Considering a Tenancy in Common?

Tenancy in Common (TIC) 

What is Tenancy in Common (TIC)?

Tenancy in common is a situation in which two or more people have ownership interests in a property. Each owner has the right to leave his share of the property to any beneficiary upon the owner's death. Tenancy in common is different than joint tenancy because the transfer of the property to a beneficiary in the event of an owner's death is different: In a joint tenancy agreement, the title of the property is passed to the surviving owner, while in a tenancy-in-common agreement, the title can be passed to a beneficiary of the owner's choosing.

Breaking Down Tenancy in Common (TIC)                 When two or more people own property as tenants in common, all areas of the property are owned equally by the group. For this reason, an individual may not claim ownership to a specific part of the property.

One or more co-tenants may buy out another to dissolve the tenancy in common. A co-tenant may file a partition action if the other co-tenants are unwilling to sell. When the property is sold, the proceeds are divided among the co-tenants according to their interest in the property.

Ownership Interests

Whereas tenants in common may not claim ownership to an individual part of a property, they may have different ownership interests. For example, Sarah and Debbie may each own 25% of a property, while Leticia owns 50%. Because a tenancy in common may be created anytime, an individual may obtain an interest in a property years after the others entered into a tenancy-in-common ownership.

In contrast, joint tenants obtain equal shares of a property with the same deed at the same time. As with contract terms for tenants in common, terms for joint tenants are detailed in the deed, title or other legally binding property ownership documents. Some states have joint tenancy as the default ownership for married couples, whereas others have tenancy in common. A joint tenancy is broken when one or more tenants sell their interest in the property. For example, one or more co-tenants buy out the others, the property is sold and proceeds distributed equally among the owners, or a partition action is filed, letting an heir sell his stake in the property.

A tenancy in common also differs from a tenancy by the entirety, in which the owners of property are married and each spouse has an equal and undivided interest in the property.

Rights of Survivorship

When an owner dies, the fate of the ownership of the property depends on the type of ownership defined by the contract. Tenants in common have no rights of survivorship. Unless the deceased person’s will specifies his interest in the property is to be divided among surviving owners, a deceased tenant in common’s interest belongs to his estate. Conversely, with joint tenants, the deceased owner’s interest is automatically transferred to the surviving owners. For example, when four joint tenants own a home and one tenant dies, each of the three survivors ends up with a one-third share of the property.

Tenancy in Common Agreements and Taxes

Because a tenancy in common agreement does not legally divide a property, most jurisdictions will not separately assign each owner a property tax bill in proportion to his or her ownership interest; most often, the tenants in common therefore receive a single property tax bill. The tenancy in common agreement, guided by applicable law, usually outlines the implications of shared ownership on a property's taxes, including how tax liability is contractually distributed to each owner. 

In many jurisdictions, a tenancy in common agreement imposes joint and several liability on tenants, meaning each owner can be liable up to the full amount of property tax, regardless of stated ownership interests. In this case, the owner is entitled to a deduction equal to the amount he actually paid. Where joint and several liability is not imposed, owners are only able to deduct property tax that is proportional to their ownership interest in the property, no matter the amount they actually paid.

Pros and Cons of a Tenancy in Common

Buying a home with a family member, friend or business partner as tenants in common may help individuals enter the property market more easily. Because deposits and payments are divided, purchasing and maintaining the property may be less expensive than it would be for an individual. Additionally, borrowing capacity may be greater when one individual with a greater income owns a larger percentage of the property than a lower-income borrower. In addition, a co-tenant may use a will for designating which heir receives his interest in the property, giving the co-tenant more control over his share.

However, when mortgaging a property as tenants in common, typically all borrowers sign the documents. That way, the lender may take over the entire property, rather than part of it, in case of default. If one or more borrowers ceases contributions to the mortgage payment, the other borrowers must cover the payments to avoid foreclosure. If a co-tenant dies without a will, his interest in the property goes through probate, a costly event in terms of time and money. In addition, the remaining co-tenants may own the property with someone they do not know. Furthermore, a tenant in common may file a partition action, forcing unwilling co-tenants to sell the property.

REVIEWED BY JAMES CHEN

Updated Feb 8, 2019

Your Questions Answered: Best Home Buying Tips for First-Timers

Connie Foley - Realtor & Problem Solver 

First Time Buyer Specialist

No, you probably don't need to put 20% down.

