All Forum Posts by: Nicholas Dutson

Jason — appreciate the CPA perspective and I agree on the basics. An LP can't 1031 a partnership interest; the taxpayer that sells (the LLC/LP) has to be the taxpayer that buys.

Where I’ve seen deals diverge is planning when investors want different outcomes:

• Entity-level exchange: Cleanest path if everyone's aligned—the LP/LLC sells and that same entity acquires the replacement to keep deferral.

• Pre-sale “drop-and-swap”: If some investors want autonomy, the partnership can distribute deeded TIC (or SMLLC-disregarded) interests before the sale so those owners can run their own exchanges. Timing, lender consent, and docs matter to avoid partnership re-characterization/step-transaction issues.

• DSTs as replacement: Useful when lender logistics or mixed investor goals make a TIC impractical, while still treating the replacement as real property for 1031.

Totally agree that many sponsors avoid these routes because of fees, waterfalls, and timing, but with the right OA language and lender cooperation, I’ve seen them executed.

Questions for you:

1. In your practice, what "seasoning" period have you found most defensible for pre-sale TIC distributions?

2. Any lender or OA provisions you view as make-or-break for allowing a same-entity exchange or a drop-and-swap?

Happy to compare notes on best practices—especially around debt matching/boot and governance so folks don't accidentally create partnership-like control in a TIC.

Great question. "Reserves" in a TIC are more than a rainy-day jar—they're the brake and the seatbelt that keep co-owners from white-knuckle cash calls or hard choices at the worst possible time.

In practice I size reserves off three inputs: the operating profile, building and systems, and the lease/tenant risk. For operating risk, a common starting point is three to six months of fixed expenses at the property level—property taxes, insurance, utilities you’re responsible for, management, and a prudent maintenance buffer. That gives you enough room to absorb timing hiccups, tax reassessments, or an insurance premium jump without shutting off distributions overnight.

For the building itself, I like to anchor on a third-party property condition assessment and roll it into a 3–5 year capital plan. Big-ticket items with a visible fuse—roof, HVAC, parking, elevators—should be pre-funded on a glide path so you're not relying on last-minute calls. In older assets or harsher climates, the capital reserve often needs to be materially larger than the operating cushion. If it's a single-tenant NNN, don't get lulled into a zero-reserve stance just because the lease shifts expenses to the tenant; you still have roof/structure exposure and the "what if" of downtime, TI, and leasing commissions if the tenant leaves.

On governance, the TIC agreement should be explicit about how reserves work. Spell out a target amount, a floor that triggers automatic top-ups from cash flow before distributions, and a cap so you're not warehousing excessive cash that drags yield. Clarify what reserves can be used for (property-level operating and capital needs only), who can authorize draws, and what consent threshold applies. In TICs where unanimous consent is required for most decisions, consider carving out routine reserve draws to manager-level authority while keeping larger non-budgeted capital items subject to a higher vote. Also define the remedies if a co-owner doesn't fund a true emergency call—common approaches are a default loan from consenting co-owners at a preferred rate or proportional dilution tied to the shortfall.

Keep the money mechanics clean. Maintain reserves in a segregated, FDIC-insured account under the TIC or manager's control with dual-signature protocols, monthly reporting, and read-only bank access for all owners. Track operating and capital reserves separately in the books so everyone can see what's available for each need. If the lender escrows for taxes, insurance, or replacements, that's not a substitute for internal reserves; treat lender impounds as dedicated buckets and set your internal targets on top of those.

A few practical sizing heuristics I see work well in the field: for small- to mid-sized multifamily, many owners are comfortable when the operating reserve roughly equals four to six months of non-discretionary expenses and the capital reserve equals at least one year of the near-term capital plan, replenished annually. For stabilized multi-tenant retail/industrial, three to four months of operating expenses plus a capital reserve appropriate to roof/HVAC age is common. For single-tenant NNN, I still like to see a modest operating cushion and a capital reserve matched to landlord components and estimated downtime risk, even if the lease is investment-grade.

