Opinion ID: 1386091
Heading Depth: 4
Heading Rank: 1

Heading: Transfer of a Present Interest in Real Property

Text: Plaintiff maintains that the transaction failed to meet the portion of the test requiring a transfer of a present interest. As will appear, plaintiff's view of the nature of the conveyance is incorrect. It is undisputed that plaintiff transferred the entire fee to Metropolitan Life. An estate in fee simple is a freehold estate. (Civ. Code, §§ 762, 765.) (2) A freehold estate is distinguished from other forms of estates in that it is of indeterminate duration ( Millsap v. Quinn (Mo. 1990) 785 S.W.2d 82, 84 [appointed officeholder qualification case]; Board of Transp. v. Turner (1978) 37 N.C. App. 14 [245 S.E.2d 223, 225] [the true test of a freehold is its indeterminate tenure]), and carries with it title to land (see Cohn v. Litwin (1941) 311 Ill. App. 55 [35 N.E.2d 410, 413]). But an estate for years  in this case, a nonperiodic tenancy under a lease  is not a freehold estate. (Civ. Code, § 765.) Indeed, under California law an estate for years is not real property at all but rather a chattel real  a form of personalty  even though the substance of the estate, being land, is real property. ( Id., §§ 761, 765; Dabney v. Edwards (1935) 5 Cal.2d 1, 11 [53 P.2d 962, 103 A.L.R. 822]; see also Weaver v. Superior Court (1949) 93 Cal. App.2d 729, 734 [209 P.2d 830] [The sale of a lease for a term of years is not the sale of real property.]; Parker v. Superior Court (1970) 9 Cal. App.3d 397, 400 [88 Cal. Rptr. 352, 67 A.L.R.3d 743] [although a leasehold is not real property, it is nevertheless an estate in land].) Notwithstanding the fact that a lease is a present possessory interest in land, there is no question that as a nonfreehold estate it is a different species of interest from a freehold estate in fee simple. Any other conclusion would be contrary to centuries of English and American common law and its codification, as modified, in our Civil Code. A leasehold is not an ownership interest, unlike the possession of land in fee simple even when encumbered by a mortgage, for in the latter situation the mortgagor acquires equity over time through periodic payments. It is for that reason that common parlance refers to the owner of a freehold estate, encumbered or unencumbered, but to the holder of a lease; the freeholder is seised of land, whereas the leaseholder is not. Thus plaintiff's contention that it did not convey a present interest in real property is simply incorrect and cannot forestall a conclusion that a transfer of a present interest in real property occurred. Plaintiff did not retain the same interest when it sold its fee and reserved an estate for years. (3)(See fn. 3.), (1b) The entire fee was transferred to Metropolitan Life; the simultaneous creation of a different interest in plaintiff will not defeat the first prong of section 60. [3]