The first installment of this new series introduces the ownership interests a person may hold in real estate.
Unbundling the rights
Real estate, sometimes legally called real property or realty, consists of:
- the land;
- the improvements and fixtures attached to the land; and
- all rights incidental or belonging to the property. [Calif. Civil Code §658]
A parcel of real estate is located by circumscribing its legal description
All permanent structures, crops and timber are part of the parcel of real estate. The parcel of real estate also includes buildings, fences, trees, watercourses and easements within the parcel’s boundaries.
A parcel of real estate is three dimensional. In addition to the surface area within the boundaries, a parcel of real estate consists of:
- the soil below the parcel’s surface to the core of the earth, including water and minerals; and
- the air space above it to infinity.
In the case of a statutory condominium unit, the air space enclosed within the walls is the real estate conveyed and held by the fee owner of the unit. The structure, land and air space outside the unit are the property of the homeowners’ association (HOA).
The ownership interests a person may hold in real estate are called estates
- fee estates, also known as fee simple estates, inheritance estates, perpetual estates, or simply, “the fee”;
- life estates; and
- leasehold estates, sometimes called leaseholds, or estates for years. [CC §761]
Fee estates
A person who holds a fee estate interest in real estate is a fee owner. In a landlord/tenant context, the fee owner is the landlord.
Editor’s note — If a sublease exists on a commercial property, the master tenant is the “landlord” of the subtenant.
A fee owner has the right to possess and control their property indefinitely. A fee owner’s possession is exclusive and absolute. Thus, the owner has the right to deny others permission to cross their boundaries. No one can be on the owner’s property without their consent, otherwise they are trespassing. The owner may recover any money losses caused by the trespass.
Exclusive right to use and enjoy
A fee owner has the exclusive right to use and enjoy the property. As long as local ordinances such as building codes and zoning regulations are obeyed, a fee owner may do as they please with their property. A fee owner may build new buildings, tear down old ones, plant trees and shrubs, grow crops or simply leave the property unattended.
A fee owner may occupy, sell, lease or encumber their parcel of real estate, give it away or pass it on to anyone they choose on their death. The fee estate is the interest in real estate transferred in a real estate sales transaction, unless a lesser interest such as an easement or life estate is noted. However, one cannot transfer an interest greater than they received.
A fee owner is entitled to the land’s surface and anything permanently located above or below it. [CC §829]
The ownership interests in one parcel may be separated into several fee interests. One person may own the mineral rights beneath the surface, another may own the surface rights, and yet another may own the rights to the air space. Each solely owned interest is held in fee in the same parcel.
In most cases, one or more individuals own the entire fee and lease the rights to extract underground oil or minerals to others. Thus, a fee owner can convey a leasehold estate in the oil and minerals while retaining their fee interest. The drilling rights separated from the fee ownership are called profit a prendre.
Profit a prendre is the right to remove profitable materials from property owned and possessed by another. If the profit a prendre is created by a lease agreement, it is a type of easement. [Gerhard v. Stephens (1968) 68 C2d 864]