Buying your first home is a big freaking deal. How do you know which loan is right for you? How do you swing the down payment? How do you ensure your offer isn't too low or too high? What don't you know that you don't know? Ack!

Breathe, friend. The process doesn't have to painful.

To prep you for the journey, HouseLogic hosted a Q&A series on Facebook. Here are the top-10 Q&As from the first event, which was hosted by Meg White, the former managing editor of REALTOR? Magazine -- and a homeowner, herself. This has been edited by me and I have included links to other informational blogs.

 #1 Getting Started

 Q: Where should a prospective home buyer (and their significant other, if applicable) start their buying journey? What do you do first?

 A: The first step should be to look inward and have some super-honest conversations. Check my blog post on Buying a Home and What you Really want

Talk openly about your priorities: Where do you see yourself in five to 10 years? Create a checklist of must-haves in your new home and neighborhood. Hash out a budget, and talk about the kind of lifestyle changes you might be willing to take on (and the ones you won't be willing to do).

Finally, check your credit, correct any errors in your report, and start taking steps to build a positive financial profile.

 #2 The Down Payment

 Q: Is there any wiggle room on the 20% down payment, or should I just plan on making that?

 A: It's actually quite common to put less than 20% down. My family only put down 10%, and many other buyers put down even less. (For example, FHA borrowers might put down as little as 3.5% on the purchase price.)

Keep in mind that when you put down less than 20%, you'll probably have to pay PMI, or private mortgage insurance; it's a monthly fee the bank charges to secure their investment in you, since you have less skin in the deal.

 So while it's true that buyers who don't put 20% down generally have to pay mortgage insurance until they reach 20% equity, that fee usually gets bundled into your monthly payment, so it's not a huge deal. Also, when that mortgage insurance requirement is lifted, your payments should go down. When's the last time that happened to your rent?
How to get that downpayment

  #3 Agents and Listing Sites

 Q: How should a first-time home buyer work with an agent? What do agents do that property sites don't?

 A: Your real estate agent is your rock in what can be a really confusing, stressful, and involved experience. They've been through a lot of deals, so they know what can go wrong and have seen many of the mistakes buyers make most often.

 But more than that, they're your sounding board. Sometimes it's hard to know which direction to go during the home buying process, and just being able to talk it out with a third party who has your back is huge.

Listing sites are great; they have tons of useful information. But agents are on the ground in your community every day, and because of that, they know a lot more than what you see online. Sometimes they've seen the same listing in person many times, or they know about geographic considerations you'd never think of.

 Every time our agent warned us about a listing ("That one has been on the market forever because . . " or "Yeah, it's nice to be that close to the train, but don't forget that you'll also hear the station announcements going on all day," etc.), he was totally right.

#4 Finding a Lender

 Q: Getting a mortgage is a big deal for most buyers. How should they get started on securing a loan? And what about online lenders like RocketLoans? Is there a disadvantage or concern with using this type of lender rather than a local or traditional bank?

 A: The very first thing is just getting all your financial documents in a place where they're easily accessible -- or figuring out how to access them, i.e., what's your username and password for this or that account? You also need to know where your credit history stands in general. The most common stuff banks will ask you for is W2s, your last couple years of tax returns, bank statements, and pay stubs.

But even before you start looking at houses, you should try and get pre-approved. That might seem premature, but you need to know what kind of loan you're going to be able to get in order to determine your price range, which is obviously a big part of the home search for those of us who don't have unlimited cash.

 Now, pre-approval doesn't mean you're applying for a mortgage -- just getting an idea of what you're approved for.

 Basically, you give a lot of info about your financial situation to a lender and see what they think. You'll get a document back that's like a preliminary idea of what they might lend you. These documents vary from bank to bank and are generally free of charge, and you can usually apply for them online these days.

 Having that pre-approval letter will help sellers see you're a serious buyer backed by a real financial institution -- and that'll help make your offer stronger.

 When it comes to lenders, whether online or otherwise, your choice will depend on your personal situation. We recommend starting out with HouseLogic's mortgage lender guide.

 #5 The Loan

 Q: Do you suggest a government loan over a private bank?

