Duplex owner's TIC conversion a risky move

DEAR BOB: I own a very desirable duplex that my husband and I bought in the 1970s. One tenant has been there more than 30 years; the other has been there 20 years. Both keep their units in tip-top shape. The rents are a few hundred dollars below market value, but we have zero vacancy. I want to sell one of the units to the tenant and keep the other one for my old age (I am 75). What do you think of a tenant-in-common sale? Converting the two-family duplex into condominiums would be difficult without a zoning variance because the local condo parking regulations require 1.5 spaces per unit and there are only two parking spaces. Would a life tenancy work for either tenant or me? --Alleen R.

DEAR ALLEEN: Forget the life tenancy idea. That leads to nothing but trouble.

Purchase Bob Bruss reports online.

Selling one of the units to your tenant as a tenancy-in-common (TIC) creates potential problems. How will your buyer finance the purchase of the unit? Are you willing to carry the mortgage that will be secured by the entire property? If you think about it, it's not a great idea.

If you or your buyer later wants to sell your TIC, it could be impossible for the buyer to obtain a new mortgage without the cooperation of the other TIC co-owner. Another potential problem is one TIC can force the sale of the TIC building by bringing a partition lawsuit. I hate to be so negative, but all I see are problems with your TIC plan. Please consult local real estate attorney for more details.

(For more information on Bob Bruss publications, visit his
Real Estate Center).

Copyright 2006 Inman News