Thinking about buying in Pacific Heights and keep seeing “TIC” in the listing? You’re not alone. TICs can open doors to landmark neighborhoods at price points that are often lower than comparable condos. In this guide, you’ll learn what a TIC is, how it differs from condos and co‑ops, how financing works, and what to know about condo conversion in San Francisco. Let’s dive in.

What is a TIC?

A tenancy‑in‑common, or TIC, is a way for multiple buyers to co‑own one property. Each owner holds an undivided fractional interest and typically has exclusive occupancy of a specific unit defined by a TIC agreement. You get a deed to your fractional share, your own property tax allocation, and shared responsibility for common areas.

In San Francisco, many TICs are in prewar multi‑unit buildings. Think classic Victorians and Edwardians that were never subdivided into condos. Instead, the co‑owners use a written TIC agreement to set the rules for maintenance, assessments, insurance, voting, resale mechanics, and potential condo conversion.

TIC vs condo vs co‑op

• Condominium: You own your individual unit in fee simple plus a share of the common elements. Condos are often easier to finance when the project is “warrantable” under conventional guidelines.
• Co‑op: A corporation owns the building and residents own shares with proprietary leases. Financing and governance run through the corporation.
• TIC: You co‑own the real property directly. You hold title to a fractional interest, not a separate condo parcel. Governance flows from the TIC agreement among owners, and financing is often more complex.

What these differences mean for you

• Title and resale: You can sell your fractional interest, but the TIC agreement may include provisions like rights of first refusal or approval thresholds.
• Liability: If the building has a single master mortgage, cross‑default exposure can exist. One owner’s default might affect all owners, depending on the agreement and loan structure.
• Financing: Many TICs are treated as non‑warrantable by conventional lenders. You’ll likely work with a local portfolio or specialty lender and may need a higher down payment.

Financing a TIC in San Francisco

Financing a TIC is doable, but the path looks different from a standard condo loan. The lender landscape is more specialized, documentation is heavier, and terms can vary by building.

Where TIC loans come from

• Portfolio lenders: Local banks and credit unions that keep loans in‑house and underwrite case by case.
• Specialty lenders or mortgage brokers: Teams with specific TIC expertise.
• Private lenders: Short‑term or higher‑rate financing when other options don’t fit.
• Seller financing: Occasionally available through a carryback.
• Cash: Common in some TIC resales and avoids underwriting hurdles.

Down payment and qualification

Expect higher down payments than for many condos. It’s common to see requirements in the mid‑20% to 30% range for conventional financing, though exact terms vary. Lenders will closely review the building’s financials, reserve funds, delinquency history, and the TIC agreement, along with your debt‑to‑income and reserves.

Master mortgage vs individual mortgages

Some TIC buildings carry one shared master mortgage. Others allow individual mortgages attached to each owner’s fractional deed. If there’s a master mortgage and owners are co‑borrowers or guarantors, a single default can lead to problems for the whole building. Before you write an offer, confirm whether you would assume any joint liability.

Government‑backed programs

FHA financing is historically limited for TICs because the structure lacks individual unit titles. VA loans have specific eligibility standards and should be verified with a VA‑approved lender experienced with TICs. Conventional conforming programs usually require a warrantable project, which most TICs are not. Always confirm current program guidelines with lenders, as policies can change.

Refinance and resale

Refinancing a TIC can be more challenging than a condo because options depend on lender appetite and the building’s structure. On resale, TICs typically trade at a discount to comparable condos due to financing complexity and buyer risk tolerance. Market dynamics in Pacific Heights and nearby neighborhoods can influence that price gap, so look at very local comps.

Converting a TIC to a condo in SF

Condo conversion is appealing because separate condo titles can make financing and resale easier. That said, conversion in San Francisco involves legal, financial, and tenant‑protection steps that take time and money.

Why owners pursue conversion

• Improved marketability and a larger buyer pool
• Easier access to conventional mortgage products
• Clear unit titles that simplify future sales

Rules and tenant protections

Conversion requires legal subdivision under California law and San Francisco processes. Tenant protections and the local rent ordinance can add requirements such as notice and relocation payments when occupied rental units are involved. Your ability to convert typically depends on owner consent thresholds in the TIC agreement and compliance with city and state rules.

