Are you weighing a TIC against a condo in San Francisco? You are not alone. In neighborhoods like Noe Valley and across the city, both options show up side by side, and the differences are not always obvious. This guide breaks down ownership, financing, insurance, resale, conversion, and the key due diligence steps so you can buy with confidence. Let’s dive in.
Quick definitions: TIC vs condo
A condominium gives you fee simple title to a specific unit along with a shared interest in the common areas. Your unit’s boundaries appear on a recorded condominium map, and a homeowners’ association manages the building under CC&Rs and bylaws.
A tenancy in common gives you a fractional interest in the entire property. Your right to occupy a specific apartment is defined by a private TIC agreement among the co‑owners, not by a recorded condo map. The agreement governs who lives where and how the owners manage the building.
Title and governance differences
How title appears
With a condo, you receive a separate deed for your unit. This clear, unit‑level title typically makes financing, selling, and tax tracking more straightforward.
With a TIC, your deed usually states a fractional share of the whole property, such as a one‑quarter interest. Your exclusive occupancy of a particular unit exists because the TIC agreement grants it. Title is fractional, and many rights come from the contract.
Decision‑making and disputes
Condo buildings follow a statutory governance model. The HOA operates under recorded CC&Rs and bylaws, with board elections, voting rules, disclosures, budgets, and enforcement procedures.
TICs rely on a private contract. Voting thresholds, maintenance obligations, dispute resolution, and default remedies come from the TIC agreement. Quality and clarity vary, so you must review it closely.
Reserves, assessments, and remodeling
Condo HOAs generally prepare budgets and may complete reserve studies to plan for future repairs. Owners pay monthly dues and special assessments when needed.
TIC agreements may or may not require formal reserves or consistent monthly contributions. Some buildings pool funds. Others handle repairs as costs arise. Remodeling can be different too. Condo unit boundaries are mapped, which often makes interior projects simpler to define. In TICs, boundaries are contractual, so permitting and insurance can be more nuanced.
Financing realities in San Francisco
Condo financing
Conventional lenders commonly finance condos in San Francisco when the project meets standard underwriting and any applicable agency requirements. You will find broader loan options, including conforming, and in some cases FHA or VA if the project has the required approvals.
TIC financing
TIC financing is more limited. Many national lenders do not offer TIC loans, and those that do can require larger down payments, often in the 20 to 30 percent range depending on your profile and the building. Lenders review the TIC agreement, occupancy mix, and whether loans are individual or part of a master mortgage.
FHA and VA financing usually is not available for TICs unless the property has been converted to a recorded condominium project that meets approval standards. If a TIC is your target, get preapproved with a lender that underwrites that specific TIC interest. Do not assume a standard condo preapproval will transfer.
Insurance basics
Condo buildings are often covered by an HOA master policy for the structure and common areas. Individual condo owners carry HO‑6 policies for interior coverage and personal property.
TIC insurance varies by agreement. Some groups purchase a master policy together. Others require each owner to carry individual coverage and add loss assessment protection. Confirm who pays premiums, the deductible structure, and how assessments work if there is a large claim.
Property taxes and 1031 basics
Condo units have their own parcels and assessed values. For TICs, the San Francisco Assessor‑Recorder may assess each fractional interest or allocate value across the building depending on how title is recorded. That approach affects your base year value and future reassessments at sale.
Condos are generally simpler for unit‑level tax tracking and can be easier to use in a like‑kind exchange. TIC interests can still qualify as real property for 1031 purposes, but documentation and structure matter. If taxes or exchanges are important to your plan, verify how the TIC is recorded and assessed before you write an offer.
Resale and marketability
Buyer pools and pricing
Condos usually appeal to a wider buyer pool because they are easier to finance and are familiar to most lenders and appraisers. TICs tend to attract buyers comfortable with the structure and with access to specialty financing. In many San Francisco neighborhoods, TICs often sell at a discount to comparable condos. The size of any discount varies with neighborhood, condition, and market conditions.
Contractual restrictions that matter
TIC agreements can include rights of first refusal, approval requirements for incoming buyers, limitations on renting, and restrictions on alterations. These provisions can affect timing and the number of buyers willing to engage. Review all transfer and occupancy rules early, since they directly impact resale and your long‑term flexibility.
Condo conversion impact
Some TICs later convert to condos by recording a condo map, adding CC&Rs, and forming an HOA. Conversion can broaden the future buyer pool because financing is typically easier on condos. That said, conversion in San Francisco involves planning approvals, code compliance, possible upgrades, owner consent thresholds, and tenant protections. It can be time‑consuming and expensive, and it is not guaranteed.
