Ownership in San Francisco

Types of Real Estate Ownership

San Francisco offers several types of real estate ownership, each with its own legal, financial, and market considerations. Below is an outline of the most common forms:

1. Fee Simple (Sole Ownership)

The most common and straightforward type of property ownership.
The owner has full control over the property, including land and structures.
Can be transferred, sold, or passed down in a will.
Subject to local zoning and property tax laws.

2. Condominium (Condo) Ownership

Owners have individual ownership of a specific unit within a larger building.
Common areas (hallways, lobbies, amenities) are shared and managed by a Homeowners Association (HOA).
Owners pay HOA dues for maintenance and management of shared spaces.
Easier to finance with traditional mortgages compared to TICs.

3. Tenancy in Common (TIC)

Multiple buyers own a percentage of a multi-unit property rather than individual units.
Each owner has an agreement (not a deed) granting them exclusive rights to occupy a specific unit.
Financing is more complex (often requiring fractionalized loans).
Harder to sell compared to condos.
Some TIC owners attempt to convert their property into condominiums, but the process is lengthy and highly regulated in San Francisco.
See more detail below

4. Co-Op (Cooperative) Ownership

Less common in San Francisco but exists in some buildings.
Instead of owning a unit, buyers own shares in a corporation that owns the entire building.
Owners receive a proprietary lease to occupy a unit.
Co-ops often have stricter financial and lifestyle requirements.
Typically require board approval for buying, selling, and renting.

5. Multi-Family Property Ownership

One entity (individual or group) owns an entire building with multiple rental units.
Can be owner-occupied (e.g., a duplex where the owner lives in one unit and rents out the others).
Subject to San Francisco rent control laws, which impact rental increases and tenant protections.
Can be held under different ownership structures: fee simple, LLC, trust, or partnership.

6. Community Land Trust (CLT) Ownership

A nonprofit entity owns the land, and individuals buy homes or units at affordable prices.
Owners have long-term land leases and must follow resale restrictions to keep homes affordable for future buyers.
Aimed at increasing affordable housing in high-cost areas like San Francisco.

Each form of ownership comes with different financial, legal, and practical implications. Buyers should consider:

Ease of financing (TICs and co-ops can be harder to finance).
Resale value (condos and fee simple homes tend to sell more easily).
Legal restrictions (rent control laws, condo conversion rules, and TIC agreements).
Tax and liability protections (LLCs, trusts, and co-ops offer various levels of protection).TIC "Tenant's in Common"

Shared Ownership: Owners collectively own the whole building, unlike condos where units are individually owned.
Exclusive Rights Agreement: A legal contract (not a deed) determines which owner occupies which unit.
Financing Challenges: Traditional mortgages are not available; owners typically need a TIC loan, often with higher rates than condo loans.
Limited Marketability: Harder to sell compared to condos because of financing and ownership structure.
Potential Condo Conversion: Some TIC owners attempt to convert their building into condominiums, but this process is complex and regulated by San Francisco laws.
Legal Considerations: TIC agreements must be carefully drafted to outline responsibilities, decision-making, and dispute resolution among owners.

More on TIC

A TIC (Tenancy in Common) in San Francisco refers to a form of property ownership where multiple individuals share ownership of a multi-unit building, but do not own individual units separately. Instead, each owner has a percentage interest in the entire property and a private agreement outlining their exclusive right to occupy a specific unit.

Key Features of TICs in San Francisco:

Shared Ownership: Owners collectively own the whole building, unlike condos where units are individually owned.
Exclusive Rights Agreement: A legal contract (not a deed) determines which owner occupies which unit.
Financing Challenges: Traditional mortgages are not available; owners typically need a TIC loan, often with higher rates than condo loans.
Limited Marketability: Harder to sell compared to condos because of financing and ownership structure.
Potential Condo Conversion: Some TIC owners attempt to convert their building into condominiums, but this process is complex and regulated by San Francisco laws.
Legal Considerations: TIC agreements must be carefully drafted to outline responsibilities, decision-making, and dispute resolution among owners.

Why Do People Choose TICs?

TICs are often cheaper than condos, making them an attractive entry point into San Francisco’s high-priced real estate market.
They provide access to desirable neighborhoods where condos might be scarce.
Some buyers hope to convert to condos in the future, increasing their property value.

However, the risks include financing difficulty, potential disputes among owners, and limitations on future resale. If you're considering buying a TIC, it's crucial to work with a real estate attorney familiar with San Francisco property laws.