Publications

Tenancy in Common Poses Risks to Lenders

June 27, 2005
New York Law Journal

A tenancy-in-common (TIC) ownership structure is a vehicle that real estate investors increasingly use to pool their equity in order to acquire a property while maintaining the benefits of tax deferment provided by §1031 of the Internal Revenue Code. However, more often than not, the equity of real estate investors must be supplemented by capital provided by lenders. TIC transactions must tow a fine line between staying within the boundaries of §1031 and satisfying the requirements of lenders. Although TICs may be beneficial to borrowers, the archaic form of multiple borrower ownership structures associated with TICs creates various concerns for lenders generally, and conduit lenders specifically.