Who owns a conservation easement

Despite the advantages of buying a home or land with an easement, there are a number of drawbacks you'll need to keep in mind. The restrictive nature of an easement could come into play in a number of scenarios when you're buying a stretch of land. Imagine you buy land with an easement, and your goal is to build a home on it. Depending on the terms of that easement, you may not get to build the home you want.

Some parts of that land may be off-limits for development entirely, limiting you to a smaller property. And you'll generally have more rules to follow than when you buy regular land to build on. Furthermore, if you buy a larger piece of land with a conservation easement that you subsequently wish to subdivide, you may not get that option.

Some easements limit or prohibit subdivision; you'll need to see what restrictions you're subject to. If you're buying land with an easement you wish to farm on, you'll face similar restrictions. You may be prohibited from building a barn or any other type of permanent structure on that conservation land. Buying a home with a conservation easement could limit you substantially as a property owner. Most easements prohibit you from building permanent structures on them.

Now, imagine you buy a home where part of your backyard is conservation land, and you want to put up a fence -- either for privacy, your children's safety, or to keep wildlife at a safe distance.

Your easement, unfortunately, may prohibit you from putting up that fence. Similarly, you may be barred from putting up retaining walls, sheds, or other such structures that are considered permanent in nature when you have an easement. That, in turn, could limit the extent to which you're able to fully utilize your outdoor space. Also, with an easement, you're generally prohibited from altering its natural habitat.

The bushes and shrubs you don't like in that easement? You may not be able to remove them. The same holds true for trees in an easement -- you generally can't remove them unless they pose a major hazard to your property or a surrounding property. And even if they do constitute a potential hazard, you might still be barred from taking them down.

Finally, you might struggle to sell a home that comes with conservation land because future buyers may not want to deal with the restrictions at play. The landowner may qualify for a federal charitable income tax deduction if he or she donates or bargain sells the easement and meets all the various requirements of Internal Revenue Code section h.

These requirements include conveying the easement to a qualified organization exclusively for conservation purposes and in perpetuity. If the requirements to qualify are met, the value of the charitable contribution for tax deduction purposes is determined by independent appraisal. The more a conservation easement restricts the development potential for a property for conservation purposes, the more likely the possibility of a tax deduction and the larger the valuation of the gift for deduction purposes.

Example simplified to serve as a reasonably accurate introduction to the topic. From to , Congress provided for a more expansive tax benefit, most significantly, for those with moderate incomes, a year period in which to use the deduction. The future of this expanded benefit is perpetually uncertain, with Congress having at times renewed it at the end of the tax year for which it was being renewed. Under Internal Revenue Code section c , the gift of the easement can also qualify a landowner to a federal estate tax exclusion for a portion of the value of the land that is subject to a conservation easement, thus potentially reducing federal estate.

A dozen or so states provide some sort of state income tax incentive for the donation or bargain sale of conservation easements. Pennsylvania is not among them. A review of these various incentives is beyond the scope of this guide. The process of preparing for a conservation easement is much like the process of preparing for the acquisition of land. The prospective holder will want to make the same sorts of investigations that a prospective land purchaser makes.

The types of investigations are summarized below and the costs associated with them are described in the guide Costs of Due Diligence in Conservation Acquisitions. Title to the land must be good and marketable and free of mortgages and other liens. While exceptions can occasionally be made when the conservation easement is wholly donated and no charitable contribution for federal income tax purposes is being claimed, the general rule is that mortgages must be released or subordinated to the conservation easement.

For further information, see the guide Mortgage Subordination as well as the Model Mortgage Subordination and Commentary. The prospective holder will want to obtain information about prior uses of the land. If any existing features or historic information raises a concern, additional investigation may be desired.

If the conservation easement is being purchased, the holder will almost always want an appraisal to justify the amount being paid. Sometimes funding provided by government programs requires more than one appraisal or a review by a second appraiser of the work product of the first. If the owners want a contribution or bargain sale of a conservation easement to qualify as a charitable contribution for federal tax purposes, an appraisal must be prepared to support the tax deduction.

