This article reviews the physical aspects of real estate, the many legal interests which can be held in the real estate, and the use of real estate interests.

Physical and legal aspects

To most, the term property means a physical or tangible thing; something which is owned, such as land, a car or a share certificate.

However, property is broadly defined, focusing on the rights which arise out of the thing.

Thus, property is sometimes referred to as a bundle of rights.

Property is anything which can be owned.

Ownership is the right to possess property and use it to the exclusion of others. [Calif. Civil Code §654]

The use of property includes the right to:

  • occupy;

  • sell or dispose;

  • encumber; or

  • lease the property.

Next, the types of property are divided into two categories:

  • real estate, sometimes called real property; and

  • personal property, sometimes called personalty. [CC §657]

Real estate is characterized as immovable, while personal property is movable. [CC §§655; 658]

Personal property is defined as all property which is not real estate. [CC §§658; 663]

In fact, personal property was once called chattel, a word derived from the word cattle – a moveable.

While the distinction between real estate and personal property seems apparent at first glance, the difference is not always so clear.

Cutting up real estate

Real estate can be cut up physically, by actual severance of a part of the earth (i.e., removal of minerals).

Title to real estate can also be cut up in time providing sequential ownership. For example, fee ownership can be conveyed to one person for life, and on death, transferred to another. Time sharing is another example of the allocation of ownership by time.

Title to real estate can be fractionalized by concurrently vesting title in the name of co-owners, each holding an undivided (fractional) ownership interest in the real estate.

Possession to real estate can be cut out of the fee ownership for a period of time. For instance, a landlord conveys possession to a tenant under a lease for the term of the lease, called a leasehold estate. When the tenancy expires or is terminated, possession will revert to the landlord. The landlord at all times retains fee title to the real estate.

Possession can also be cut up by creating divided interests in a property, as opposed to undivided interests. For example, an owner can lease a portion or all of his property to a tenant. The tenant, in turn, can sublease a portion or all of his space to another person. Another example is tenants in common with divided interests allowing each the exclusive use of a specific portion of the real estate they jointly own.

Other interests in real estate can be created, such as liens. Liens are interests in real estate which secure payment or performance of a debt or other obligation. A trust deed or a local property tax are examples of liens.

On nonpayment of the lien, the lienholder can force the sale of the real estate to pay off the lien.

Thus, the rights in real estate extend beyond the mere physical aspects of the land, airspace and improvements located within the legally described boundaries of the property.

Real estate components

Consider a real estate lender who is concerned about the interest he will hold in the real estate as security for his loan, such as a lender’s lien on the entire fee, the fee subject to outstanding leaseholds, or the leasehold itself.

Also, a tenant who makes improvements or adds fixtures to the leased premises is concerned about whether he may or must remove them on termination of the tenancy, or whether they must remain as part of the real estate.

The physical components of real estate include:

  • the land;

  • anything affixed to the land;

  • anything appurtenant (incidental) to the land; and

  • anything which cannot be removed from the land by law. [CC §658]

The first step when physically locating a parcel of real estate is to circumscribe on the face of the earth (by survey) the location of the horizontal boundaries of the described real estate by locating the corners.

The horizontal description of real estate is the property’s legal description, found in the public records of the county in which the parcel is located.

However, real estate is three dimensional. It includes not only the width and breadth on the surface of the earth (horizontal), but also the airspace above the surface and the materials beneath the surface to the center of the earth.

The three dimensional aspect of real estate has its source in the English common law. [CC §659]

The common law viewed the notion of real estate as an “inverted pyramid,” where the owner held title to the surface, the land beneath the surface down to the center of the earth and above the surface up to the furthest reaches of the sky.

In the modern world, the common law definition of real estate has been radically altered to meet the changing demands of society.


The first component of real estate is the land. Land includes:

  • soil;

  • rocks;

  • the other material of the earth; and

  • the reasonable airspace above the earth. [CC §659]

The soil and solid materials, such as ores and minerals, are land while they remain undisturbed as a part of the earth.

For example, unmined gold resting in the earth is real estate.

However, when the gold is mined and removed from its surrounding rock, the gold becomes personal property. It no longer is part of the material imbedded in the earth.

The gold has been converted from something relatively immovable – rock – to something easily moved about.

Minerals in the soil are severable from the earth. Fee ownership to the soil and minerals can be conveyed away from the remainder of the land.