 A: It depends on your situation. If you have time and a lower credit score, consider a government loan. If you have a higher credit score and are in a really competitive market, consider private.

Most first-timers are going to be looking at the fixed-rate, 30-year mortgage. But even if you go with this super-common type of mortgage, there are different rules depending on whether you go with a loan from the government or from a private bank.

But there are tons of loan options out there for different situations. For example, if you need to do significant repairs on a place before you can move in, you can get help specifically for that with a 203(k) from FHA. And there might be special savings, down payment assistance, or grant opportunities that apply to your situation.

The best plan: Talk to a number of financial institutions and mortgage brokers to see what they recommend specifically for you. More information at: Home Buying 101

 #6 Open Houses

 Q: How can I make the most of open houses?

 A: Open houses are a great opportunity to learn about the sellers, their home, and the neighborhood. But they can also be stressful, especially when they're packed with a bunch of other people looking to buy.

 If you're really serious about a place, it's good to try to schedule a showing so you can see it at your own pace with your agent beside you. Obviously when the market is hot, that's not always possible.

 #7 Finding the Right One

 Q: How many houses should I look at before I make an offer?

 A: Agents who have been around the block a few times say it used to be that buyers would look at, at least 20 to 30 homes even in the best of circumstances. Now with online listings, it's easier to narrow down what won't work and save some time.

That said, it took my husband and I many months to find the right fit, and I can't even remember how many places we looked at!

Ultimately, you should trust your gut about whether you want to keep 

looking, reassess your wish list, or make an offer.

 #8 Making an Offer

 Q: When making an offer on a home, what are the top things a buyer should keep in mind?

 A: The three most important factors are:

 1. The market. What are other people willing to pay for this house, and how does that fit with your offer? If you can't offer top dollar, what other things can you do to be more competitive (e.g. being flexible with the closing date)?

 2. Your budget. In this crazy market, it's easy for first-timers to get caught in a bidding war and push themselves to their financial limits. But you're going to have to live with your decision for a long time, so make sure you're OK with any and all sacrifices you might need to make.

 3. This might not work out, and that's OK. Your offer might not be accepted. Or maybe your offer is accepted, but structural damage is uncovered in the inspection, or the seller has contingencies that don't work with your timeline, or you have to walk away from the deal for some other serious reason. That's OK! It's not uncommon, and there will be other fish in the sea.

 #9 The Inspection

 Q: What happens at the inspection? If the inspector finds issues, what does that mean for the buyer? 

A: An inspection is a stressful time. Think about it: You've kind of fallen in love with a house, right? And then you have to pay some person to come in there and tell you all the reasons you don't want to buy it. It sounds slightly insane when you put it that way.

But this information is super important to have, and it's in your best interest to have the most comprehensive assessment possible of the place you're thinking about buying. 

Follow the inspector around and take your own notes. Ask questions about what it takes to fix this or that.

And if there are serious problems, it's not the end of the world. It might strengthen your negotiating position, or it might mean you choose not to buy the house. But either way, you're more informed!

#10 Mistakes to Avoid

Q: What are some of the biggest mistakes first-time home buyers typically make?

A: Because I work at REALTOR® Magazine, I was surprised by how challenging it can be to keep one's emotions in check. Buying your first home can be a real roller coaster. It's the excitement of seeing a great listing online and then the crash of being disappointed in person; the challenge of the offer and negotiation process; or the ups and downs of the inspection and appraisal. 

One big mistake to avoid is not being on the same page as your partner, if you're buying with someone else. Talk everything through; it can cause real heartache later on if you don’t.

Finally, it's important to step back and keep things in perspective. No matter how sideways things go, remember how lucky you are to be in a situation where you can own your own little kingdom. Not everyone has that opportunity — especially when you look internationally — and it's an amazing feeling.

What's in store for the 2019 Housing Market?

Both buyers and sellers of real estate are wondering what will happen with the market in 2019.

I see sellers caught in an early 2018 price mindset, thinking their property is worth more than they could probably get today because last year their neighbor had 20 offers and got well over asking. That was the old market. We are in a new market now. There's more to selling your home than just sticking a sign out in front and waiting for buyers to come. Now is the time you need an experienced, full service Realtor who will work hard to get that perfect buyer.

