Sections 04 to 06 and 09 of our TIC buyer’s guide. New to TIC? Start with Part 1.

04

Applying for a TIC loan

This is where most TIC purchases fall apart. Start here, not at an open house.

1. Qualify. Confirm down payment, reserves and credit with a TIC-experienced lender.
2. Screen the building. Unit count, owner-occupancy, reserves and insurance are underwritten too.
3. Pre-approve. In writing, from a lender who has funded a fractional TIC.
4. Review. Agreement, budget, reserves, title and insurance during your contingency.
5. Close. Record your deed, then file your Homeowner’s Exemption.

Why the loan is different

Almost every mortgage in America is sold to Fannie Mae or Freddie Mac after it closes. Neither will buy TIC paper; Fannie’s Selling Guide names this exact structure as ineligible. So every fractional TIC loan stays on the originating bank’s own balance sheet permanently.

That is a portfolio decision, not a judgment on your credit, and it explains everything else: the rate premium, the larger down payment, the short lender list, and the discount on the price.

The product is younger than people assume. The first individual fractional TIC loan launched at Bank of Marin in spring 2005. Before that, everyone in a building shared a single group loan.

The bank underwrites the building, not just you. Common overlays: no more than about twelve units, at least 75% owner-occupied, and a minimum unit size. A building can fail any of those independently of your credit, which is why we screen it before you write.

Terms vary by lender, loan size, credit and building, and move without notice. Ask for today’s numbers before you set a budget.

Bring these to the first call

• Two years of returns, W-2s or 1099s, and recent pay stubs
• Statements for every account holding your down payment and reserves
• A rough credit score, and a heads-up on anything unusual
• Your timeline, and whether this will be your primary residence

05

Myth and reality

Most TIC marketing answers every concern with “that’s a myth.” Some of these concerns are correct. Here we outline the reality.

Myth

A TIC is riskier than a normal property purchase.

Your interest is deeded, insured and recorded like any other real property. On a fractional loan you have your own mortgage secured only by your interest, so a co-owner’s default hits their lender, not yours. The risks in a TIC are real, but they are specific and listed below, not general.

This one is true

It is harder to get a loan.

True, and anyone who tells you otherwise is selling. A short list of portfolio lenders, 20–25% down, 700+ credit, six months of reserves, and no FHA or VA. Budget for it and start with the lender, not the listing.

Myth

You cannot sell or refinance a TIC unit.

You can do both, and people do constantly. Refinancing works, but limits are tighter than on purchase, so build equity.

It depends

TICs do not appreciate like condominiums.

It depends on the building and the street. You own a percentage of a whole property, so you capture appreciation on the full asset. But your resale is constrained by the same financing that constrained your purchase, so the discount tends to persist rather than close.

Myth

A TIC is basically a timeshare.

Absolutely not. A timeshare is a right to occupy for a period each year. You are buying recorded title to a percentage of real property with a permanent, exclusive right to one specific home.

It depends

There are too many legal complexities.

There are more moving parts than a condominium: the agreement, the reserves, the lender overlays, the insurance. None of it is exotic and all of it is handled routinely. What matters is whether your agent screens the building before you fall for it.

Does a TIC actually resell?

You are marketing to an exclusive, like-minded buyer pool, which lets you use the same value proposition that attracted you, while keeping a reliable and predictable exit timeline.

San Francisco, where this market is mature, is the best available read on whether TICs trade at all.

The constraint in this asset class shows up in price level, not in whether homes sell. Los Angeles and San Diego are younger and thinner markets; plan on more patience than those figures imply.

06

The risks, honestly

Six things that can cost you money. None of them are reasons not to buy. All of them are reasons to buy with your eyes open.

The refinance you will eventually need

Most TIC loans adjust after three, five or seven years. The lender list is short, refinance limits are tighter than purchase limits, and there is no government backstop. Sterling Bank once did the large majority of Los Angeles TIC lending and exited around 2023. Mitigate it with more equity than the minimum and a five-year-plus horizon.

Insurance, which is the quiet one

The building carries a master policy as a shared expense, and California’s market is under real strain. Two things to know: there is no true HO-6 policy for a TIC owner (that form assumes a condominium and an association), and if the building sits on the FAIR Plan without a wrap policy, that can block financing for every owner at once. Ask which carrier writes the building before you offer.

Under-funded reserves

No statute requires a TIC to fund reserves. Lower assessments than a condominium is partly a real saving and partly a deferred bill. Read the reserve schedule and insist on a separate default reserve, which we provide with HomWorks.

A weak TIC Agreement

Silent on partition, no default reserve, no forced-refinance clause, proceeds split by percentage rather than by what each owner improved. An agreement can be fixed before you buy and is very hard to fix afterwards.

Group loans

Some older buildings still share one blanket mortgage. Properties with individual fractional loans sell for materially more. If you are shown a group-loan building, price it accordingly, and understand that one co-owner’s non-payment can reach you.

Your co-owners

Typically there is no HOA required, no manager unless the owners hire one, and no statutory dispute machinery. A well-run building is a genuine pleasure. We set you up for success, with an owners’ association already in place to keep the building running smoothly.

What we check before you write an offer

• Unit count against every lender’s overlay
• Owner-occupancy ratio today, and after your purchase
• The master insurance policy, carrier and renewal date
• The TIC Agreement, clause by clause
• Both reserve schedules and the operating budget
• DRE public report status for buildings of five or more units
• Any Ellis Act history and recorded constraints on title
• Whether any owner is on a group loan

09

How we work

Start with a conversation, not a listing.

What to ask for before you offer

1. The TIC Agreement: the full document, not a summary
2. The operating budget and both reserve schedules
3. The master insurance declarations page, with the carrier named
4. The owner-occupancy count as of today
5. DRE public report status, for five units or more
6. Any Ellis Act history or recorded constraints on title
7. The preliminary title report
8. Whether any owner is on a group loan
9. Written pre-approval from a lender who has closed TICs

What happens next

1. A call about your numbers and your neighborhoods.
2. An introduction to a lender who has closed TIC loans.
3. We screen buildings against the list above.

Edition 2026. Current as of September 2026 and subject to change. Figures are illustrative and are not a quote, an offer or a loan commitment. Listing prices reflect selected listings and are not a comprehensive survey. San Diego County price data: San Diego Association of REALTORS®, August 2026. Affordability data: California Association of REALTORS® Housing Affordability Index, Q2 2026. We are not lenders, attorneys, accountants or insurance brokers, and receive no compensation from any lender. Terms, availability and law vary by building, by borrower and by jurisdiction, and municipal procedures change; confirm current requirements with the relevant agency. Nothing here is legal, tax, insurance or financial advice; consult your own advisors before purchasing. Equal Housing Opportunity.