When ownership to minerals in the land is transferred, the transfer establishes two fee owners of the real estate within the legal description – an owner of the surface rights and an owner of the mineral rights beneath the surface. They are not co-owners of the real estate.

Both fee owners are entitled to reasonable use and access to their real estate.

For example, an owner conveys the ownership right to extract minerals to a buyer. On conveyance, there now exists a surface owner and a mineral rights owner.

Later, the surface owner conveys the real estate to a developer. The developer subdivides the parcel of real estate and plans to construct homes on the lots.

The mineral rights owner objects, claiming the homes, if built, would completely interfere with his right to enter the property to remove his minerals.

Is the owner of the mineral rights entitled to enter the property to remove the minerals?

Yes! But only as is reasonably necessary to use the mineral rights. The rights of the surface owner and the mineral rights owner are balanced to determine the precise surface location to be used to extract the minerals. [Callahan v. Martin (1935) 3 C2d 110]

The right to enter the property to remove minerals exists even if the documents conveying the mineral rights fail to provide for the right of entry. [Wall v. Shell Oil Company (1962) 209 CA2d 504]

The right to remove minerals from another’s real estate is called a profit a prendre.

Oil and gas

Unlike solid minerals, oil and gas move about. Legally, oil and gas are referred to as being fugacious matter.

Interestingly, a real estate owner does not hold title to the physical oil and gas situated under the surface of his real estate.

The oil and gas are perpetually escaping and percolating under the earth’s surface.

At any given time, the real estate owner will have more or less oil or gas depending on gravity and the earth’s movements. The ownership interest in the oil and gas unremoved is called a corporeal hereditament.

In California, oil and gas are incapable of being owned until they are actually possessed – that is, when they have been removed, and thus become personal property. [Callahan, supra]

The fee owner has the exclusive right to drill for oil and gas on his premises, unless the right has been conveyed away to others.

Rather than owning the physical oil and gas, the owner has a right, called an incorporeal hereditament, to remove the oil or gas, taking it as his own. [Gerhard v. Stephens (1968) 68 C2d 864]

Frequently, the right to remove minerals, including oil and gas, is conveyed to another in consideration for the payment of royalties from excavation.

Removing oil and gas

The owner of land has the right to extract all the oil and gas brought up from the real estate even if taken from an underground pool which extends into the adjoining owners’ real estate. [Alphonzo E. Bell Corporation v. Bell View Oil Syndicate (1938) 24 CA2d 587]

Since oil and gas are fugacious, the oil and gas move into and out of a parcel of real estate.

However, the owner cannot slant drill onto another’s property to reclaim the oil or gas. [Alphonzo E. Bell Corporation, supra]

Slant drilling is a trespass on the adjoining landowner’s real estate. The trespasser is responsible to account for profits derived from the slant drill. [Calif. Code of Civil Procedure §349]


“Land” also includes the airspace above the surface.

Under the common law, the right to airspace continued to the edge of the universe. However, modern technological advances have altered the legal view on airspace.

For example, an owner runs a farm near a military airport. Planes frequently fly over the owner’s real estate on their ascent from or descent to the airport.

The government decides to expand the military base by extending the runway and using more advanced (and louder) aircraft at the base. The aircraft, on their approach to the airport, now fly directly over the farmer’s barn, scaring the animals and causing the farmer financial loss.

The farmer sues the government for trespass on his real estate as the airspace is being occupied by others – the military.

Can the owner keep the aircraft from flying into his real estate?

No! The common law doctrine regarding the ownership of airspace to the edge of the universe is obsolete. The owner only owns the airspace necessary to allow him a reasonable use of the real estate. The real estate extends only so far above the surface as can be reasonably occupied or used in connection with the land. [United States v. Causby (1946) 328 US 256]

In fact, the United States Congress has declared the airspace above a landowner’s real estate reasonable use to be a public highway for the navigation of airplanes, helicopters, satellites and spacecraft. [49 United States Code §40110]

When, however, the flight of airborne vehicles intrudes upon the use and enjoyment of the real estate below, it may constitute a taking of the real estate.

Thus, the continued noise and disturbance of low-flying aircraft which impairs the enjoyment or value of land by causing disruption has effectively “taken” something from the owner. Thus, the owner must be compensated for his loss. [Causby, supra]

Other blue sky

The airspace portion of land has also been modernized with the concept of the condominium, a subdividing of the airspace which created a corporate security (cooperatives), but now is classified as real estate (common interest developments).