The Internal Revenue Code and Regulations have very specific requirements regarding the preparation of the appraisal and the qualifications of the appraiser. However, baseline documentation is critical to the soundness of the conservation project, whether or not federal tax benefits are involved. For every easement, the land trust has a baseline documentation report that includes a baseline map prepared prior to closing and signed by the landowner at closing.

The report documents the important conservation values protected by the easement and the relevant conditions of the property as necessary to monitor and enforce the easement.

Common practice is for the holder to prepare the baseline documentation. The Model Grant of Conservation Easement and Commentary , published and maintained by the Pennsylvania Land Trust Association PALTA , provides users with a state-of-the-art legal document together with expansive guidance covering alternative and optional provisions and the reasoning behind it all.

The model, now in its sixth edition , has been adopted by land trusts, local governments and landowner counsels across the country. The Model Grant of Conservation Easement and Commentary is the culmination of countless hours of research, discussion and drafting by the development team; feedback from users; review by easement professionals; and comments from workshop participants.

No easement document in the nation has benefited from more cycles of public review and comment. The model is written to achieve meaningful resource protection while being fair to both landowner and holder. It is characterized by plain language, consistent form and easy-to-read formatting. It is structured in modular form to minimize cross-referencing and the potential drafting errors resulting from cross-referencing.

The Model Riparian Buffer Protection Agreement , now in its second edition, is a grant of conservation easement specifically designed for riparian buffer protection projects. The model applies a single set of conservation objectives and restrictions to the area to be conserved. The Model Grant of Conservation Easement , in contrast, enables users to set different conservation objectives and restrictions for different areas of a property.

Both owners and holder need to focus upon the resources to be protected: not only what is being protected but why. Conservation Objectives are important for a number of reasons discussed in the commentary to the Model Grant of Conservation Easement.

From the perspective of the holder, the Conservation Objectives are the reason the holder is accepting the conservation easement. After owners and holder come to agreement on the Conservation Objectives and the restrictions on the land that will serve those Conservation Objectives, it is time to prepare a draft of the grant of conservation easement.

This task is greatly simplified by the availability of the Model Grant of Conservation Easement. Usually the first draft of the Grant is produced by holder or counsel for the holder.

When accepting a conservation easement, a holder is responsible for ensuring the conservation objectives are upheld in perpetuity. Proper stewardship for conservation easements includes regular site monitoring trips, responding to landowners questions about the easement, maintaining positive relationships with landowners, building relationships with new landowners, ensuring easement violations are resolved, responding to landowners requests to exercise reserved rights, and amending the easement when necessary.

The guide Costs of Conservation Easement Stewardship and the accompanying Stewardship Costs Calculator may help in estimating the costs of the stewardship activities.

An Introduction to Stewardship Funding Arrangements and Legal Considerations for Stewardship Funding Arrangements help users understand their options in ensuring adequate funding for easement stewardship. The Model Stewardship Funding Covenant and Commentary provides a model legal document and guidance for implementing one or more of these options. Nothing contained in this or any other document available at ConservationTools.

The material presented is generally provided in the context of Pennsylvania law and, depending on the subject, may have more or less applicability elsewhere. There is no guarantee that it is up to date or error free. Home » Guides » Conservation Easement. Typical End Users. Conservation Impact.

What You'll Need. Obstacles and Challenges. A Work In Progress Overview Summary A conservation easement is a power vested in a land trust or government to constrain, as to a specified land area, the exercise of rights otherwise held by a landowner so as to achieve certain conservation purposes.

Users The establishment of a conservation easement requires 1 landowners willing to place limits on the use of their land in order to advance conservation purposes and 2 a holder -- a nonprofit conservation organization or unit of government willing to accept the powers and the obligation to uphold the conservation purposes.

Track Record Thousands of Pennsylvania properties important to people — farms, forestlands, scenic hillsides, historic landscapes, community open space, etc. The first conservation easement in Pennsylvania was established in What You'll Need A willing landowner and a willing holder a charitable conservation organization or a unit of government. A model legal document on which to base the conservation easement. The latest edition of the Model Grant of Conservation Easement and Commentary is available online free-of-charge at the ConservationTools.

