Back in the day, a small group of real estate syndicators in Southern California took a partnership structure and converted it into a tenant-in-common, or “TIC” structure. When they divided a property into fractional TIC interests, they were able to sell them to investors in search of replacement property for tax-deferred exchanges under Section 1031 of the Internal Revenue Code.

Originally sold based on the authority of tax opinions, Revenue Procedure 2002-22, issued by the Treasury Department in 2002, provided a higher level of authority for securitized TIC programs. As a result, a burgeoning TIC industry developed with an influential trade association (TICA, now known as ADISA). Independent broker-dealers sold billions of dollars of TIC securities nationwide.

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