The owner of a condominium unit legally owns the right to occupy the parcel of airspace enclosed within the walls of the structure, as well as rights of ingress and egress and exclusive rights to use other portions of the real estate for storage and parking, plus an undivided interest in the common areas. [CC §1351(f)]

Also, the installation of active solar collectors has led to the right to sunlight and air. This right to the sun for a solar collector is considered an easement. [Calif. Public Resources Code §§25980 et seq.; CC §801.5(a)(1)]


Water in its natural state is also land as it is part of the material of the earth.

While water is real estate, the right to use water is an appurtenant (incidental) right to the ownership of real estate.

Three key rights in water must be separately understood and appreciated by brokers.

First, the right to use water is called a riparian right.

Riparian rights refer to the rights of a real estate owner to take surface water from a running water source contiguous to his land. [Calif. Water Code §101]

Second, the right to take water can be acquired by appropriation.

The appropriator of water diverts or appropriates water from a river or watercourse to his real estate and puts it to reasonable use. [In re Water of Hallett Creek Stream System (1988) 44 C3d 448]

Thirdly, an individual may obtain prescriptive rights in water by wrongfully appropriating nonsurplus water openly and adversely for an uninterrupted period of five years and under claim of right. [City of Barstow v. Mojave Water Agency (2000) 23 C4th 1224]

However, all water in the state belongs to the people, under state auspices, based on a public trust doctrine. Riparian, appropriation, and prescriptive rights are subject to the state’s interest in conserving and regulating water use. [Water C §101]

Under the public trust theory, the state controls any unclaimed water rights for the highest and most beneficial use of the water.

The State Water Resources Control Board determines the respective water rights of individuals and makes decisions based on the public interest and the needs of the individuals. [Water C §2501]

Affixed to the land

Real estate also includes things which are affixed to the land. Things may be affixed to the land by:

  • roots (e.g., shrubs and trees);

  • embedment (e.g., walls);

  • permanently resting (e.g., buildings); or

  • physically attached (e.g., cement and nails). [CC §660]

Things attached to the earth naturally are real estate. Natural fixtures to the land include trees, shrubs, grass, etc. and are called fructus naturales.

However, natural items which are planted for human consumption and use are fruits of labor, called fructus industriales.

Fruits of labor include such things as crops and standing timber.

Crops and timber are ordinarily real estate.

However, industrial crops and standing timber sold under a purchase agreement and scheduled to be removed are considered personal property. [Calif. Commercial Code §9102(a)(44)]

The crops and timber separately sold under a purchase agreement are treated as constructively severed even though actual removal has not yet occurred. [Wilson v. White (1911) 161 C 453]


A fixture is a personal property item which has become attached to real estate so as to become part of the real estate. [CC §660]

When a personal property item becomes a fixture, it is part of the real estate and is thereafter conveyed with the real estate.

Factors which determine whether an item is a fixture include:

  • relationship of the parties;

  • agreement between the parties;

  • intention of the parties;

  • manner of attachment; and

  • adaptability of attachment to the real estate’s use. [San Diego Trust and Savings Bank v. San Diego County (1940) 16 C2d 142]

Individuals most likely to dispute whether an item is a fixture include:

  • buyers and sellers;

  • landlords and tenants;

  • a builder and an owner;

  • a lender and an owner; and

  • the county tax collector and an owner.

The most important factor when determining whether an item is a fixture or improvement is the intent of the parties.

Intent to make an item a permanent part of the real estate as a fixture is determined by:

  • the manner of attachment; and

  • the use and purpose of the item in dispute.

When the item is attached to the real estate by bolts, screws, cement or the like, the item is a fixture and part of the real estate. However, for an item to be a fixture, it need not be attached to the real estate. Items of such weight that gravity maintains them in place is sufficient to give the item the character of permanence and affixation to be real estate.

Also, the item may be constructively attached when the item is a necessary, integral or working part of improvements on the real estate.

Another factor used to determine whether an item was intended by the parties to be a fixture is the adaptability test, which considers the circumstances under which the real estate is used. The adaptability test determines if the item makes the real estate peculiarly valuable in its use by the owner or a tenant.

For example, a tenant enters into a lease which entitles him to the use of a wharf facility designed for handling cargo containers. Two container cranes, weighing 750 tons each, stand 100 feet high and operate on railbeds embedded in the land. The cranes are not attached to the land.