Don't forget the tax and accounting angle. Dollars sitting in reserve generally don't create deductions until spent, and cash calls and distributions affect basis differently than normal NOI distributions. It's worth having your CPA review the reserve policy so the mechanics align with each co-owner's tax posture, especially in 1031-heavy TICs.

If you're setting this up from scratch, the fastest way to get to the "right number" is to build a simple bridge: fixed monthly expenses, lease and credit risk assessment, PCA-based capital plan, lender impound requirements, and your distribution target. That model usually converges on a reserve range that protects the asset without starving current yield. Then lock the rules into the TIC agreement so you don't have to renegotiate in the middle of a surprise roof leak.

I work in the TIC space and can share a few practical things I'd want you to know before you wade in. "Tenants in common" simply means each investor owns an undivided, deeded percentage of the real property. Because you hold title directly, TICs can be structured to qualify for a 1031 exchange when set up correctly, which is a big reason many investors use them. The flip side of owning real estate together is governance: you're buying both the property and a relationship. Spend real time on the co-tenancy or TIC agreement. The key items are voting thresholds for major decisions, who has day-to-day authority, how cash calls work, what happens if someone doesn't fund, transfer restrictions, right of first refusal, and the exit or buy-sell mechanics. Clear rules for refinancing, sale timing, and deadlock resolution will save you headaches later.

Financing is a common friction point. Many lenders prefer a single borrower, so TIC deals sometimes use a "master tenant" or a single loan with multiple carve-outs. Make sure the loan documents you're signing align with the TIC agreement, especially around recourse, carve-outs, cure rights, and who can trigger a default. Insurance should be placed at the property level in amounts and forms required by the lender, and each TIC owner should confirm they're named appropriately. On the tax side, you'll receive your share of income and depreciation proportionate to your percentage, but pay attention to how reserves, leasing commissions, and capital projects are allocated so you're not surprised at K-1 time.

Due diligence is everything. Underwrite the real estate like you would if you were buying it yourself: market rents, rollover schedule, tenant credit, capital plan, property condition, environmental, and local supply pipeline. Then underwrite the co-owner group or sponsor: their track record, fee structure, alignment of interest, and how they handled prior workouts. I’d want to see a detailed hold plan that covers leasing assumptions, capex timing, refinance sensitivities, and multiple exit paths. Ask for scenario models that show returns if cap rates expand, interest rates stay elevated, or a major tenant leaves. If those cases still pencil, you’ve probably found a resilient deal rather than a pro-forma fantasy.

A lot of folks ask how TICs compare to DSTs. A TIC gives you direct title and typically more control, but often requires active votes and occasional capital calls. A DST is more passive with trustee control and simpler financing, but you're giving up most decision rights and usually can't do big capex or re-tenanting beyond what the trust allows. There isn't a "right" answer; it's about your control preferences, your tolerance for illiquidity, and your comfort with potential cash calls.

Two final thoughts from the trenches. First, liquidity is limited, so treat the buy-sell and transfer language as your “secondary market.” If you ever need out, those clauses determine how and at what price a sale can happen. Second, plan for disagreements while everyone still likes each other. A well-drafted dispute and deadlock process, along with clear reporting standards and regular investor updates, keeps relationships healthy and value intact.

If you share a bit more about your goals, target check size, and whether you’re using 1031 proceeds, I can suggest what structure tends to fit best and what red flags to watch for in the documents.

Short answer: you can 1031 out of a single-family rental into a pooled deal, but only if the "syndication" gives you a qualifying real-property interest such as a properly structured Tenants-in-Common (TIC) interest or a Delaware Statutory Trust (DST). What you generally cannot do is exchange into a partnership/LLC interest where you're just getting units or membership interests in the entity. The tax code treats a partnership interest as personal property, not like-kind real estate, so a typical LP/LLC syndication won't qualify. That's why many sponsors offer TIC or DST versions specifically for 1031 investors—because those count as direct interests in real property when they're set up correctly.

