Dispute Resolution: TIC vs Condo

Resolving a heated argument with a TIC neighbor is completely different than if you and your neighbor lived in a condo. This might sound like the most non-sensical sentence I’ve written in quite a while, but it is absolutely true. Here’s why: common interest developments (CIDs) are subject to and controlled by the Davis-Stirling Common Interest Development Act (California Civil Code Sections 1350 et seq.) while tenancies-in-common are not! 

Tenancies-in-common do not meet the definition of a common interest development (section 1351 of the civil code contains the definitions), therefore the Davis-Stirling act does not apply. Let’s take one particular example to show you the difference in how things could play out in a hypothetical dispute – one set in a fictional TIC, the other a condo.

TIC Dispute & Resolution:
Let’s say that you live in a four-unit TIC and that one of your neighbors does a major remodeled. Down to the studs, absolutely gorgeous, must of cost a ton of money! In fact, it did cost a ton of money… so much money that your neighbor can’t afford to pay his contractor. So the contractor files a lien – but the contractor can’t file a lien against their unit (it isn’t a separate legal parcel), so they file a lien against the entire building… which includes you. So even though you have a fractional mortgage, even though you don’t get any of the benefit of the remodel, and even though you’ve never met this contractor, you are now involved in your neighbor’s dispute because you live in a TIC. And how the dispute gets resolved depends purely on contract law and how everyone interprets the TIC agreement. Because everyone did sign the TIC agreement, right?

Condo Dispute & Resolution:
In a condominium, the above situation could never happen. Why? Because Section 1369 of the CA civil code expressly prohibits a contractor from filing a lien against anyone other than the legal owner of the subject condominium where the work was performed. They can’t file a lien against the neighbors, they can’t file a lien against the HOA, they can’t file a lien against you. Their sole recourse is against the owner of the condominium.

This is just one example of how dispute resolution in a condo differs dramatically from dispute resolution in a tenancy-in-common (TIC). It’s something that many people don’t think about during the purchase process, because who wants to go pick out their dream home while imagining worst-case neighbor scenarios? My experience is that people tend to give others the benefit of the doubt, and very few buyers go into condos or TICs with the assumption that their neighbors are all losers that are going to make their life a living hell.

BIG FAT ENORMOUS DISCLAIMER:

1) I am not an attorney and am not qualified to give legal advice. This article is not legal advice. It is an illustration of how dispute resolution varies based on your form of ownership, which is something to consider when deciding what type of property to purchase.

2) Your specific situation, TIC agreement, or other document may vary wildly from the hypothetical scenario I’ve written about above. If you are reading this because you are in a dispute with a neighbor, I want to remind you that this isn’t legal advice and I’m not an attorney.

3) You should never, ever take candy from strangers (except on Halloween), and you should never rely on free advice you find on the internet. Just saying.

 

 

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