TICs Attorneys – Tenant in Common Investment Attorneys
What is a TIC investment?
A tenant in common (TIC) investment is a fractional ownership interest in commercial real estate — typically an office building, retail center, apartment complex, or other income-producing property. TIC interests are sold as securities under SEC Regulation D (private placement exemption) to accredited investors, typically in connection with 1031 tax-deferred exchanges. Investors use the proceeds of a sold property to purchase a TIC interest in a larger property, deferring capital gains tax while receiving passive income from the commercial real estate.
TIC interests were widely marketed through broker-dealers in the early 2000s as an ideal 1031 exchange vehicle — offering passive real estate income, professional property management, and tax deferral without the management responsibilities of direct real estate ownership. Commissions on TIC sales were typically 7-10% of the invested amount.
How TIC investments were misrepresented
- Income sustainability misrepresentation: TIC distributions were frequently projected based on optimistic occupancy assumptions and favorable debt service terms that were not sustainable over the investment horizon.
- Liquidity misrepresentation: TIC interests are extremely illiquid. All co-owners must agree to a sale, financing decision, or major capital expenditure — making exit from a TIC investment practically impossible without unanimous consent. The lack of any secondary market meant investors could not exit even when the investment was clearly deteriorating.
- Debt structure risk: most TIC properties were heavily leveraged with commercial mortgage loans. When property values declined and debt service requirements could not be met from rental income, TIC investors faced foreclosure — losing not only their income but their entire investment.
- 1031 exchange pressure: investors who had just sold a property in a 1031 exchange had 45 days to identify a replacement property and 180 days to close. This time pressure made many investors accept TIC investments without adequate due diligence — and brokers sometimes exploited this pressure to sell unsuitable TIC interests.
Recovery options for TIC investors
TIC interests are private placements sold under Regulation D — meaning they were sold by broker-dealers who conducted (or failed to conduct) due diligence on the offering. FINRA arbitration claims against the selling broker-dealer are available for misrepresentation, unsuitable recommendation, and failure to conduct adequate due diligence. For more on private placement claims generally, visit the Advisor Misconduct page.
Frequently asked questions — TIC investments
My TIC investment stopped making distributions — what are my options?
A distribution suspension typically signals that the property’s rental income is insufficient to cover debt service and operating costs. Contact Bakhtiari & Harrison immediately. If the TIC was unsuitably recommended — particularly if the debt structure, occupancy assumptions, or income projections were misrepresented — you may have a viable FINRA arbitration claim against the selling broker-dealer regardless of the TIC’s current financial condition.
I purchased a TIC as part of a 1031 exchange — does the tax deferral issue affect my claim?
The 1031 exchange context does not affect the viability of a FINRA arbitration claim against the selling broker. If the TIC was unsuitably recommended or misrepresented, the claim exists regardless of the tax structure under which it was purchased. Bakhtiari & Harrison evaluates TIC claims at no charge.
Can I exit my TIC investment?
TIC exits require the agreement of all co-owners — which is practically very difficult to achieve, particularly when the property is in financial distress. If the TIC is in foreclosure proceedings, exit options may be even more limited. The illiquidity of TIC investments — and whether it was adequately disclosed at the time of purchase — is itself a component of most TIC misconduct claims.
For a full overview of the firm’s investment product failure practice, visit the Product Failure page.
Contact a TICs attorneys — free consultation
Contact Bakhtiari & Harrison for a free, confidential consultation. Our FINRA attorneys evaluate every potential investor claim at no charge. Investor cases are handled on a contingency fee basis — no recovery, no fee.
Investor cases are handled on a contingency fee basis — no recovery, no fee.
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