Trying to decide between a TIC and a condo in Santa Monica? The choice affects how you finance your purchase, how your building is run, and how easy it is to resell later. In a market with limited inventory and strong demand, you want clarity before you commit. This guide explains the key differences, what to expect with financing and insurance, how resale plays out, and the due diligence to protect your investment. Let’s dive in.
TIC and condo basics
TIC defined
A tenancy in common, or TIC, is fractional ownership of a single property. You own an undivided percentage interest in the whole building, paired with exclusive rights to occupy a specific unit under a private TIC Agreement. The agreement sets rules for use, maintenance, assessments, transfers, and dispute resolution.
Condo defined
A condominium is a common interest development. You own a deeded unit in fee simple plus a shared interest in the common areas. Condos are governed by a homeowners association under the Davis-Stirling Common Interest Development Act, with recorded CC&Rs, bylaws, and rules.
Ownership and governance
- Legal form: A TIC relies on a private contract and general property law. A condo is a statutory structure with defined owner rights and obligations.
- Rules and oversight: TICs follow the TIC Agreement drafted by the co-owners and their advisors. Condos follow Davis-Stirling, which sets expectations for board meetings, records, budgets, reserves, and disclosures.
- Disclosures: Condo buyers receive required resale documents like financial statements, CC&Rs, minutes, and details about litigation and reserves. TIC buyers do not get a statutory resale certificate, so you must request comprehensive documents in escrow.
Financing differences
- Condos: Conventional lenders commonly finance condos when the project meets program rules such as owner-occupancy ratios, reserve levels, and acceptable legal status. Conforming, and sometimes FHA or VA financing, may be available depending on the project.
- TICs: Financing is more limited. Many agency programs do not accept TICs or only do so under narrow conditions. Buyers often use portfolio lenders or specialty programs, and terms can include higher rates, larger down payments, or shared liability structures. Some TIC loans require all co-owners to be co-borrowers or cross-collateralized.
- Practical takeaway: Expect a larger buyer pool and more predictable pricing for condos. For TICs, plan ahead with a lender who knows TIC underwriting or prepare for cash or bridge financing.
Insurance and title
- Condos: The HOA typically carries a master policy for the structure and common areas, while individual owners carry HO-6 policies for interiors and personal property. Insurance details appear in the HOA documents and budgets.
- TICs: Coverage depends on the TIC Agreement. Some TICs carry a master policy for the building, while others require specific individual policies with indemnity provisions. Title insurance for fractional interests can be more complex, and lenders often require special endorsements and clarity on mortgage priority.
Resale and liquidity
- Condos: Generally sell faster due to standardized ownership and broad financing options. More buyers can qualify, which supports pricing.
- TICs: Often have a smaller buyer pool and longer marketing times because of financing limits and shared-liability concerns. Prices may be discounted compared with comparable condos. A well-structured TIC with a strong track record can narrow the gap, but risk remains.
Santa Monica conversion factors
Converting a TIC to a condo can expand the buyer pool and increase value, but it requires time and money. In Santa Monica, you should expect municipal review and compliance with local planning and tenant protection rules. If tenants are in place, relocation and rent-control obligations may apply. Legal drafting, surveys, potential building upgrades, and county recording also add cost. Not every building pencils out for conversion, so test feasibility early.
Taxes and reassessment
In California, a sale or subdivision can trigger reassessment, which may change property taxes. A conversion or the sale of a fractional interest can create reassessment events. Review scenarios with the county assessor and a qualified tax advisor before you proceed.
Buyer due diligence checklist
For both TIC and condo
- Preliminary title report, recorded deeds, and all liens or easements.
- Property tax history and expected reassessment implications.
- Any leases, rental history, and occupancy details.
- Evidence of insurance and requirements from any lender.
- Inspection reports for structure, pest, roof, plumbing, and electrical. Include seismic-related items where relevant.
TIC extras to request
- Full TIC Agreement and any amendments, signed and recorded.
- Operating budget, assessment history, and reserve practices for recent years.
- How monthly shared expenses are collected and enforced.
- Existing mortgage details, including any blanket loans on the parcel and debt priority.
- Litigation or dispute history among co-owners.
- Transfer rules, such as right of first refusal, buyout formulas, and required approvals.
- Title insurance availability and required endorsements for your fractional interest.
- Protections if another co-owner defaults on assessments or a shared loan.
- Any past efforts or plans to pursue condo conversion.
Condo extras to review
- CC&Rs, bylaws, HOA rules, and the most recent budget and reserve study.
- Required resale disclosures, including meeting minutes and any pending litigation.
- Special assessment history and any planned assessments.
- Project eligibility for common loan programs, including owner-occupancy and litigation status.
Seller considerations
- Document readiness: Whether you own a condo or a TIC interest, organize a clean disclosure package. For TICs, deliver the signed TIC Agreement, budgets, insurance evidence, and lender or title confirmations for endorsements.
- Marketability levers: TIC sellers can sometimes improve liquidity by offering seller financing, updating building-wide insurance, or commissioning preliminary title and lending guidance. Some owners explore conversion feasibility to grow the buyer pool, though timing and cost vary.
- Pricing strategy: Condos typically support broader demand. TICs may need value positioning that reflects financing limits and shared-liability risk.
Which option fits you
- Choose a condo if you want conventional financing, standardized HOA protections, and the widest resale audience. You trade some flexibility for predictable governance.
- Consider a TIC if you seek a lower entry price and can use cash or a portfolio loan, and you are comfortable with a contract-based governance structure. Confirm how shared obligations work before you commit.
- If you already own a TIC, explore whether conversion is realistic. Factor in municipal approvals, tenant protections, building upgrades, legal work, and recording steps, then weigh the likely value premium against the cost and timeline.
When you want a clear plan for purchasing, pricing, or preparing a property in Santa Monica, work with a team that understands ownership structures, financing routes, and value creation. Reach out to Baharian Group for a focused strategy and a smooth process.
FAQs
What is the main legal difference between TIC and condo in Santa Monica
- A TIC is fractional ownership governed by a private TIC Agreement, while a condo is a deeded unit in a common interest development governed by an HOA under the Davis-Stirling Act.
How does financing compare for TICs versus condos in Santa Monica
- Condos often qualify for conventional loans when projects meet program rules, while TIC financing is limited to portfolio or specialty lenders, with potentially higher rates and stricter terms.
What disclosures do buyers receive when purchasing a condo or TIC
- Condo buyers receive statutory HOA resale documents like financials, CC&Rs, and minutes; TIC buyers must request the full TIC Agreement, budgets, insurance, and title and mortgage details.
Can converting a TIC to a condo increase resale value in Santa Monica
- Yes, conversion can expand the buyer pool, but it requires municipal approvals, tenant protection compliance, legal and building work, and county recording, which add cost and time.
What are the biggest risks for TIC owners in Santa Monica
- Limited financing, potential shared liability for assessments or loans, internal dispute risk, title complexities, and lower resale liquidity compared with comparable condos.
Will my property taxes change if I buy or convert in Santa Monica
- A sale or subdivision can trigger reassessment under California rules, so consult the county assessor and a tax advisor to understand your specific impact before you proceed.
