On June 11th, 2013, the San Francisco Board of Supervisors approved the “Expedited Conversion Program”, intended to allow owners of TICs (Tenancy in common) units the ability to convert their homes to condominiums.
Over the years, in the expensive San Francisco real estate market, TIC’s became a more affordable means of home ownership. Although we speak of TIC’s as a “thing” they are really simply a form of holding title. In a typical TIC scenario several people purchase a multi-unit dwelling together, with each party having the exclusive use of a certain unit, and perhaps some common areas (yard, roof deck, etc.). TIC’s historically sold for anywhere from 15-20% less than a comparable condominium would. The reason for the reduced price tag is that TIC’s are harder to buy, and harder to sell. Few lenders offer financing for TIC’s and rates are considerably higher than they would be, were the unit a condo. As you hold title with others, there is also more risk involved for each owner.
Most folks who purchase a TIC in San Francisco do so with the intention of eventually converting their unit(s) to condominiums, where they would realize an immediate increase in value, as well as the ability to finance the home at a lower rate. They would also instantly increase the home’s salability. Uber-tenant friendly San Francisco politics has stood in the way of allowing many property owners to achieve this goal. Considerable changes were made to the initial legislation proposed by Supervisors Weiner and Farrell. As you can read in the piece below, written by local TIC expert, attorney Andrew Sirkin, what TIC property owners in San Francisco have been left with is of little help.