Tenancy In Common agreement - can percentage splits be fluid?

Tenancy In Common agreement - can percentage splits be fluid?

Member since 2018 · 43 posts · 8 votes

TIC agreement question for the experts on this board:

A normal TIC agreement would specify the fixed percentages of each partner. For example, if the TIC is buying a 500k house and my company puts in 250k, my percentage is 50%, partner A puts in 250k so her percentage is also 50%. When future expenses come up (taxes, utilities, etc), I cut a check for 50% of the bill and my partner cuts a check for 50% of the bill.

So my question: if my partner only wants to contribute 250k and no more, can a TIC agreement be structured in such a way that percentages will change as expenses occur? For example, if we get a 50k bill, and my company pays the whole 50k, that would increase my contribution to a total of 300k, which will make my percentage 54.5%, and partners percentage to 45.5%. if another 50k expense comes in and my company pays it, my contribution will now be a total of 350k, my percentage will go to 58.33%. So when we sell, my keep will be 58.33%, and the rest to my partner.

Is this TIC arrangement possible / doable?

0Reply
7 views

2 Replies

Jump to latestLatest
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    7y

    @Mel Cosio TIC is determined by and on the deed. So if you wanted to change the deed periodically you certainly could. But it would have to be recorded. That seems like a hassle and could cause some recognition of gain issues possibility.

    A better answer for that would be an LLC where typically you can adjust membership interest at will and it can follow the capital contributions and be reflected in each members capital account.

    The 1031 Investor5137 Reviews
  • Member since 2018 · 43 posts · 8 votes
    7y

    Thanks @Dave Foster, appreciate the response.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.