Selling Part of a Property
Updated: Oct 2, 2021
Not that co-ownership of a property is new, Tenancy in Common, Joint Tenancy and other means of holding a property with other individuals has been around for a long time. I first became familiar with part of an individual's interest in a home being sold in the San Francisco Bay area. Residential listings with a type of Tenancy in Common (TIC). My first thought was investors, like portion of income properties, but that isn't always the case. Interest holders were also occupants. How the listing was represented, in RESO terms, was a Property Type of Residential and a Property Sub Type of TIC.
More recently another similar model has come to light where the home is being held under an LLC, but like the TIC, the members of the LLC had interest in the property and not so much as an investment, but an actual sharing of the home. Interest holding occupants might be actual full time occupants, or they might also be taking turns with the property.
Timeshare, Stock Cooperative, or Business Opportunity are quick answers, but none fit in this case. Timeshares and Stock Cooperatives are forms of Common Interest, which have to be established with the state in advance for the given property. In this use case there is no formal Common Interest (e.g. not a Stock Cooperative, Condominium, Community Apartment, nor a Timeshare). If the property were purely an investment, then listings as Business Opportunity might make sense, but in this case the listing agent would be lacking typical information to the sale of a business that would likely be required fields in the MLS.
Instead, and following the RESO definition of "what's being sold", the Property Sub Type field is a much better fit. This was the decided direction by the RESO Data Dictionary Workgroup this year.
Because the LLC model could be done with in different ways, it was agreed that a more generic term was needed. The RESO workgroup decided to move forward with Co-Ownership allowing any type of company or other structure to facilitate co-ownership. Further, because the TIC ownership was very specific and has related legal requirements of disclosure, the workgroup voted to add Tenancy In Common. Both Co-Ownership and Tenancy In Common were added as separate options in the Property Sub Type field's list of options.
Pacaso has made a business of facilitating the sale of a portion of a home to share with other purchasers. An alternative to Timeshare that is also focused on desirable Single Family properties.
It's also worth noting that both the Co-Ownership and TIC options are not exclusive to SFR, but might also be done with Condos. By using the Structure Type field and the Common Interest field found in the RESO Data Dictionary, it would be easy to express many combinations of homes, multi-family, duplex, etc., with or without Common Interest and to be able to sell interest in the property via the Sub Types of Tenancy In Common or Co-Ownership.
As always your feedback, opinions, and questions are welcome.