Trying to decide between buying a TIC or a condo in Santa Monica? You are not alone. With a mix of classic courtyard buildings and newer condo communities on the Westside, the differences can feel confusing when you are comparing listings. In a few minutes, you will understand how each ownership type works, how financing and monthly costs differ, what to watch for in governance and insurance, and how resale and taxes may affect your bottom line. Let’s dive in.
TIC vs condo basics
Condo ownership, in short
In a condominium, you own your individual unit in fee simple and share an undivided interest in the common elements. The building is created through recorded condominium documents, including a condo map or plan and CC&Rs, and it is governed by a homeowners association. Each condo unit has its own separate title, which title companies and lenders work with every day.
TIC ownership, in short
In a tenancy in common, you and the other owners hold undivided fractional interests in the entire property. You typically receive exclusive occupancy rights to a specific unit through a private TIC agreement. The agreement controls who can live where, how expenses are split, how decisions are made, and what happens if someone wants to sell or defaults. The paperwork is more customized than a condo and there is more contract-level variability from building to building.
Westside context you will see
On the Westside and in Santa Monica, some older multifamily buildings were set up as TICs. TICs are still available, though they are less standardized than condos. Condominiums remain more common and tend to have more predictable documentation and title structure.
Converting TIC to condo
Converting a TIC to a condo requires proper mapping, recordation, and compliance with local and state rules. It usually needs owner consensus and municipal approvals and can take time and money. Local regulations and rent-control interactions can complicate conversions, so do not assume a TIC can or will become a condo.
Financing differences
Lender appetite and loan programs
- Condos are widely financed by mainstream lenders using conventional loans and, when eligible, FHA and VA programs. Project-level approval matters.
- TICs are harder to finance. Many loans are offered by portfolio or specialty lenders. Expect tighter underwriting, fewer loan choices, and potentially higher rates.
Down payment and borrower requirements
- Condos can qualify for lower down payments with certain conventional programs. FHA may be possible if the project is approved. Availability depends on lender and project review.
- TICs often require larger down payments, commonly 20 to 30 percent or more. Some lenders ask for 25 percent or higher, stronger reserves, and higher credit standards.
Condo project risks to approval
For condos, lenders review the HOA’s health. They consider owner-occupancy ratios, HOA delinquency rates and reserves, any ongoing litigation, and insurance coverage. If a project fails review, financing can be limited or more expensive.
TIC structure and underwriting details
TIC loans may be underwritten by lenders who retain them in portfolio or sell to specialty investors. Some TIC financing uses a loan structure tied to the whole building with individual allocations. Title insurance for TIC interests can require special endorsements and added underwriting.
Practical financing takeaways
- Get pre-approved with a lender who actively finances TICs before you write an offer on one.
- For condos, confirm whether the project is eligible for your intended loan program.
- Ask every lender: required down payment, reserve requirements, whether they keep or sell the loan, and any extra title or escrow conditions.
- Assume FHA and VA options are limited for TICs unless a lender confirms otherwise.
Governance, costs, and insurance
Who makes decisions
- Condo HOAs follow recorded CC&Rs and bylaws and are subject to California’s HOA laws. Boards are elected and there are formal procedures for budgets, special assessments, and rule changes.
- TICs run on the TIC agreement. Voting rules, meeting procedures, and default remedies come from that contract. Some agreements require unanimous or supermajority consent for major actions.
Monthly charges and reserves
Both condos and TICs collect monthly amounts to cover shared expenses. Condos typically rely on a formal HOA budget and reserve study. TICs vary more, and reserve practices can be inconsistent. In a TIC, weak reserves can create risk if big repairs arise.
Insurance and liability
- Condos usually have a master association policy for common areas. You carry an HO-6 policy for your unit’s interior, personal property, and liability. Coverage details, deductibles, and exclusions like earthquake or flood matter.
- TICs also often carry a master policy arranged by the owners or a manager. If coverage is thin or poorly structured, owners may face gaps or higher personal liability. Lenders may require specific coverage levels.
Maintenance and big projects
Condo projects follow HOA rules for repairs and capital improvements. Large projects typically require certain board or membership approvals. In a TIC, the agreement controls how projects move forward, and unanimity requirements can slow or stall major work if owners disagree.
Rentals and local rules
Santa Monica has local rent-control and tenant-protection rules. Some TIC units may be tenant-occupied and subject to local requirements. Whether a unit is owner-occupied or rented can affect financing and resale options.
Resale, title, and appraisals
Buyer pool and market liquidity
Condos usually attract a broader buyer pool and have more predictable comparable sales. That often supports easier appraisals and stronger liquidity on resale. TICs can have a smaller buyer pool because of financing limits and buyer preferences, and they may trade at a discount versus similar condos.