On the other hand, buyers are wondering if they should wait to see if the housing market crashes. Or, they want to make low-ball offers because they hear dire tales from the news. We are in California, people! In fact Northern California and to be more precise, the Bay Area! We are a very different animal! We have the jobs, the high salaries, the weather and excellent amenities. We also have a lack of space to build enough new homes to satisfy demand.

For more information, go to  2019 Housing Market Forecast

6 Reasons to Buy a Home in Winter

Buying a home in winter could be the perfect time. You have less buyers in the market to compete with, sellers are usually trying to get their home off the market so more willing to lower price, and inventory is lower, which makes sellers more motivated to negotiate.

Home Prices are Lower

Seasonal home prices are lowest in winter, particularly in January and February, meaning home-buyer affordability is at its highest. You also have fewer buyers in the market, making supply exceed demand. This usually results in prices being lower than during the warm or peak seasons.

Quicker Transactions

During the winter months there are fewer real estate transactions than there are in spring and summer. The fewer number of transactions means mortgage lenders have fewer loans to process, title and escrow companies have less closings to process, and home inspectors have fewer inspections. All of these are motivating factors that can lead to quicker transactions and closings for everyone involved.

Home Sellers are Motivated

A home on the market during winter months usually means there’s a motived seller. Having to move because of a job change or life change could make the seller more motived due to a “must sell” situation. Real estate agents also know that impulse can equate to sellers who are more willing to negotiate, whether it is on selling price, closing costs, closing date, or even terms of the sale, like what household items are to be included in the sale.

Less Competition

In most markets, winter usually means a lower inventory with less houses on the market. It also means there will be fewer buyers to compete with during the winter months.

If there are fewer buyers in the market, the seller may be willing to negotiate a better price. And with fewer buyers competing for homes, the chances of multiple offers on a single property decrease. All this means that buyers have the upper hand over sellers in the negotiations. The laws of supply and demand are always at work in real estate sales.

Real Estate Agents Can Focus on You

During the slower winter month, your real estate agent has more time to give you their undivided attention – they will be working harder for you. These low-activity months for sales encourages agents to try just that little bit harder to negotiate a sale. With extra time on their hands, they are better able to help you find the right home, negotiate the best deal, and close the transaction quickly.

You Get to Assess a Home’s Condition in Wintertime

Winter can be the toughest season for a home. The cold, moisture, and wind will test the home’s ability to insulate and protect its residents. When you view the home, you’ll get to assess first-hand whether the insulation is no good, for example. Significant problems are more likely to appear as well, such as if it’s drafty, if the HVAC system works well, and so on.

Buying a home in winter affords you the opportunity to discover things that otherwise might not be noticeable in warmer weather. Such information can be extremely useful in your decision making and your negotiations about the final price of the home.

All of these reasons factor into why winter can be a more opportune time for home buyers than sellers. As a buyer, you can benefit favorably, in ways you’re less likely to experience during peak selling seasons.

-article courtesy of FAHW

For more information about buying and selling, visit my website at www.conniefoley.com

Down Payment How-To

Wondering About That Down Payment? You're not alone!   

Saving for a down payment can be daunting, but it shouldn't be the reason you aren't preparing to buy a home. There are options. 

In the recent housing market, most offers needed to have at least 20% of the purchase price as a down payment and the more, the better. After all, buyers have been competing against multiple offers with large down payments or all cash. This will not always be the case. Right now, we are experiencing a slow down in the market (seasonal or economic?) and buyers can get an offer accepted with less down if they have strong offers on all other counts. This opens up some options and creativity for first timers. 

Of course, saving the down payment is great, but may take time. Most lenders will accept a gift for the down payment. This can be from a parent, but you should check with different lenders to see what their restrictions may be. 

You can use crowdfunding to raise the money. Check these sites:

http://www.downpaymentdreams.com/

https://featherthenest.com/

Or, check for downpayment assistance programs:

NeighborWorks http://www.neighborworks.org/

California Housing Finance Agency (CalHFA)
http://www.calhfa.ca.gov/homebuyer/index.htm

California Association of REALTORS® down payment resource search tool: https://www.car.org/marketing/clients/downpaymentresource

Local agency programs: HUD provides a list of all cities in California offering down payment assistance as well as special first time buyer loan plans: http://portal.hud.gov/hudportal/HUD?src=/states/california/homeownership/prgmscity

For more information on down payments or getting started on the process of purchasing a home, contact me! I'm here to help!

