What Is a Tenancy in Common Agreement? Key Features & Benefits

When multiple parties want to invest in rental property together, understanding the various ownership structures becomes crucial for success. A ‘tenants in common’ agreement offers rental property owners a flexible way to share ownership while maintaining individual control over their investment portions. 

What is a tenancy in common agreement? It’s an arrangement that clearly outlines the rights and responsibilities of each owner, typically documented with a tenants in common agreement form to avoid any future disputes. 

A TIC arrangement enables two or more individuals to own varied percentages of a similar property, such that each owner has a separate, transferable interest. While this arrangement differs from joint tenancy in that it does not need to have equal shares of ownership, it is especially appealing to real estate investors that have differing contributions or investment objectives.

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Key Characteristics of a TIC Agreement

Individual Proprietorship Rights

Under a TIC arrangement, each party owns an outright deed and is able to make their own decisions about their own percentage of ownership. This enables you to assign a portion to sell or mortgage without recourse to others' approvals. This is invaluable to income property investors when your own situation changes or when you wish to make changes to your own portfolio.

Unequal Ownership Share

TIC contracts allow for varying investment rates among proprietors. An investor may have 60% and another have 40%, as a proportion of their financial investment in buying a property. This proportion applies to division of rent and cost-sharing.

No Right of Survivorship

When a TIC owner dies, its ownership interest automatically reverts to its beneficiaries or heirs and not to surviving co-owners. This is a facet of TIC arrangements that is of special advantage to estate planning because investment in rental property is preserved within families from generation to generation.

Independent Financing Sources

Individual TIC owners will be responsible to procure their own funding against their ownership percentage. This implies that different owners will have varying terms of loans, rates of interest, or lenders, giving more room to tailor the investment structure.

Advantages of TIC to Rental Property Investors

Investment Accessibility

TIC arrangements make high-cost rental properties accessible to investors who would otherwise be unable to afford them. By combining their resources, two or more can finance higher-value properties in strong markets that would normally be beyond their reach.

Opportunities for Diversification

Whereas all of your capital would invest in a property as an individual owner, TIC ownership allows you to diversify investment into numerous rental properties through different partners. You can do away with risk while increasing your real estate investment portfolio.

Shared Management Responsibilities

Operating rental units is a time- and skill-intensive business. Within a TIC structure, owners can split tasks according to skill set and schedule. One owner can work on renter relations and another repairs and maintenance. You can also outsource property management in Moore, OK to save all your resources.

Tax Benefits

Each TIC owner can claim their proportional share of rental property tax deductions, including depreciation, mortgage interest, and operating expenses. This individual tax treatment can optimize each owner's specific tax situation.

Estate Planning Benefits

The lack of survivorship rights renders TIC ownership a useful estate planning device. Real estate investors can leave ownership interests to select beneficiaries without keeping family property within the marital community and without subjecting such property to disadvantages inherent to joint tenancy arrangements.

The Right Decision in Selecting Your Investment Approach

TIC partnerships present a highly favorable situation for property owners when set up appropriately. Individual ownership percentage flexibility, control of investment by an individual, and estate planning considerations make this arrangement highly favorable to investors looking to diversify their portfolios through partnerships.



Consult real estate attorneys and tax professionals before signing a TIC agreement to ensure that the property is suitable considering your investment goals along with regional legislation. Paperwork and mutual understandings between co-owners will aid in evading potential conflicts and obtaining complete benefit of this type of ownership!