If you go this route, think of it like trading fee title in your house for fractional fee title (TIC) or a beneficial interest in a trust that holds the property (DST). Both are widely used by 1031 investors. TICs give you undivided fractional ownership, but they need to be structured to avoid "partnership" treatment—things like management agreements and decision-making mechanics matter. DSTs are simpler for most exchangers because the trustee handles operations and, if the structure follows the standard guardrails, the IRS treats your interest as real estate for 1031 purposes.

The process mechanics are the same as any 1031: line up a qualified intermediary before your sale closes, don’t touch the proceeds, identify your replacement(s) in writing within 45 days, and close within 180 days. Make sure your replacement value and debt line up so you’re not taking taxable “boot.” Identification rules matter when you’re looking at fractional interests or multiple DSTs; most exchangers either identify up to three specific options or use the 200% rule, and they keep backups in case one deal slips.

From an investment standpoint, syndication-style TICs and DSTs are passive and can be a good fit if you want mailbox income and institutional management, but they’re not all created equal. You’ll want to underwrite the sponsor’s track record, the property and market, leverage, fees, projected hold period, and the exit plan, because your liquidity and control are limited compared to owning your own rental. With TICs, pay attention to lender requirements and voting rights; with DSTs, understand the operational limitations built into the structure and how that affects business plans like value-add.

A couple of practical tips I give clients in this situation. Start evaluating replacement options before you list the house so you're not scrambling inside the 45-day window. Confirm—explicitly—that the offering is 1031-eligible as a TIC or DST; "syndication" is a broad term and a lot of deals are LP/LLC only. Get your intermediary, CPA, and (ideally) a real-estate attorney on the same page early, especially if there's any wrinkle like a refinance, improvements, or co-owners. And be careful with "drop and swap" or post-closing entity moves; even when they can be structured, the step-transaction risk is real if the facts aren't right.

Bottom line: yes, you can exchange a single house into a pooled institutional asset, but make sure you're acquiring a qualifying real-property interest (TIC or DST), not a partnership interest. If you want, share a few details—sale price, equity amount, target markets, risk profile—and I can outline what a realistic TIC/DST lineup might look like and how to structure the identification so you stay compliant and protected.

I work with investors who use Tenants in Common (TIC) for income property, and the key is to separate the concept of being on title from how you run the partnership. In a TIC, each owner holds an undivided, fractional interest directly on the deed, which typically allows you to take depreciation and complete 1031 exchanges in proportion to your percentage. The tradeoff is that you also carry your share of liabilities and you need a solid governance framework to avoid gridlock.

Everything lives or dies in the TIC agreement. Make sure it clearly defines who handles day-to-day decisions, which actions need unanimous consent, how capital calls are triggered and enforced, what happens if someone won't or can't fund, how transfers work, and exactly how disputes are resolved. I always focus on exit mechanics: rights of first refusal that actually function on a timeline, an appraisal method everyone accepts in advance, and a pre-agreed path to sell or buy out without torching value. If the group can't articulate how a partner exits cleanly, that's a red flag.

Financing is the next pinch point. Some lenders underwrite and require carve-outs from every TIC owner; others push for a single signatory with special-purpose entities behind the scenes. More owners usually means more underwriting friction, slower closings, and tighter covenants. If you're doing a 1031 into a TIC, get the lender's TIC requirements in writing before you start your identification clock so you're not scrambling inside the exchange timeline.

Underwrite the real estate as if there were no TIC—cash flow durability, DSCR, rollover and lease exposure, realistic rent growth, capex, and exit cap assumptions—and then underwrite the people. Balance sheets, experience, time horizon, and risk tolerance all need to line up. I've seen otherwise strong deals stumble because one co-owner wanted a quick flip while the rest planned a longer, cash-flow hold. Alignment up front is cheaper than mediation later.

