Actor Dan Nufer was in the market for a new home in the Los Angeles area. Driving around and looking for new properties, he found one specific house that had everything he was looking for. It was larger than other homes he tried to get, was newly renovated, and even fit within the lower end of his budget. His first thought was that this was too good to be true.
“This house was way too nice, in an up-and-coming neighborhood and at the low end of my budget,” he said. “It was too good to be true.” In some ways, it was. When he asked his real estate agent to check into how this larger house in an awesome neighborhood went for so cheap, he found out that it was being offered as a tenancy in common.
Believe or not, there’s actually movement going on in neighborhoods and cities across the country. In these areas, rent is so expensive that it’s forcing complete strangers to decide to buy a home together. They want a nice house in the nice neighborhood. Rather than living in an unsavory and unsafe area, they’re deciding that buying a home with someone else puts them in a better situation.
Managing living in a home with roommates, except this time, both roommates are the owners. They share all the bills and have every responsibility and right to the home. No one owns it outright, so they both co-own it together. This can be a large townhome, a very large house, or even a single property that has several smaller homes on it.
What is Tenancy in Common Like?
“It is exactly like living in a condo complex,” says Nufer. “Except that legally I don’t own my house, I own 1/7th of the property and I have the right to live in my house.” This might seem like a strange situation, but there is an upside for people looking to buy a home or property. The prices for owning a piece of it are much lower than if you are buying the entire thing yourself.
Again, think about sharing rent with a roommate. Many people live like this already to help with the bills. That doesn’t mean that there aren’t any risks involved with the situation either. If things turn sour between you and the other person(s) involved, it’s more difficult to just up and leave. You partly own the property. You would have to sell your share.
There are other risks as well. You might be difficult to find financing and/or insurance options that cover the living situation. Then there’s the situation of what happens if your partners financial situation goes downhill. You will be expected to share property taxes and maintenance costs. Your real estate partner in this deal may not be up for all the costs.
“I understood the potential risks. And I was fine with it,” Nufer said. “From start to finish, with TICs, I found the bark was much worse than the bite.”