Title and escrow
Condo closings follow familiar title insurance products and procedures. TIC transactions can require special title endorsements and a deeper review of recorded agreements, lien priority, easements, and cross-defaults. Expect more title questions and possibly higher endorsement costs with TICs.
Litigation and building risk
Any building-level litigation can impact financing and resale. For condos, association lawsuits can restrict loan programs. In TICs, disputes under the agreement or an owner default can create unique exposure for co-owners.
Taxes and 1031 basics
Property taxes in California are generally reassessed at change in ownership or new construction. In a TIC, the transfer of a fractional interest is typically a change in ownership for that interest, which can trigger reassessment for that share. County assessor practice governs the specifics, so clarify how your transaction will be handled.
If you are considering a 1031 exchange, some TIC interests can qualify when recognized as real property. Eligibility depends on how the TIC is structured and written. Work with tax and legal professionals who know TICs and local practice.
Santa Monica buyer checklist
Lenders and loan programs
- Do you finance TIC interests? If yes, what down payment, credit, DTI, and reserve requirements apply?
- Will you keep the loan or sell it? How could that affect terms or servicing?
- Are FHA, VA, or other programs available for this property? If not, why?
- For condos, is the project eligible for your intended program? What HOA metrics could block approval?
- For TICs, do all co-owners need to qualify, sign, or guarantee the loan? Any cross-collateralization?
Title, escrow, and insurance
- What title endorsements are required for this TIC or condo? Any added costs or conditions?
- Are there easements, encroachments, or other issues that could affect closing?
- What master policy coverage is in place? What are the deductibles and exclusions such as earthquake or flood?
Documents to request
- TIC: the fully executed TIC agreement, recorded deeds, and any addenda on occupancy rights, maintenance splits, resale restrictions, and default remedies.
- Condo: CC&Rs, bylaws, meeting minutes, reserve study, budget, insurance policies, and statements on assessment delinquencies.
- For either type: disclosures about pending special assessments, litigation, or code violations.
Local checks in Santa Monica
- Ask whether any unit is subject to Santa Monica rent-control or tenant rules and what registrations or notices apply.
- Review the building’s permit history and Certificate of Occupancy with the city. Ask about past remodels, structural or seismic work, and compliance with local retrofit ordinances.
- Clarify parking, storage, and common area use. These details are often written differently in TIC agreements versus condo CC&Rs.
Closing and long-term ownership
- Have a Los Angeles County attorney review the TIC agreement before you commit.
- In condos, confirm HOA rules on rentals, pets, renovations, and short-term stays. Santa Monica has specific short-term rental rules, so verify what is allowed.
- Budget for potential unpredictability with TICs, including special assessments, insurance gaps, or legal costs if co-owner disputes arise.
Which fits your goals
- Choose a condo if you want broader financing options, more standardized governance, and stronger resale liquidity. The title structure and market data are more predictable.
- Consider a TIC if you value a potential price advantage and can handle more customized agreements, limited lender options, and a smaller buyer pool at resale. Take time to study the TIC agreement and the building’s long-term needs.
Ready for a local game plan?
Whether you are weighing a sunlit courtyard TIC near the beach or a newer Santa Monica condo with amenities, you deserve clear guidance tailored to your budget and goals. For a neighbor-first approach backed by full-service resources, connect with Kyle Leibovitch to map your path with confidence.
FAQs
What is the main difference between a TIC and a condo in Santa Monica?
- A condo gives you fee simple title to your unit plus shared common areas with HOA governance, while a TIC gives you a fractional interest in the whole property with exclusive occupancy rights defined by a private TIC agreement.
How do down payments compare for TICs versus condos?
- Condos may qualify for lower down payments through conventional or FHA programs when eligible, while TICs often require 20 to 30 percent or more with stricter reserves and credit standards.
Can I use FHA or VA loans to buy a TIC in Santa Monica?
- FHA and VA options are generally limited or unavailable for TIC interests, so you should confirm program availability with a TIC-experienced lender before you shop.
What HOA issues can block condo financing?
- Lenders often review owner-occupancy ratios, reserve levels, assessment delinquencies, litigation, and insurance coverage, and problems in these areas can limit or price up financing.
Are TICs harder to resell than condos on the Westside?
- TICs typically face a smaller buyer pool and fewer financing options, which can mean longer market times or pricing discounts compared to similar condos.
How are property taxes handled for TIC purchases in Los Angeles County?
- A TIC fractional interest transfer is typically a change in ownership for that share and can trigger reassessment for that portion, so confirm details with county guidance and your tax advisor.
What documents should I review before buying a TIC?
- Request the fully executed TIC agreement, recorded deeds, and any addenda covering occupancy rights, expense allocations, transfer rules, default remedies, and dispute resolution procedures.
Can a TIC be converted to condos in Santa Monica later?
- Conversion can be possible but often requires owner agreement, proper mapping, recordation, and compliance with local rules, which can add time, cost, and complexity.