Conversion, renovation, and permits
Converting a TIC to a condo generally requires a recorded condominium plan, creation of an HOA with CC&Rs, and approvals from city departments. Buildings may need safety, egress, or seismic upgrades as part of the process. Owner supermajority approval is common, and local tenant protection rules may apply if units are occupied.
If you plan to renovate, know that permits are required for structural work and major systems. Shared walls, old utilities, and historic features in Victorian or Edwardian buildings can add complexity. In a TIC, confirm how common and exclusive areas are defined and what approvals are required before you start.
Buyer due diligence checklist
Pre‑offer items
- Verify the ownership type on title. Confirm whether you are buying a recorded condo unit or a TIC fractional interest.
- Get the right preapproval. For TICs, obtain a written statement from a lender that they will finance that specific TIC interest.
- Review the governing documents. For condos, read the CC&Rs, bylaws, budgets, reserve studies, minutes, and the master insurance policy. For TICs, review the full TIC agreement and any amendments, bank statements, and all insurance policies.
- Ask about litigation. Request information on any past or pending claims involving the building, HOA, or co‑owners.
Financial items to verify
- Monthly payments and what they cover. For condos, understand HOA dues. For TICs, confirm how assessments are set and what is included.
- Reserves and planned projects. Determine whether reserves exist, how they are funded, and if special assessments are anticipated.
- Delinquencies among owners. High delinquency rates signal risk for both condos and TICs.
- Outstanding loans. For TICs, confirm whether a master loan encumbers multiple interests and how it is managed. For condos, verify if any common debt exists.
Contractual and transfer items
- Rights of first refusal or approval requirements for new buyers. These can affect timing and flexibility.
- Rental and occupancy rules. Confirm whether you can rent the unit and under what conditions.
- Default and remedy provisions. Understand what happens if a co‑owner or HOA member fails to pay their share.
Inspection and condition
- Evaluate common systems. Review the roof, foundation, plumbing, electrical, and seismic elements and confirm maintenance plans and budgets.
- Check the permit history. Unpermitted work can impact financing, insurance, and resale.
Negotiation levers
- Ask for concessions to offset upcoming assessments or to seed reserves.
- Require seller cooperation for any co‑owner approvals and for clearing liens before closing.
- Use escrow holdbacks to protect against known but unfinished repairs.
Red flags
- No written TIC agreement or vague terms that fail to define governance, money management, or dispute resolution.
- No reserves or budget for common repairs.
- Lender reluctance to finance the TIC interest or only offering costly terms.
- Active or pending litigation among owners or with the HOA/TIC group.
Which option fits your plan?
Choose a condo if you value broader financing options, predictable governance, and an easier resale path. A condo often makes sense if you need agency‑backed loans or want the standard HOA structure.
Choose a TIC if you prioritize entry price, are comfortable with a smaller lender pool, and you like the building’s character or location where TICs are common. A strong TIC agreement, cooperative co‑owners, and realistic expectations on financing and resale are essential.
If you are torn, start with financing. Secure a lender who understands the structure you prefer, then review documents with a fine‑tooth comb. Your comfort with the agreement, reserves, and long‑term plan should steer the decision.
Ready to compare a specific building or have us sanity‑check a TIC agreement? Reach out to our team for clear guidance and a tailored game plan. Unknown Company — Let's Connect.
FAQs
Can I use FHA or VA financing for a San Francisco TIC?
- Usually no. FHA and VA typically require condominium project approval, and TIC interests without a recorded condo map generally do not qualify.
Why are TICs often cheaper than condos in San Francisco?
- TICs usually trade at a discount because financing is more limited, the buyer pool is smaller, and some buyers perceive higher governance risk compared to condos.
What does a TIC agreement cover and why does it matter?
- It defines exclusive occupancy, voting rules, maintenance obligations, reserves, insurance, rental limits, and default remedies. Your stability depends on its clarity and enforcement.
How do HOA dues for condos compare to TIC assessments?
- Condo dues are set by the HOA budget and often include planned reserves. TIC assessments vary by agreement and may be formal monthly contributions or ad hoc collections.
Will converting a TIC to a condo increase resale value?
- Conversion can improve financing access and widen the buyer pool, which may boost marketability. It requires approvals, potential upgrades, time, and cost, so it is not guaranteed.
What tax differences should I expect between a condo and a TIC in San Francisco?
- Condo units have separate parcels and assessments. TIC assessments depend on how fractional interests are recorded and valued by the Assessor‑Recorder, which can affect base year and reassessment at sale.