The cranes are assessed and a property tax lien is imposed on the real estate, which the tenant pays.

The tenant then seeks a tax refund from the county, which the county rejects.

The tenant claims the cranes are personal property and not part of the real estate since the cranes are not attached to the land, can be moved to and used in areas where the railbeds do not extend, and are not essential to the use and purpose of the land.

The county claims the cranes are fixtures and part of the real property since the weight of the cranes gives them the character of permanency and affixation to the land, the cranes comprise an integral and working part of the rails which are attached to the property, and the cranes are also an integral part of the facility constructed on the property specifically for handling cargo containers.

Here, the tenant is not entitled to a refund. The cranes, by virtue of their size and relationship to the purpose for ownership of the land, were intended to become a part of the real estate. [Seatrain Terminals of California, Inc. v. County of Alameda (1978) 83 CA3d 69]

In another example, a bank updates its accounting equipment by purchasing a state-of-the-art computer system.

A bank, as a service organization, does not pay personal property taxes assessed by the county – only local real estate taxes.

The bank installs computers in a building which are attached to cables installed throughout the building for hook-ups. The bank networks the various computers together.

The county tax assessor claims the computers have become a fixture as they are permanently attached to the building. If the computer equipment is considered part of the real estate and no longer personal property, then the bank must pay ad valorem property taxes on the value of the equipment.

The bank claims the computers are personal property and merely attached to the building by cords and readily removed, making them separate pieces of office equipment.

Are the computers, detachable at computer cables affixed to the real estate, also part of the real estate?

No! The bank never intended for the computers to become a permanent part of the real estate. [Crocker National Bank v. City and County of San Francisco (1989) 49 C3d 881]

Trade fixtures

Fixtures which are used to render services or make products in the trade or business of a tenant are called trade fixtures.

Trade fixtures are to be removed by the tenant on termination of the tenancy, unless agreed to the contrary with the landlord. The removal must not unduly damage the real estate. [CC §1019]

Thus, trade fixtures remain personal property.

Removal of trade fixtures is often negotiated between landlord and tenant to agree who has ownership of the fixtures on expiration of the tenancy. [City of Beverly Hills v. Albright (1960) 184 CA2d 562]

Trade fixtures must be an essential part of the tenant’s business and removal must not substantially damage the real estate. An example of a business’s trade fixtures would be mirrors, sink bowls, dryers and wash stations installed by a tenant for use in a beauty salon business. [Beebe v. Richards (1953) 115 CA2d 589]

Substantial damage

A tenant installs a refrigeration unit in a grocery store.

When the tenant’s long-term lease expires, the tenant wants to remove the refrigeration unit to use at his new location. However, removal of the unit would put a large hole in the ceiling and cause structural damage which would subject portions of the building to collapse.

Is this refrigeration system a trade fixture, permitting the tenant to remove the unit?

No! The damage caused by the removal would be too substantial. [Goldberg v. Stanton (1927) 84 CA 665]

Landlords frequently require tenant improvements to remain a part of the real estate after the tenant vacates.

For example, a landlord may agree to reduce rent in exchange for the tenant’s installation of gas tanks, noting the gas tanks are not trade fixtures, but belong to the landlord. [Southland Corporation v. Emerald Oil Company (9th Cir. 1986) 789 F2d 1441]

Appurtenant rights

Real estate also includes any incidental rights to the real estate which are not located on the real estate, nor reflected on its title, called appurtenant rights. Appurtenant rights include the right of ingress and egress across adjoining properties. [CC §662]

An appurtenant easement is an interest held by an owner of one parcel of real estate to use adjoining real estate.

An owner’s right to use the adjoining real estate is part of his real estate and is conveyed with the real estate when he sells it.

Appurtenant easements are said to run with the land. These easements are not personal to the owner of the real estate entitled to use them. They cannot be severed and retained by an owner when the real estate is sold – the right of an owner to use an easement is part of the real estate.

Other appurtenant rights to real estate include the right to the lateral and subjacent support provided by the existence of adjoining real estate.

The owner of real estate cannot remove soil from his land so as to cause the adjoining real estate to subside or collapse.

The owner who benefits from appurtenant rights cannot be located in the public records by a search of the legal description for the real estate. However, appurtenant rights are incidental rights which remain with the real estate they benefit. Conversely, the appurtenant rights held by the owner of one property are a recorded condition of title on the property burdened by the rights.