Hurdles, costs, and timelines

Expect technical and legal tasks like creating or separating utility meters, addressing code or seismic upgrades, preparing a condo map, and drafting CC&Rs. Costs include legal, surveying, engineering, and construction work. Timelines can range from months to years depending on building conditions, tenant occupancy, and owner alignment. A single holdout owner or tenant can slow or block a plan depending on the agreement.

Buyer takeaways

A successful conversion can boost value and simplify financing, but it is never guaranteed. Do not rely on informal promises. If a conversion plan is part of your decision, negotiate clear contractual protections and contingencies.

Due diligence for Pacific Heights buyers

TICs can be a smart way to access Pacific Heights’ character buildings and coveted blocks. The key is to perform careful due diligence before you commit.

Documents to review

• Fully executed TIC agreement and amendments
• Recorded deeds for each owner and any recorded mortgages or liens
• Preliminary title report with all exceptions and master loan documents
• Building financials, bank statements, operating budget, and reserve studies
• Meeting minutes for the past 12 to 24 months
• Master insurance policy details and deductibles
• Current occupants, unit occupancy status, and any leases
• Any pending or past conversion plans and outcomes
• Evidence of utility metering and responsibility allocations
• Any recorded or pending lawsuits affecting the property

Questions to ask

• Is there a master mortgage? If yes, are owners jointly liable and are there any delinquencies?
• What is the history of assessments and major projects like roof, plumbing, or seismic work?
• How are repairs funded and are reserves adequate for near‑term needs?
• Are any units rented and subject to tenant protection or rent rules?
• Are there restrictions on renting individual units under the TIC agreement or city rules?
• Have there been any master insurance claims in the last 5 to 10 years?

Pros to engage early

• Real estate attorney with San Francisco TIC experience
• Title company familiar with TIC title work
• Lender experienced in TIC loans for pre‑approval and terms
• CPA or tax advisor for property tax allocation and capital gains questions
• Building inspector or engineer to assess structure, systems, and seismic needs

Smart contingencies

• Review period for TIC agreement, building financials, and minutes
• Contingency for written lender approval or clear loan terms
• Title objections and right to terminate if exceptions are not cleared
• Clear language addressing any shared mortgage liability

Pacific Heights market reality

Pacific Heights has a concentration of older multi‑unit buildings where TICs are more common. Buyers consider TICs here to access location, architecture, and streetscape at a lower entry cost than some condos. Inventory of warrantable condos can be limited, which is part of the appeal.

The TIC submarket behaves differently. The buyer pool is smaller and often includes cash buyers, experienced TIC owners, and borrowers working with local portfolio lenders. Pricing and days on market can diverge from condos, so you should evaluate comps within the TIC segment, not just across all condos.

Next steps

If you’re exploring Pacific Heights, a TIC can be a practical path into the neighborhood’s most charming buildings. The trade‑off is added complexity in financing, governance, and potential shared liability. With the right team and a strong TIC agreement, you can make a confident decision that fits your goals.

Ready to talk through a specific building, review a TIC agreement, or plan a purchase strategy? Reach out to the team at Michelle Harris Properties for a private, local‑minded plan tailored to you.

FAQs

Are TICs legal in San Francisco?

• Yes. TICs are a recognized form of co‑ownership and are common in older neighborhoods, though each building’s agreement and local rules vary.

Can I get a mortgage for a TIC?

• Often yes, but it is more specialized than a condo loan. Expect to work with an experienced TIC lender and plan for a higher down payment or different terms.

What happens if a co‑owner defaults in a TIC?

• It depends on the TIC agreement and loan structure. With a shared master mortgage, one default can affect all owners. Legal review is essential before you buy.

Will my TIC convert to a condo later?

• Possibly, but there is no guarantee. Conversion depends on owner consent, building upgrades, and regulatory requirements. Get any plan documented and contingent.

Are TICs good for first‑time buyers in Pacific Heights?

• They can be, if you are comfortable with higher down payments, shared governance, and added diligence. In exchange, you may access a prime location at a lower price point than some condos.