Landowner and holder should both have guidance of legal counsel. Obstacles and Challenges o assure compliance with the terms of the conservation easement, the holder will need to periodically inspect the property. The holder also may need to take action if the conservation objectives of the easement are not being respected. Responsible conservation organizations set aside a stewardship fund to ensure that conservation objectives will be respected in perpetuity. Does DU accept all easements offered?

DU concentrates its conservation efforts in certain focus areas, which are regions of importance to waterfowl. These areas include the most important nesting, migration and wintering areas for migratory birds throughout North America.

If the property does not fit with DU's mission, DU will help the landowner find a more appropriate organization to accept the easement. If I donate an easement to DU, will it ever be transferred to the government?

DU is a private nonprofit organization. It is not affiliated with the federal government or any state or local branch. In the unlikely event that DU should ever cease to exist as a conservation organization, the easement document provides that the easement automatically transfers to another private nonprofit organization that has experience with conservation easements.

What is the responsibility of the owner in the easement process? Each state has its own laws that will determine the legal consequences of a conservation easement. Each prospective donor should consult his or her attorney and tax professional as to the laws of their state and the legal and tax implications of the proposed easement.

The landowner is responsible for obtaining an appraisal of the property. The appraiser will furnish both a market value of the property and a value of the property after a conservation easement has been placed thereon. This difference in valuation may determine the amount of tax deduction allowed.

A qualified appraiser is one who is knowledgeable in making appraisals of the type of property donated, who is not the donor or holder. The BDR is an inventory of the conservation values of the property, which includes habitat and wetland analysis, as well as suggested management ideas to ensure its protection and highest use to waterfowl and wildlife.

It is essentially a snapshot of the property at the time of donation. The IRS requires a donor to "make available to the holder prior to the time the donation is made, documentation sufficient to establish the condition of the property at the time of the gift.

A BDR fulfills the IRS documentation requirement, and provides the holder with critical information about the property that is used for monitoring and enforcement. The cost of this report may run several thousand dollars. DU can help the donor to arrange for the preparation of these documents.

Additionally, the landowner will need to obtain a title search or a title opinion from a title examiner or attorney in the area. Title information is necessary to disclose the encumbrances recorded on the land records that might be in conflict with the conservation easement.

The cost may be minimal, depending on how long the donor has held title to the property and the number of encumbrances recorded on the land records. What are the steps in the easement process? A landowner who wishes to donate a conservation easement to DU should contact the nearest DU office.

The terms in the easement document will then be negotiated between the owner and DU. In the meantime, the owner will arrange for the appraisal, title work and BDR. The process is one of mutual cooperation as both donor and holder are working toward the preservation of valuable habitat. When both parties are satisfied with the terms and the conditions of the conservation easement, it is signed and recorded with the recording clerk of the local county or town.

What if there is a mortgage on the property? An easement, recorded after a mortgage, could be extinguished if the mortgage is ever foreclosed. Mortgages on the property should be identified, and if the donor will be claiming a deduction, a subordination should be obtained. The existing mortgage holders will have to subordinate make secondary their rights to those of the easement holder.

In other words, the easement has to be first in line. The donor should contact any lenders early in the easement process and obtain a subordination for those mortgages. What is the endowment fund? DU has the welcomed duty of monitoring and enforcing the easement forever. It is simply a decision to set up legal protection for land to ensure it will never be developed.

The terms are established jointly by the landowner and the land trust that will hold the easement. Under IRS rules, a conservation easement must achieve at least one of the following purposes: preservation of land for outdoor recreation or education of the general public; preservation of natural habitat for fish, wildlife, or plants; preservation of open space, including farmland or forest; or preservation of a historically significant structure or land area.

A conservation easement defines the activities that are permitted and prohibited on the land, and the rights granted to the easement holder. Typically, a conservation easement restricts any activities that would negatively impact the land with regards to a specific conservation objective. Some easements place requirements on the landowner to ensure conservation objectives are met. These may include fencing off certain areas to keep livestock out or changing agricultural or timber harvesting methods to avoid impact on streams, habitat, or soil quality.

Landowners enter into conservation agreements in order to protect their land from destructive development by future owners. There are also a variety of potential economic benefits for landowners who place conservation easements on their property.