The TIC Conversion Guide for SF Owners
If you own a duplex, triplex, or fourplex in San Francisco, you're sitting on one of the most valuable asset classes in the country. But there's a question a lot of owners don't ask early enough: are you maximizing that value by selling the building as a whole — or by selling each unit individually?
Tenancy-in-Common (TIC) conversion is a strategy that lets you do exactly that. Instead of selling to a single investor buyer, you structure the ownership so each unit can be sold to a separate buyer — at retail prices, not investor prices. The difference in total proceeds can be significant. But it's not simple, and it's not for everyone.
What Is a TIC, Exactly?
A Tenancy-in-Common is a form of shared property ownership where two or more people each hold an undivided fractional interest in a property. In a TIC conversion, each owner has an exclusive right to occupy a specific unit — defined in a TIC agreement — but they all technically own a share of the whole building together.
TIC ownership is the primary path for selling individual units in a small SF multifamily building that hasn't gone through the condo conversion lottery (more on that below). It's not condo ownership, but in practice it functions similarly for the end buyer — they get their own unit, their own financing, and their own piece of real estate.
For the seller, TICs allow you to sell unit by unit, to individual owner-occupant buyers, at prices that reflect the retail market rather than the investor cap rate market. That's the core financial argument for doing it.
The Pros and Cons
TIC conversion isn't the right move for every owner. Here's an honest look at both sides.
Potential Upside
- Sell at retail prices to individual buyers instead of a single investor discount
- Total proceeds per unit are often 10–20% higher than an as-is building sale
- Broader buyer pool — owner-occupants, not just investors
- Can sell units over time rather than all at once
- Positions units for future condo conversion if the lottery opens
- Units with vacant possession command the highest prices
Real Risks & Costs
- Legal fees, title work, and TIC agreement drafting add real upfront cost
- Tenanted units face serious rent control and Ellis Act complications
- TIC financing is more limited and typically costs buyers more than condo loans
- Fractional financing requires each buyer to qualify independently
- TIC owners share liability — a problematic co-owner affects everyone
- Timeline from decision to closed sale can run 6–18 months
The Tenant Situation Changes Everything
The biggest variable in any TIC conversion is whether the units are occupied. Vacant units can be sold immediately. Tenanted units are a different story — San Francisco's rent control laws give long-term tenants significant protections, and you cannot simply ask them to leave to facilitate a sale. If you have tenants, you need to understand your options under the Ellis Act, Owner Move-In eviction rules, and buyout agreements before you decide to pursue TIC conversion. This is where an experienced real estate attorney is non-negotiable.
TIC vs. Condo Conversion — What's the Difference?
Condo conversion is the gold standard — it gives each unit its own parcel, its own deed, and access to conventional financing at the best rates. But in San Francisco, condo conversion for buildings with more than 2 units requires going through a lottery system, and the waitlist for 3–6 unit buildings has historically been years long. Some buildings have been waiting a decade or more.
TIC conversion doesn't require the lottery. It's a faster, more accessible path to individual unit sales — and it preserves the option to convert to condos later if and when your building reaches the front of the line. Many owners use TIC as a bridge strategy: sell as TICs now, convert to condos when the lottery comes through, and let buyers benefit from that conversion in the future.
The TIC-to-Condo Upgrade
One of the most compelling arguments for TIC conversion: buyers know they may one day be able to convert to condos. That future optionality has real value — it's often baked into the TIC purchase price. When conversion eventually happens, each owner benefits from a significant equity event as their unit value jumps from TIC to condo pricing.
The Legal Process & Timeline
Here's how a typical TIC conversion plays out from decision to first unit sold. Timelines vary based on whether units are vacant or tenanted, how quickly attorneys can turn documents, and market conditions.
This is the foundation. A real estate attorney specializing in SF TICs will assess your building, your tenant situation, and advise on structure. Don't skip this step or try to use a generalist attorney.
The TIC agreement is the governing document for the shared ownership. It defines each owner's exclusive space, shared responsibilities, financial obligations, and decision-making processes. This takes time to do right — it protects all future buyers and is a key underwriting document for lenders.
If you want to offer buyers individual financing — rather than group financing — you'll work with a TIC-specialist lender to set up fractional loans. Each buyer finances their own unit independently. This is a significant selling point and makes your units much more marketable.
If any units are occupied, this is the most time-sensitive and legally complex phase. Options include negotiated buyout agreements with tenants, Owner Move-In evictions (with strict requirements), or Ellis Act proceedings. Each path has different timelines, costs, and risks. Vacant units skip this step entirely.
A title company familiar with TIC transactions prepares the deed conveying fractional interests, reviews title for any encumbrances, and issues title insurance for each buyer's interest. This runs parallel to the TIC agreement drafting.
Once the legal structure is in place, units are listed and marketed individually. You can sell all units simultaneously or stagger them based on market conditions and your timeline needs.
What Does It Cost?
The costs below are estimates for a typical 2–4 unit SF building. Actual costs depend on building complexity, tenant situation, and attorney rates.
| Cost Item | Notes | Estimated Range |
|---|---|---|
| TIC Attorney — Agreement Drafting | Core legal document, varies by complexity | $5,000 – $15,000 |
| Title Work & Deed Preparation | Per unit; includes title search and insurance | $1,500 – $3,000/unit |
| Fractional Financing Setup | Lender fees to structure individual loans | $1,000 – $3,000 |
| Tenant Buyout (if applicable) | Negotiated — highly variable by tenant | $10,000 – $100,000+ |
| Building Inspections & Disclosures | Required per unit for sale | $500 – $1,500/unit |
| Real Estate Commission | Per unit sale | Market rate per sale |
| Estimated Total (Vacant 4-Unit) | Excluding commission and tenant costs | $20,000 – $45,000 |
For most owners, the legal and preparation costs are modest relative to the value unlocked by selling at retail prices. On a well-located SF fourplex, the premium from selling as TICs versus selling to a single investor buyer can easily reach $200,000–$500,000 in total proceeds — making the $20,000–$45,000 in setup costs a sound investment.
Is TIC Conversion Right for You?
TIC conversion makes the most sense when your units are vacant or close to becoming vacant, your building is in a neighborhood with strong owner-occupant demand, and you have time to run the process properly rather than needing a quick sale.
It's more complicated when you have long-term tenants, when the building needs significant deferred maintenance, or when you're in a part of the city where TIC demand is softer.
The first step is always a conversation — about your building, your tenants, your timeline, and what the numbers actually look like for your specific situation. Every building is different, and the right strategy depends on the details.
"The difference between selling a building and selling units is often the difference between one transaction and four — and the math usually makes it worth the work."