Check Your Home Buying Score Card!

I found this great post on HomeKeepr.com and want to share it with prospective buyers. The more you know about yourself in this process, the less stress there is and we can actually have fun finding your new home.

Buying a house is a confusing process. Not only is there a lot of material to process, you really have to do a lot of introspection to find the house that’s right for you and your family. It’s about more than just ceiling treatments and square footage, there’s something else, too.

Irish poet Thomas Moore may have captured that little bit of something else best when he penned these lines:

Sometimes, the spirit of a place is so strong, you may think you see its face and glimpse it gamboling over a field or peeking out of a forest. This spirit we sense in each locality would once have been described as the scintilla or spark of its soul, the pearl in the oyster. It accounts for the magic of a region, and, without it, an acute sense of place dissipates into a vague and lazy feeling of nowhere.

Maybe you’ve not started your home search yet, so you’ve yet to experience this strange phenomenon, or maybe you’ve just seen a few homes and they just didn’t strike you. Either way, it’s important to take stock of what it is that really moves you so that you can narrow your list of prospective homes and get the perfect fit sooner rather than later.

Home Is Where the Investment Is?

Home buyers should never think of their primary home as an investment first, but you should keep in mind that you might need to sell one day. Because of that, you need to think a little bit like an investor and a little bit like a love-struck teenager. It’s ok to be both. Before you step foot into a single house, figure out where you need to buy.

If you live in a large metro area, this may mean narrowing to within a few suburbs or choosing some urban neighborhoods that you really feel drawn to (and are holding their value). Some people go one step further and narrow by schools, especially if they have children. Even people without kids can benefit from the extra value good schools bring to the immediate neighborhoods surrounding them, though.

Now that you’ve narrowed the initial list, you can create a checklist to help you decide what it is that you want in a house so you don’t waste time with homes where you’ll never feel the spirit of the place.

Your Home Buying Scorecard

This exercise is meant to help focus your home search, but you should also realize that it’s highly unlikely you’ll be able to get everything you want out of one house without an incredible budget or very low standards. To the scorecard!

When shopping for a home, it’s useful to start your search online for houses in your price range to see what sort of features they usually have. For example, if a $900,000k house in your area tends to have a fireplace or a ceiling treatment or a two car garage, you know you can reasonably expect that. You’ll probably also realize about 20 houses in that your expectation of acreage or a private movie theater is a little out of reach.

Grab your tablet or a piece of paper (if you’re into that sort of thing) and draw four columns. Label them like this: Definitely Need, Want, Can Live Without and Definitely Don’t Want. If you have a spouse or other person you’re buying with, make sure they make their own scorecard — no sharing answers, please.

Now for the really hard part. You need to fill those columns in.

This isn’t an exercise that you should finish in five minutes or ten minutes. You should spend a good week or two really working on it. Think deeply and about the long term. A few questions you may want to ask yourself include:

* Do I intend to age in place? In this case, you might want to put stairs in your “don’t want” column, since it can be difficult to navigate them as you age.
* Am I planning to start a family? You’ll want a bigger house, make sure there are enough bedrooms for all your future kids.
* Is there a style of house I’m attracted to? Open floor plans are big right now, but they’re not for everybody. If you hate them, write it down!
* Would I use a fireplace if I had one? Fireplaces can be nice, but they can also be huge pains to maintain and keep safe. If you won’t be using it, you might as well not pay extra for a house that features one.
* Do I plan to have pets? Hard surfaces are a must for pet owners. Carpet is cleanable, but it will never hold up like a tile, hardwood or laminate floor when pets are involved.
* How close can I tolerate my neighbors? For many people, it’s no big deal to be piled on top of the next house, but for others it gets downright uncomfortable. If you need room to roam, a cul-de-sac lot or other irregularly shaped lot may give you some elbow room without the added expense and upkeep of buying an acreage.

As you start to take inventory of your actual wants and needs, you’ll also be eliminating huge swaths of houses in single blows. This makes your home search a lot easier, believe it or not. Don’t narrow so much that only that house at 123 Marigold Lane will do, but do spend some time really thinking about your perfect home.