Operationally, aim for fewer decision-makers when you can, set reporting expectations for the property manager, and give yourselves the contractual ability to replace the manager based on objective performance. Build healthy reserves at closing and agree in advance on what triggers additional contributions so you’re not negotiating in the middle of an emergency repair or a vacancy spike. Decide early how you’ll choose between refinancing and selling so you aren’t inventing a process under pressure. If your group mixes 1031 buyers and cash buyers, align the tax and timing goals at the outset; otherwise exit timing can turn into a recurring argument.

The recurring risks in TICs are partition actions, transfer friction when someone wants out, and lender restrictions that make ownership changes cumbersome. With a well-drafted agreement, those risks are manageable. The right team matters: use a real estate attorney who drafts TICs regularly, a tax advisor who understands depreciation allocation and exchange rules, and a lender that is explicitly comfortable with TIC structures.

If you share the property type, market, rough deal size, number of co-owners, and whether a 1031 is involved, I’m happy to sanity-check the structure. TICs can be excellent tools to fractionate larger assets and preserve 1031 flexibility, but the success rides as much on partner alignment and paperwork as it does on the pro forma.

Gi'angelo, great question. I work a lot on TIC structures around the Bay, and you're right that they're far more common in San Francisco than elsewhere. The two big reasons are financing and local conversion rules. On financing, the key is whether you can get true fractional TIC loans (each owner with their own note secured by their exclusive-use unit). In SF there's a well-developed ecosystem of lenders and docs; once you cross the county line, lender appetite thins out quickly, which can mean higher rates, tighter terms, and fewer options for your eventual buyers. On the legal side, your economic "exit" often depends on condo conversion, and cities like Oakland and Berkeley have tougher paths—think replacement-housing requirements, annual caps, or tenant-protection look-backs that can delay or block a conversion after certain types of vacancy events. Because of that, I underwrite TICs outside SF as if they'll remain TICs permanently, and I only get interested if the price per exclusive-use unit is compelling even without a conversion. Before you tie up a property, get written confirmation from at least two active fractional-loan lenders that they'll fund both your acquisition and future resales, retain a TIC-savvy attorney to draft market-standard agreements, and read the city's condo-conversion code like a land-use deal—fees, timing, owner-occupancy, and any links to rent control or just-cause. With those boxes checked, a non-SF TIC can still pencil; without them you're swimming upstream. If you share the target city and building profile, I'm happy to map the step-by-step for that jurisdiction.

If you’re buying as a tenants-in-common today with an eye toward converting to condos later, start by thinking like a lender. The easiest path—both for your initial purchase and for future resale—is fractional TIC financing, where each co-owner has their own loan secured only by their share and the exclusive-use rights to their unit. That structure keeps one owner’s issues from becoming everyone’s problem and, later, makes it much simpler to sell an individual interest or refinance. Blanket loans still exist, but they tie all owners together, create cross-default risk, and usually force a group refinance when anyone wants out. If you’re serious about conversion and individual exits, fractional is the cleaner lane.

Underwriting on TICs is a bit tighter than on condos, so go in prepared. Most portfolio lenders want to see 15–25% down (more if it's non-owner-occupied), a master insurance policy that names each lender correctly, an HOA-style budget with real reserves, and a modern TIC Agreement. That agreement is more than paperwork—it's your operating system. Make sure it spells out the percentage interests, the exclusive-use/occupancy plan, a clear maintenance matrix (who pays for interiors versus roofs, foundation, major systems), reserves, right-of-first-refusal so transfers don't get messy, and dispute resolution that doesn't require World War III to enforce. The more your TIC feels "condo-like" in governance and budgeting, the smoother the financing and the better buyers will respond.

On 1031 exchanges, TICs can absolutely be exchange-friendly if they’re structured to look like co-ownership rather than a partnership. Keep income and expenses split in proportion to ownership, avoid centralized profit-sharing or a manager with GP-style powers, and coordinate early with your qualified intermediary and attorney. Even if nobody is in an exchange today, build that flexibility in—people’s plans change, and you don’t want your governing docs to be the reason a sale falls apart.

