Legal Question in Real Estate Law in California

What makes you think an interest in the land is not to be treated as real property?

If the previous answer had simply been "yes," the attorney would have been correct. For Federal (IRS) tax purposes, oil and gas leases are treated as real property, irrespective of state law to the contrary. See Revenue Ruling 68-331 (1968).

However, in California, most oil and gas leases would be treated as personal property for all other purposes. See Dabney v. Edwards (1935) 5 Cal.2d 1; Callahan v. Martin (1935) 3 Cal.2d 110; in re Marino (Calif., 1987) 814 F.2d 1562; Cal-Cut Pipe & Supply, Inc. v. Haradine Petroleum (1973) 35 Cal.App.3d 359 and several other cases I can give you upon request. Please feel free to contact me if you need any further explanation or research.

California is among a minority of states that hold oil and gas leases to be personal property unless the "habendum clause" of the lease makes the lease indefinite in duration. All other leases are said to result in a "profit a prendre" (legal French) or a :chattel real" and therefore personal property under our state law. I do not know how our Franchise Tax Board would treat oil and gas leases for state tax purposes. Also, I'm assuming the leases you are asking about are indeed in California.