Tenants in Common Agreement
(Short Form) (CA)

Summary

This short form of tenants in common agreement is for use by business entities that intend to acquire and hold title to commercial real estate in California as tenants in common. This template includes practical guidance, drafting notes, and alternate clauses. Tenancy in common (TIC) is a form of co-ownership of property. Each TIC member, sometimes called a TIC owner or a co-owner, holds an undivided interest in the property with no rights of survivorship. Although TIC owners may hold unequal interests in the property, each TIC owner has the right to possess the entire property and may not exclude any other TIC owner from any part of the property, unless otherwise agreed to in writing. Upon the death of a TIC owner, the decedent's interest in the property becomes part of the decedent's estate, and (unlike in the case of a joint tenancy with rights of survivorship) does not automatically transfer to the remaining TIC owners. Under California law, tenancy in common is the default form of co-ownership of property (other than for married couples and domestic partners, who are presumed to acquire property as community property; see Cal. Fam. Code § 760). As a result, absent language to the contrary, a conveyance to two or more unmarried parties creates a TIC under California law. See Cal. Civ. Code § 686. California law does not require a TIC to have a governing document; however, it is common practice in commercial real estate transactions to memorialize the rights and obligations of TIC members in a co-ownership agreement. For more information about TIC interests under California law, see 10 California Real Estate Law & Practice §§ 345.40-345.41. For more information about acquiring commercial real estate in California, see Purchasing and Selling Commercial Real Estate Resource Kit (CA). For an overview of ownership structures and related issues, see 2 Thompson on Real Property, Thomas Editions § 12.16.