As for the condo conversion itself, the rules are local, but the cadence is similar everywhere. First, run a quick feasibility screen: are you eligible to subdivide under your city's rules, and do any tenant-protection or rent-control overlays complicate timing? Next, a surveyor and land-use attorney will guide you through the tentative map and what life-safety or utility-separation upgrades the city will require. In many buildings, the big lifts are separate (or sub-metered) utilities, egress, and fire/life-safety tweaks. After that, you'll draft your CC&Rs, set up the HOA, and march toward a final map and recordation. Once you have separate APNs and condo titles, you unlock conventional financing and a broader buyer pool. In practical terms, you should budget both time (six to eighteen months is common, depending on jurisdiction and scope) and money (soft costs for mapping/legal/fees plus whatever hard costs it takes to meet code).

Value-wise, expect TIC interests to trade at a discount to similar condos before conversion—financing is scarcer and some buyers are wary of the structure. After conversion, that gap usually narrows or flips because you're offering separately deeded units with mainstream financing. That's why I tell clients to model both exits up front: one scenario where you sell as TIC if conversion drags, and one where you sell as mapped condos. Don't forget to include carrying costs, capex, and the time value of money—sometimes a "cheaper" conversion ends up more expensive if it stretches your timeline.

To tie it together, here’s a short action plan I’ve used on successful projects:

• Do a lender pre-flight before you lock your TIC structure: send a TIC-savvy lender your draft agreement, insurance, budget, and a quick building condition summary. Let them tell you what to tweak now so you're financeable later.

• Sequence the inevitable upgrades (sub-metering, life-safety) early so you’re not paying twice—those items help with both current financing and future conversion.

When does conversion not pencil? If utilities can't be practically separated, if life-safety/code upgrades are heavy relative to the unit values, or if your city's tenant-protection/lottery rules create multi-year uncertainty, you may be better off dialing in a rock-solid TIC and sticking with fractional loans. But if feasibility checks out and your market shows a healthy condo premium, lining up your docs and improvements now will make the financing easier today and the exit cleaner tomorrow.

Short answer: yes—two LLCs can own one property together. The clean, common way to vest title is something like:

"ABC, LLC, a Washington limited liability company, as to an undivided 50% interest; and XYZ, LLC, a Washington limited liability company, as to an undivided 50% interest; as tenants in common." (Adjust percentages and state as needed; title companies see this all the time.)

From there, think through three buckets:

1) Choose your ownership structure (TIC vs. JV LLC)

TIC (each LLC on title for its %)

Pro: Keeps the door open for each party to do its own 1031 exchange later.

Pro: Cleaner “go-your-own-way” exits; each side owns real property directly.

Con: More signatures/consents on financing; lenders often require both TIC owners to sign loan docs/guaranties.

Single “propco” JV LLC (both parties are members)

Pro: Simpler day-to-day ops (one entity on title, one bank account by default).

Con: Membership interests generally don’t qualify for 1031 exchanges, which can pinch you at sale.

If future 1031 flexibility matters to either of you, TIC is usually the better fit. If operational simplicity is king and you don't care about 1031, a JV LLC can be easier.

2) Financing realities

Underwriting: With TIC, expect the lender to underwrite both owners; most commercial/portfolio lenders are fine with this, but ask early.

1–4 unit nuance: Some consumer lenders don't love multiple LLCs on title. If that's your asset class, you may need a portfolio/DSCR lender.

Guaranties: It's common for lenders to require guaranties from both TIC members (even if pro-rata). Clarify who's guaranteeing what and whether any carve-outs are joint and several.

3) Paperwork to get right (the difference between smooth and painful)

Create a TIC Agreement between the two LLCs (even if you're best friends). Key clauses:

Capital: Who funds how much at close; future capital calls; what happens if someone can’t fund (dilution? loans at a stated rate? cure periods?).

