Opinion ID: 1386091
Heading Depth: 4
Heading Rank: 2

Heading: Reservation of an Estate for Years

Text: (7) Subdivision (e) of section 62 provides that a change in ownership does not include Any transfer by an instrument whose terms reserve to the transferor an estate for years or an estate for life; however, the termination of such an estate for years or estate for life shall constitute a change in ownership, except as provided in subdivision (d) and in Section 63. Calling to our attention the language of the purchase agreement, which specifically except[s] and reserv[es] from the property to be conveyed to Metropolitan Life an estate for years on the terms and conditions set forth in the Office Building Lease, plaintiff argues that subdivision (e) of section 62 exempts the conveyance at bench from reassessment. We cannot agree. Although plaintiff's interpretation arguably comports with the language of the code provision, it disregards other pertinent sections of chapter 2 of part 0.5 of division 1 of the Revenue and Taxation Code. As we have already observed, code sections in pari materia must be harmonized with each other to the extent possible; a section should be construed in light of the whole system of law of which it is a part. ( People v. Comingore (1977) 20 Cal.3d 142, 147 [141 Cal. Rptr. 542, 570 P.2d 723]; see Moore v. Panish (1982) 32 Cal.3d 535, 541 [186 Cal. Rptr. 475, 652 P.2d 32].) Considered in isolation, we might agree with plaintiff that the language of subdivision (e) of section 62 appears to confer an exemption from reassessment, for it provides that Any transfer by an instrument whose terms reserve to the transferor an estate for years shall not work a change in ownership. (Italics added; see Title Ins. & Trust Co. v. County of Riverside, supra, 48 Cal.3d 84, 93-94 [Statutes often use the word `any' to designate all those referred to....].) But we have already explained that the transaction did achieve a change in ownership within the meaning of section 60, which was intended as the fundamental rule implementing Proposition 13. As we have also observed, the report drafters declared their intention that the examples set forth in sections 61 and 62 were to be derivative or explanatory, and not to conflict with section 60's general rule. (Task force rep., supra, at p. 40.) We therefore conclude that the Legislature did not intend for a sale and leaseback to fall within the ambit of section 62, subdivision (e). Any other conclusion would render meaningless the preeminent command of section 60  a result we are constrained to avoid. Moreover, we find support for our conclusion in the task force report. The report originally proposed the following language for subdivision (e) of section 62: (e) Retained Life Estates. Any transfer in which the transferor retains beneficial use of the property for his lifetime. (Task force rep., supra, at p. 51.) As codified, however, the subdivision exempts Any transfer by an instrument whose terms reserve to the transferor an estate for years or an estate for life.... We believe the evolution of the provision explains the Legislature's intent as clearly as possible given the sparse legislative history. The drafters were concerned that individuals who proposed to convey title to property to others but retain the beneficial use of that property not have a change in ownership forced upon them while they retained the beneficial use and thereby the dominant or primary [economic] interest.... (Task force rep., supra, at p. 44.) A contrary rule would frustrate the intent of the voters, who adopted Proposition 13 in part out of concern that high property tax rates were burdening senior citizens and others whose home values had soared but whose incomes were fixed. (See Sears, Tax Revolt: Something for Nothing in California (1982) p. 122.) Of course, a conveyance of fee simple with a reserved life estate is a common means for parents to convey property to children. But the Legislature was apparently also mindful of the desire of some parents to convey a remainder or reversionary interest to their children to vest at adulthood, at an age of greater maturity (e.g., 35 years), or, as suggested at oral argument, upon the planned retirement of the fee owner. The reservation of a life estate would not serve the transferor's goals if the intent was to convey property in this manner, but the reservation of an estate for years in the transferor would accomplish that end. It is therefore not surprising that the Legislature added the phrase estate for years to subdivision (e) of section 62; and it is equally unsurprising that the beneficial use language in the task force's proposed subdivision disappeared from the codified version, because section 60 includes that language, making its repetition superfluous. Construing subdivision (e) of section 62 to provide an exemption from the general rule of section 60 when the transferor retains the beneficial use of the property during the transferor's life or for years harmonizes those two sections and meets the voters' and the Legislature's apparent intent. We therefore adopt that construction. It is immediately evident that the transaction before us does not fall within the exemption set forth in subdivision (e) of section 62 as we have construed it. Plaintiff did not retain a beneficial use of the property for itself; it pays rent to Metropolitan Life, which enjoys the entire beneficial interest in the property. Therefore, we cannot apply the rule of subdivision (e) of section 62 to provide the relief plaintiff seeks.