If you and one or more partners are thinking about buying a property together but want to keep your finances separate, a tenants in common (TIC) loan setup might be exactly what you need.
Here's the core idea: instead of all co-owners getting one big joint mortgage, each owner gets their own individual loan. That means you're responsible only for your own payment. Your partner's mortgage isn't your problem. You can sell your share, refinance your piece, or borrow against it without asking permission from the other owners.
Let's walk through how this actually works, who it's best for, and what you need to know before you go down this road.
What Are Tenants in Common Loans?
A tenants in common (TIC) loan structure lets two or more people own a single property with completely separate mortgages and individual liability protection.
Think of it like this: you and a business partner buy a 10-unit building together. Instead of both signing one mortgage for the full amount, you each get your own mortgage for your respective ownership stake. You own 50%, your partner owns 50%. Your lender doesn't care what your partner does with their portion—that's between them and their lender.
Each co-owner holds what's called "undivided interest" in the property. That just means your stake isn't a specific physical space—it's a percentage of the whole building. You can't say "I own units 1-5 and you own 6-10." Instead, you both have rights to the entire property based on your ownership percentage.
How Individual Financing Works in a TIC Arrangement
The big difference between a TIC loan and a traditional joint mortgage is this: you're not linked to your co-owner's creditworthiness or financial situation.
Related: Property Line of Credit: How It Works for Business Owners
Each owner applies for their own mortgage separately. Lenders evaluate your credit, income, debt-to-income ratio, and assets independently. If your partner has spotty credit or high debt, it doesn't affect your loan approval or interest rate. You stand on your own.
This is huge because it removes cross-liability. If your partner defaults on their mortgage, the lender can't come after you. Their loan is secured only by their ownership stake. Your loan is secured only by yours.
In a traditional joint mortgage, both parties are on the hook for the entire debt. If one person stops paying, the lender can pursue either borrower for the full amount. That risk disappears in a TIC structure.
When you're working with Aberdeen Financial Group LLC or any alternative lender on multi-owner property deals, this separation of responsibility becomes a key part of underwriting the deal. Each owner's loan is evaluated and structured independently.
Ownership Flexibility and Control
One of the biggest advantages of TIC loans is the flexibility they give you as an owner.
You can sell your share to someone else without getting consent from your co-owners. Want out? Find a buyer for your 50% stake, transfer the title, and you're done. Your partner keeps their share and their mortgage. No mess, no holdout situation.
You can also refinance your loan independently. Interest rates drop and you want a better deal? Refinance your portion. Your partner's loan stays the same.
Need cash for another project? You can borrow against your ownership stake—again, without your co-owner's approval. They don't have a veto.
This independence is especially valuable for business partnerships and investment groups where people's circumstances change. Someone might need to exit, or a partner might want to leverage their equity for a new venture. A TIC structure lets that happen cleanly.
How Mortgage Responsibility Works Across Multiple Owners
Each co-owner is responsible for their own mortgage payment. That's it. You don't pay for anyone else's debt.
However—and this is important—if the property itself needs upkeep, insurance, or property taxes, those expenses are typically shared based on ownership percentage. If you own 60% and your partner owns 40%, you contribute 60% of the property tax bill, insurance premiums, and maintenance costs.
This shared operating cost doesn't replace the individual mortgage obligation. It's separate. Your mortgage is your debt to your lender. The shared costs are expenses of owning the property itself.
When you're structuring a deal like this, make sure you and your co-owners have a written agreement that spells out exactly who pays for what. Who handles repairs? Who deals with tenant calls? What happens if someone wants to refinance? Get it in writing upfront. It saves drama later.
For business partnerships looking at real estate investor loans with multiple owners, these questions come up during the application process. Good lenders will want to understand the ownership agreement before they move forward.
Who Benefits Most from TIC Loans?
Tenants in common loans work best for specific situations.
Business partnerships buying commercial property or rental real estate together often use TIC structures. Two partners, two separate mortgages, two independent financial stakes. Clean and clear.
Related: Commercial Rental Property Loans: A Complete Guide for Investors
Investment groups pooling money to buy an apartment building or office complex can use TIC loans so each investor can exit independently if needed. No one gets stuck waiting for a partner to refinance or sell.
Family members who want to buy property together but maintain separate liability protection. One sibling's bad financial decisions don't drag down the other.
Real estate investors with strong individual credit who want to scale their portfolio using their own borrowing power without being held back by a weaker co-owner's credit profile.