Distributions & Waterfall: Default is pro-rata, but if one side advances capital, define preferred returns or reimbursements before splits.

Management & Authority: Who can sign leases, hire/fire the property manager, approve budgets, spend above $X, refinance, or list for sale. Tie voting to decision type (ordinary vs. major decisions).

Deadlock mechanics: With 50/50 ownership, you need a tie-breaker. Options include buy-sell (shotgun), third-party referee, or a forced-sale mechanism after a defined period.

Transfers & ROFR: Limit assignments; give the other TIC a right of first refusal so an unknown third party doesn't suddenly become your partner.

No-Partition Covenant: TIC owners have a statutory right to partition unless they waive it—waive it. Use buy-sell/deadlock clauses instead of letting a court force a sale.

Insurance & Risk: Set minimum coverages (property, GL, umbrella). Align who carries what and how deductibles are handled.

Compliance with 1031/TIC best practices (if exchanges might matter): Keep separate decisions, limit centralized management, and avoid creating a de-facto partnership if your tax goal is direct ownership. (Rev. Proc. 2002-22 lays out factors—make your docs and behavior align.)

Exit & 1031 mechanics: Spell out how you’ll sell, how listing/price decisions are made, and how a split exchange (“drop-and-swap” or separate exchanges) would work in practice (timelines, accommodator coordination, ID periods).

Banking & Reporting: One operating account, monthly reporting to both parties, and an annual budget approval process. Transparency keeps partnerships healthy.

Defaults & Remedies: Missed capital calls, covenant breaches, or material mismanagement—define cures and outcomes (interest, dilution, buy-out, or forced sale after process).

Taxes & estate planning notes

Even as TICs, the IRS can treat active co-owners as a partnership for tax filing. Many TICs file a 1065 and issue K-1s—coordinate with your CPA.

TIC has no right of survivorship; each LLC's interest follows its operating agreement/succession plan. If survivorship is desired (rare between unrelated investors), that's a different vesting (joint tenancy) and usually not recommended for investment partners.

Bottom line: two LLCs on one deed as TIC is totally workable and commonly done. If you want maximum flexibility to 1031 later, TIC is usually the right call—just pair it with a strong agreement and a lender that's comfortable with the structure. If you prioritize simplicity and don't care about exchanging later, a single JV LLC can be smoother operationally.

Totally doable to pair a 1031 exchange with a tenants-in-common (TIC) deal—the trick is making sure what you're buying truly looks and behaves like simple co-ownership, not a partnership in disguise. Put title in each exchanger's name (or their own single-member LLC) as a tenant in common so everyone owns an undivided percentage. From there, keep the economics clean: income, expenses, depreciation, and sale proceeds should track each owner's percentage exactly. If you bring in a manager or sponsor, pay them a fixed or fair-market-value fee, not a share of profits—profit-based comp is one of the quickest ways to make a TIC smell like a partnership.

Lenders and logistics are where most headaches crop up, so start lining those up early. Some banks are very TIC-friendly; others aren't. Make sure any lender requirements—cash management, carve-outs, reserve controls—still let you function as co-owners. Also, remember that your 1031 rules don't change just because the replacement property is fractional: each exchanger has to replace equal or greater value and equal or greater debt, or add cash to cover any shortfall. Don't assume a group loan solves that automatically; each person's share of the debt needs to pencil.

Your TIC agreement should do two things well: prevent deadlock and preserve co-owner independence. Day-to-day items can sit with a manager under a budget, but big decisions—selling the property, refinancing, signing an unusually long or expensive lease, replacing the manager—need clearly stated voting thresholds (often unanimity for fundamental actions, high supermajority for the rest). Build in real-world exit mechanics: what happens if someone won't fund a capital call, wants out early, or goes dark? A practical buy-sell or "shotgun" clause, reasonable transfer standards, and a right of first refusal usually strike the right balance between marketability and control. Avoid blanket transfer bans; they make fractional interests hard to sell and can create tax and financing friction.

