The Ultimate Guide to Buying a Condo, Co-op, or TIC in San Francisco

The Ultimate Guide to Buying a Condo, Co-op, or TIC in San Francisco

If you’re planning to buy a home in San Francisco, you’ll quickly encounter a unique set of ownership options: condos, co-ops, and TICs (Tenancy-in-Common). Each comes with its own pros, cons, legal structures, and financial implications. While these ownership types can seem confusing at first, understanding the distinctions is essential for making the best decision for your lifestyle, budget, and long-term goals.

This blog I will break down the differences between condos, co-ops, and TICs in San Francisco, helping you make an informed decision.

What is a Condo (Condominium)?

Definition: A condominium is a type of real estate ownership where you own your individual unit (everything within the walls) and share ownership of the common areas with other unit owners (e.g., hallways, roof, garage).

Legal Structure: Each condo unit has its own parcel number, and you get a grant deed and title for the unit. You can buy, sell, or refinance independently.

Financing: Condos are the easiest of the three ownership types to finance. Most traditional mortgage lenders will approve loans for condos.

HOA (Homeowners Association): Condos have an HOA that collects monthly dues to manage building maintenance, insurance, reserves, and amenities. The HOA has the power to enforce rules (CC&Rs) and make decisions affecting the community.

Pros:

• Full ownership and equity
• Easier to finance and refinance
• Often located in newer or luxury buildings
• More predictable resale value

Cons:

• Monthly HOA dues (can be high in luxury buildings)
• Subject to HOA rules and management decisions

Ideal For: Buyers looking for independence, easy financing, and potential appreciation in a more traditional ownership structure.

What is a Co-op (Cooperative)?

Definition: A co-op is not real estate ownership in the traditional sense. Instead, when you buy a co-op, you're purchasing shares in a corporation that owns the building. Your shares entitle you to a proprietary lease for your specific unit.

Legal Structure: You don’t hold a deed to your unit. Instead, you own a portion of the building via shares and have a lease agreement giving you the right to occupy a specific unit.

Financing: Financing a co-op can be more challenging. Not all lenders offer co-op loans, and the building may have restrictions on loan types, down payments (often 25% or more), or whether financing is allowed at all.

HOA Equivalent: Co-ops have a Board of Directors (usually shareholders) who approve new buyers, enforce house rules, and make decisions about building management. Monthly dues typically include property taxes, building mortgage (if any), maintenance, and utilities.

Pros:

• Often more affordable per square foot
• Tight-knit communities with vetted residents
• Monthly dues may include taxes and utilities

Cons:

• Board approval required for purchase and subletting
• Limited financing options
• Less resale flexibility

Ideal For: Buyers looking for a community-oriented environment and who plan to stay long-term.

What is a TIC (Tenancy-in-Common)?

Definition: In a TIC, multiple individuals co-own an entire property and share rights to the building. Each owner has the right to occupy a specific unit but does not own that unit individually.

Legal Structure: There is one deed for the entire property, and each buyer holds an interest in the whole property. A TIC agreement outlines the rights and responsibilities of each co-owner, including who occupies which unit.

Financing: Historically difficult to finance, but fractional loans have become more common. These loans are tied to an individual's percentage of the TIC rather than the entire property. However, not all lenders offer them.

HOA Equivalent: There is no formal HOA, but TIC groups often operate like one through the terms of their TIC agreement. Maintenance, taxes, and expenses are shared proportionally.

Pros:

• Often the most affordable entry point into SF real estate
• Allows buyers to live in high-demand neighborhoods at lower costs

Cons:

• More complicated legal structure
• Potential risks if a co-owner defaults
• Resale may be more difficult

Ideal For: Budget-conscious buyers who understand the risks and are comfortable sharing ownership.

Key Differences at a Glance

Financing: What to Expect

• Condos: Conventional mortgages with as little as 3-10% down, depending on lender and building qualification.
• Co-ops: Often require 20-30% down or more. Lenders may require additional documentation from the co-op board.
• TICs: Usually require 15-25% down. Lender options are limited to those who offer fractional loans (e.g., Bank of Marin, Sterling Bank).

Resale Considerations

• Condos: Easiest to resell. Buyers understand the structure and financing is readily available.
• Co-ops: Resale depends heavily on board approval. Some co-ops limit profit on resale or have stricter rules on who can buy.
• TICs: Resale is improving thanks to better lending, but buyers must be educated about the risks.

Converting TICs to Condos

One reason some buyers consider TICs is the possibility of converting the property to a condo in the future. San Francisco regulates this closely. Condo conversion typically requires:

• Owning the property for several years
• Occupancy by owners
• Meeting the city's eligibility requirements

While conversion can increase property value and simplify ownership, it can be a lengthy and uncertain process.

Lifestyle Implications

• Condos are ideal for people who want simplicity, ease of financing, and flexibility.
• Co-ops work best for those who value community oversight, long-term living, and are less concerned with resale.
• TICs appeal to savvy buyers who want a foothold in the SF market but understand and accept the legal complexity.

Choosing the Right Option for You

Ask yourself:

• How long do I plan to live in this home?
• Do I want the easiest resale path?
• Am I comfortable with shared decision-making?
• Is ease of financing important to me?

Final Thoughts

Buying a home in San Francisco means navigating some of the most nuanced real estate structures in the country. Condos, co-ops, and TICs each offer different advantages and drawbacks depending on your goals, budget, and risk tolerance.

Whether you're a first-time homebuyer, investor, or downsizing retiree, working with a local expert who understands the ins and outs of San Francisco real estate is crucial.

Have questions or want help exploring your options?

Reach out to me, Lisa Vukovic, your San Francisco real estate expert. I’m happy to provide personalized guidance, help you understand the financial implications, and match you with a home that fits your needs.

Let’s make your next move the right one.