When your scorecard feels pretty complete, make sure to compare notes with your spouse (wait until they’re done, of course). You may have some compromising to do, especially if you’re dead set on a house with a pool and they want a small yard with nothing in it. With all of the details decided, you can finally call your Realtor and declare that you know what you want! They’ll appreciate the effort you’ve taken to doing the homework ahead of time.

Are you REALLY ready to Buy?

These are really important parts of your life to examine before you decide to buy a house. It also helps to be a good saver and a little handy (or at least brave enough to try to fix the small stuff). Not every problem will be one your can handle on your own, but you should at least be able to stabilize your issue so it doesn’t get worse before you call the experts in!

When that rent check leaves your hand every month (or, more likely, you click the button on the website), you feel a little lighter in the wallet and a bit more empty inside. Every month, that money goes into your landlord’s pocket, pays down their principal, helps them increase their net worth and you get what? A roof over your head that hasn’t been updated since the Reagan administration and neighbors that seem to not realize that while their band is lovely, 2 am is not the time to crank it up to 11.

No, you’ve had it! It’s time to move.

It’s time to buy your own house. You’re ready to have some control over your own living situation. Aren’t you?

Spend Some Time Soul-Searching Before You Pre-Qualify

There are far too many articles out there that discuss homebuying readiness in terms of dollars and cents, neglecting all the other things that are involved in a truly successful homeownership experience. So, we’re going to assume you’re able to qualify for a loan and just skip that part. You’ve read enough of that by now, that’s old news.

Anyone who tells you that buying and owning a house isn’t a deeply emotional experience is someone who has never done it. People become strangely attached to their homes, they experience deep heartbreak when a contract falls through at the last minute, they feel almost rapturous when they finally sign on the dotted line. The first problem their home develops gives them a sick feeling in their gut. There’s a huge emotional and social component to homeownership, but no one ever talks about it.

What even drives us to buy? Two main things: an urge to increase our social standing and a hope to give ourselves some kind of financial security. Theoretically, right? At the end of the day, that’s what it amounts to. In some economies one or both of those may be on pretty shakey ground, but they’re always beneath it all. Before you get there, let’s do a reality check.

Reality Check: Are You Really Ready?

You’re qualified, you’re flush with cash, but you may or may not be really ready to buy a home. After all, these are untested waters for you. It’s not as if no one has gone this way before, plenty have and even lived to tell the tale. But for you to really get off on a good foot, you should dig deep and make sure you have these items in check:

Wanderlust. Think of buying a house a little like getting a tattoo. It’s not a thing that’s easily undone. Even if you just walk away, you have a foreclosure hanging over your head for years and years, your credit’s damaged, you could even owe some balance from the sale of that house (depending on the local laws). If you have wanderlust left in you, get it out now. Go live in Nepal while you can, because once you buy, you’re going to have to live in it for a while. That’s not to say you can’t visit Nepal, but you can’t stay around for months on end once you have a mortgage that has to be paid.

Emotional Maturity. Living in a neighborhood with people you can’t easily move away from also requires a bit of emotional maturity. The guy across the street may drive you nuts because he loves bright, annoying Christmas lights. Don’t punch him in the face, just hang some blinds. In addition, learn to tame your inner worrier. All houses have problems, every single one, even the brand new ones. So when you notice that the air conditioner’s condensation line is backed up, take a deep breath and get to flushing it or call in a pro. In short, don’t panic, there’s a solution to everything.

Career Security. All jokes aside, it’s really very important that your career is fairly secure before you jump into a mortgage that’s 30 years long. If you hate what you do or you’re not really sure you want to do it over the long term, you may not want to commit to a mortgage just yet. Maybe wait until you get that first year under your belt and see if what you learned in class is anything like what the field really is in practice. If you would need to return to school or move out of state to find a new opportunity, it could be very difficult while trying to maintain a mortgage.

Relationship Security. The thing no one wants to say to you is the thing this blog is going to say right now. Is your relationship really sure enough to be buying a house with that person? No, really. This is on the level of having a child with someone, it’s a huge financial commitment and one that could obliterate you for years and years if things soured quickly. Whether you’re married or not, make sure this person is one you can count on for the rest of the term of that loan, as romantic as that notion may be. You’re in this mortgage together, make sure it’s an equal partnership.                                               

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