Two timing notes save a lot of pain. First, treat the 45-day identification and 180-day closing deadlines like gospel. When you identify, be specific about the property and your percentage TIC interest. Second, be careful with cash-out refis tied too closely to the exchange—poor timing can draw "step transaction" scrutiny. If you plan to refinance, talk through the sequencing before you're under the gun.

Personal use is the silent deal-killer. Qualification is tested owner by owner. If one co-owner intends to use their share personally (or blurs the line), that person’s exchange can fail even if everyone else is squeaky clean. Document investment intent and operate the property accordingly—arm’s-length leases, market rents, normal expense sharing.

A lot of folks ask about "rolling up" into an LLC after closing to make management easier. It's been done, but doing it too soon undercuts the argument that you acquired and held as co-owners for investment. If a roll-up might be in the cards, hold for a meaningful period and get bespoke tax guidance on timing before you move.

Finally, if you like the passive route and don't need the extra control a TIC offers, compare a Delaware Statutory Trust. DSTs are more plug-and-play for exchanges, but you'll give up the ability to individually finance or sell your exact undivided interest. If control, custom debt, or a tailored exit path matter to you, a well-drafted TIC can be the better fit.

If you want targeted feedback, share a few specifics—your relinquished sale price and debt, how many co-owners you're planning on, what your lender is asking for, and any clauses in the draft TIC agreement that feel heavy-handed. I'll flag where I'd tighten language or push for different terms so your exchange stays clean and your co-ownership stays functional.

If your main goal is day-to-day simplicity and smooth financing, put the property in a manager-managed LLC. Lenders generally prefer one borrower, one bank account, and one set of books, and an operating agreement lets you spell out exactly who can sign leases, approve budgets, and make big decisions like refis or a sale. You can also build in timelines for approvals and clear remedies if someone won't fund a capital call, so operations don't get stuck.

If you and your partner care more about holding a recorded, deeded share—“you own 60%, I own 40%”—then a tenancy-in-common can work well, but only if the co-tenancy agreement is treated like the operating system for the deal. That agreement should say who manages the property, which decisions require both owners, how budgets and major cap-ex get approved, and what happens on a funding default. I always include a partition waiver (so no one can drag this into court) and a practical exit path: first a right of first refusal (ROFR), then a buy-sell if you can’t agree. Expect more lender diligence with TICs; many banks want carve-out guarantees from each co-owner and may limit how many people can be on title, so have that conversation early.

You don't actually have to choose one or the other. A very workable middle ground is to take title as TIC, but have each person own through their own single-member LLC. On the deed it reads "A Holdings LLC as to 55%; B Capital LLC as to 45%." You still run the asset under a tight co-tenancy agreement—appoint a manager, set decision thresholds, lock in capital-call remedies—but each party has entity-level liability protection and a clearly recorded share. Day to day, if you keep banking and reporting disciplined, it feels almost as clean as a single property LLC.

Whichever route you pick, make the governance boring in the best possible way. Pre-agree on what counts as a “major decision” (sale, refinance, long or large leases, cap-ex above $X), set response deadlines so no one can stall indefinitely, and write down exactly what happens if a partner doesn’t fund (temporary loans at a stated rate, dilution after a cure period, or—only as a last resort—a forced-sale trigger). Match insurance and title to the structure, too: named insureds should align with the vesting and any lender requirements, and your documents should say who controls insurance proceeds after a casualty and who decides whether to rebuild or sell.

Short version: want the lowest friction and the most lender-friendly setup? Use a manager-managed property LLC with a real operating agreement. Want each owner to hold a deeded slice and keep more individualized rights? Use a TIC, but treat the co-tenancy agreement like a full operating agreement with a partition waiver, ROFR, and a workable buy-sell. Want some of both? Title as TIC through your own single-member LLCs and operate under a tight co-tenancy agreement. If you share partner count, leverage target, and how you want control to work, I'm happy to sketch sample decision rights and buy-sell language that fits your deal.