In January of last year, we published a two-part series called “Taking Title and How It Affects Your Heirs.” We covered both joint tenancy and tenancy in common as two of the most common ways to hold title to real estate in California. More recently, this past Monday, the LA Times published an article titled “You can buy ‘cheap’ in L.A. But you won’t own your home and may oust a renter.”
The author of this article promotes tenancy in common (TIC) as a means for home-owning in Los Angeles to become more accessible. Essentially, the idea is that multi-family properties can be sold in shares to co-owners, but not in the traditional sense of “by unit.” Instead, they own a share of the property at large, with the right to reside in a specific unit. LA-based brokers have said it can decrease purchase costs for the individual by ten to fifteen percent as compared to condominium units on the market.
While it’s true that TIC may provide more affordable real estate to homeowners in the short term, many (if not all) of its biggest endorsers fail to mention the major impact it can have on your estate after your death.
To start, each co-owner may specify who they would like to will or give their interest to after their death, and even lease out or sell it while they are still living. So, while a co-owner may agree to buy in with a specific group of people, they could and likely will end up sharing interest in a property with anyone that the other original co-owners may choose during their life, even strangers.
In case interest is not willed prior to a co-owner’s passing, intestate succession will grant it in favor of their heirs. This is because these TIC properties are subject to probate, which is handled by the California Probate courts. If one tenant in common dies, his or her heirs will be required to probate that share of the property. To avoid this outcome, each tenant in common should transfer their interest into a trust.
Estate planning is essential for those following this trend if it’s their intent to keep their family out of probate court. If you or a loved one owns property as a tenant in common, I encourage you to consider a consultation with a trust attorney as your next step.
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. Brittany Britton is licensed to practice law in the state of California only.