The people who don't benefit from TIC loans? Anyone buying with a spouse (you'd typically use "tenancy by the entirety" or joint tenancy instead) or anyone who needs simplicity above all else. TIC structures require more documentation and coordination.
Evaluating Lenders for TIC Loan Options
Not all lenders are comfortable with tenants in common arrangements. Banks especially can be hesitant because the complexity requires more legal work upfront.
When you're shopping for a TIC loan, look at three things:
1. Lender Experience with Multi-Owner Properties
Ask directly: how many TIC deals have you closed? Do you have a process in place? Lenders who do this regularly move faster and understand the nuances. Lenders doing it for the first time? You'll be the guinea pig.
2. Eligibility Requirements
Each lender sets their own rules. Some want a minimum credit score of 680, others 700. Some require a minimum loan amount (like $250K). Some have maximum loan amounts. Ask these questions upfront so you don't waste time on a lender who can't work with your deal size.
3. Costs and Terms
Interest rates, origination fees, closing costs, prepayment penalties—these vary wildly. Get quotes from at least three lenders. What looks like a 0.5% difference in rate could mean thousands of dollars over the life of the loan.
Alternative lenders like Aberdeen Financial Group LLC often have more flexibility with multi-owner structures than traditional banks. Because they work with real estate investors and business owners specifically, they've seen these situations before and know how to structure them.
Documentation and Legal Requirements for TIC Loans
A TIC loan deal requires more paperwork than a single-owner mortgage. You'll need:
- A formal co-ownership agreement that specifies ownership percentages, how decisions get made, what happens if someone wants to exit, and how expenses are split
- Individual mortgage documents for each owner, plus a deed that establishes the TIC structure
- Financial documentation from each owner (tax returns, bank statements, income verification)
- Title insurance to protect each owner's interest
- Appraisal to establish the property value that each loan is based on
Your attorney should review the co-ownership agreement and make sure it's airtight. A few hundred dollars now prevents thousands in legal disputes later.
TIC Loans vs. Other Multi-Owner Financing Options
You've got alternatives to TIC loans for multi-owner property deals.
Joint Tenancy: Both owners automatically inherit the other's share if one dies. You can't sell your piece independently. Better for married couples or family members, worse for business partnerships.
Partnership or LLC: The business entity takes out one loan, not the individual owners. Simpler in some ways, but the entity is on the hook for the entire debt. Partners can't exit without dissolving the whole structure.
Tenancy by the Entirety (married couples): Each spouse owns the whole property with right of survivorship. Offers creditor protection. Only works if you're married.
For most business partnerships and investment groups, TIC loans strike the best balance between simplicity and protection.
Red Flags and Common Pitfalls
Watch out for these mistakes when you're setting up a TIC loan:
No written agreement between co-owners: "We'll work it out as we go" never works. Get a lawyer to draft a co-ownership agreement. It should cover decision-making, exit strategies, dispute resolution, and expense sharing.
Unequal ownership percentages without clear reason: If one partner owns 60% and another owns 40%, make sure you both understand and agree why. Mismatched ownership and effort breeds resentment.
Not understanding your lender's underwriting process: Each lender approves or declines based on their own criteria. Don't assume because you got approved that your co-owner will too. Each application is separate.
Ignoring the agreement fine print: Your mortgage documents will have clauses about what happens if the property is sold, refinanced, or if one owner defaults on their portion of shared expenses. Read it. Understand it.
Not planning for the future: What happens if one partner wants to sell in 5 years and the other wants to hold for 20? Clarify these scenarios in your co-ownership agreement from day one.
Getting Started with a TIC Loan Application
If you think a tenants in common loan makes sense for your situation, here's how to move forward:
Step 1: Get a co-ownership agreement drafted. Work with a real estate attorney. This document is foundational. It sets expectations and prevents disputes.
Step 2: Find a lender experienced with TIC deals. Not all lenders will take these on. Call three to five lenders, tell them what you're trying to do, and ask about their process and requirements.
Step 3: Gather financial documentation. Each co-owner will need tax returns (usually 2 years), recent pay stubs or profit/loss statements, bank statements, and a list of debts.
Step 4: Get a property appraisal. The lender will order this, but understanding the appraised value helps each owner understand what their loan amount will be based on.
Step 5: Apply and communicate openly. Don't hide information from your lender or your co-owner. Transparency speeds up approvals and prevents last-minute surprises.
If you're working with multiple owners and need a lender who specializes in alternative real estate financing, Aberdeen Financial Group LLC has closed hundreds of multi-owner investment property deals. They can walk you through the specifics of your situation.