversion.
Due Diligence: What to Review
Going in prepared will protect your budget and your peace of mind. Use these lists to request documents and frame your questions.
For TIC purchases
- Full TIC or co‑ownership agreement and amendments
- Deeds for each owner and chain of title
- Any master mortgage note or proof of individual share loans
- Operating budget, financial statements, bank statements
- Reserve fund statement and any reserve study
- Insurance policies and endorsements
- Meeting notes, notices of assessments, history of special assessments
- Building condition and inspection reports, permits, and violations
- House rules, occupancy and subletting policies
- Litigation history and pending issues
- Any notices or plans for condo conversion
- Recent comps for TICs and nearby condos
For condo purchases
- CC&Rs, bylaws, and rules
- HOA budget and reserve study
- HOA meeting minutes and special assessment history
- Insurance certificate and master policy summary
- Pending or recent litigation disclosure
- Owner‑occupancy and rental data
Questions to ask lenders before you tour
- Do you make loans on TIC shares? What programs and minimum down payment apply?
- Will your counsel review the TIC agreement? What red flags could block approval?
- Is there a master mortgage on the building? How does that affect qualification and risk?
- Could this loan be eligible for future sale to major secondary markets?
- What documents must the seller or TIC board provide?
- What insurance levels and reserves do you require?
Questions to ask the listing agent or TIC board
- Please provide the full TIC agreement, budget, reserves, and insurance.
- Is there a master mortgage? Share the note, payment history, and current balance.
- Are there pending assessments, litigation, code violations, or capital projects?
- Has condo conversion been explored? What approvals would be required?
- What is the owner‑occupancy rate and current rental activity?
- How are monthly dues calculated and collected? Are there delinquencies?
Buyer action checklist
- Have a San Francisco TIC attorney review the TIC agreement and any master mortgage.
- Order a building inspection and a pest report.
- Get preapproved with a lender experienced in TICs and confirm down payment needs.
- Verify insurance coverage and your ability to secure the right endorsements.
- Review maintenance history and reserves to gauge future assessments.
- If conversion is a priority, obtain a feasibility opinion and cost estimate.
Insurance and Risk Allocation
For condos, the HOA master policy usually covers the structure, while you carry an HO‑6 policy for interiors and personal property. Loss assessment coverage can help in certain situations. For TICs, confirm what the building policy includes, how liability is shared, and whether you need extra endorsements. Your lender will want proof of adequate coverage before close.
Local San Francisco Reality
San Francisco has more TICs than most U.S. cities due to its older multi‑unit housing stock. TICs appear across many areas, including parts of Western Addition, Haight‑Ashbury, the Inner and Outer Sunset, and pockets of Noe Valley and the Mission. Buyers often look to TICs as an entry path into competitive neighborhoods. Financing constraints and resale dynamics remain the main tradeoffs.
Which Path Fits You
Choose a condo if you want streamlined financing, clearer unit title, and wider future buyer demand. A condo can also offer more standardized HOA governance and defined program eligibility.
Consider a TIC if your budget goes further with a fractional interest and you are comfortable with the agreement‑based structure. Be ready for a larger down payment, a smaller lender pool, and careful review of the TIC agreement, insurance, and reserves.
Your Next Step
If you are comparing specific properties, bring the documents to an early strategy call. We will walk you through financing options, due diligence, and a step‑by‑step plan that fits your budget and timeline. To get tailored guidance and lender intros, reach out to Cj Salazar Real Estate.
FAQs
What is a TIC in San Francisco and how is it different from a condo?
- A TIC gives you a fractional share of the entire building with occupancy rights set by a TIC agreement, while a condo gives you fee‑simple title to a defined unit plus shared common areas.
How does TIC financing compare to condo financing in San Francisco?
- Condos are widely financeable with conventional loans, while TICs often require larger down payments, fewer program options, and specialized portfolio lenders.
Are FHA or VA loans common for TICs in San Francisco?
- TICs have historically not fit standard FHA, VA, or GSE approval paths, so access is limited compared with condos, and you should confirm current rules with your lender.
What documents should I review before buying a TIC in San Francisco?
- Review the full TIC agreement, any master mortgage, building insurance, budgets and reserves, inspection reports, litigation history, and any condo conversion plans.
What should I know about condo conversion from a TIC in San Francisco?
- Conversion can be complex and costly, requires owner consent and city approvals, and should be treated as a possibility rather than a guarantee.
How do monthly dues in a TIC compare with HOA fees in a condo?
- Both fund building expenses and reserves, but TIC dues and cost sharing are defined by the TIC agreement, while condo HOA fees follow CC&Rs and HOA budgets.
