California Surveyors Forums

The whole concept of leasehold interest as it relates to real property ownership and the SMA is kind of lost on me. I'm hoping someone can help with this question.

We have a public entity (a housing authority) who owns a piece of property. They want to issue a long-term lease to a private company over a portion of their property for residential use. As a public entity, they are exempt from a parcel map via SMA 66428(2) so they can go ahead and record their long-term lease with no issues and no City involvement. ("For purposes of this subdivision, land conveyed to or from a governmental agency shall include a fee interest, a leasehold interest, an easement, or a license").

The problem is that they now want the City to issue a Certificate of Compliance on the portion of the property that the long-term lease is on. I think their reasoning is that the private company will need to get financing and the lender will probably want to secure that loan based on the property described in the Certificate of Compliance. When I read 66499.35 regarding COC's, it says that the COC shall state that the division of the real property complies with applicable provisions of the SMA and local ordinances. Is a leasehold interest really a "division" of real property in this sense? 66499.35(f)(1)(E) requires specific language to be included in the COC that says "The parcel described herein may be sold, leased, or financed without further compliance with the Subdivision Map Act." I wouldn't mind stating that the parcel described herein may be leased or financed, but saying it can be sold without having it ever created by a fee conveyance to begin with seems odd.

Have you ever seen a COC on a leasehold interest?

SMA 66428(2) does include a caveat that "... unless a showing is made in individual cases, upon substantial evidence, that public policy necessitates a parcel map."

The implication is that a conveyance - subject to a COC - for a potential future sale may require a subdivision by parcel map.

However, a leasehold interest is not, by itself, subject to sale. It may be subject to transfer if not prohibited by its terms.

The COC may be issued conditionally. That is, for purposes of stating that the leasehold interest was created in compliance with the SMA, but not subject to sale without the formality of a parcel map creating a fee interest.

Check out Dave Woolley's white paper. It has been cited in a case in California.

http://docplayer.net/19572523-White-pap ... -2010.html

Thank you for the helpful information. I think we’ve convinced developer that we can’t issue a Certificate of Compliance because there is no division of fee interest. Hopefully we won’t run into any problems when the lender comes in. We told them that the best we could do was issue a letter stating that the leasehold on a portion of the property is in compliance with the SMA.