What is a Conservation Easement?
A conservation easement is a voluntary agreement that allows a landowner to limit the type or amount of development on their property while retaining private ownership of the land. The easement is signed by the landowner, who is the easement donor, and the Conservancy, who is the party receiving the easement. The Conservancy (a.k.a. Land Trust) accepts the easement with understanding that it must enforce the terms of the easement in perpetuity. After the easement is signed, it is recorded with the County Register of Deeds and applies to all future owners of the land.
When a person or entity owns real property, he owns the land, attachments, and the rights that go with the land. Sometimes these rights are referred to as the bundle of rights. These rights include mineral rights, air rights, water (on the surface and below), development rights, ingress and egress, as well as the right to sell or give the property away. If an owner has the full bundle of rights, he is said to have fee simple ownership. These rights can be severed from the property and transferred or sold separately.
Another way to visualize a conservation easement is to think of owning land as holding a bundle of sticks (rights). Each one of these sticks represents the landowner’s right to do something with their property. The right to build a home, to extract minerals, to lease the property, pass it on to heirs, allow hunting are all rights that the landowner has. A landowner may give up certain development rights, or sticks from the bundle, associated with their property through a document called a conservation easement.
Why do people grant conservation easements?
People grant conservation easements because they want to protect their property from unwanted development but they also wish to retain ownership of their land. By granting a conservation easement a landowner can assure that the property will be protected forever, regardless of who owns the land in the future. An additional benefit of granting a conservation easement is that the donation of an easement may provide significant financial advantage to the donor.
What are the financial advantages of donating a conservation easement?
Landowners may receive a federal income tax deduction for donating a Conservation Easement. The Internal Revenue Service allows a deduction if the easement is perpetual and donated “exclusively for conservation purposes.” In addition, the donor may also receive tax deductions or credits in several states that make conserving land a high priority.
What activities are allowed on land protected by an easement?
The activities allowed by a Conservation Easement depend on the landowner’s wishes and the characteristics of the property. In some instances, no further development is allowed on the land. In other circumstances some additional development is allowed, but the amount and type of development is less than would otherwise be allowed. Conservation easements may be designed to cover all or only a portion of a property. If a land owner wishes to exclude part of the property, or maintain the right to profit from farming, these exceptions must be described in the land plan before it has been accepted by the Land Trust. Every easement is unique, tailored to a particular landowner’s goals and their land.
Can the landowner still sell or give the property away?
The landowner continues to own the property after executing an easement. Therefore, the owner can sell, give or lease the property, as before. However, all future owners assume ownership of the property subject to the conditions of the easement.
Does the public have a right of access to easement-protected property?
The public does not have open or unlimited access to property protected by an easement unless the original landowner who grants the easement specifically allows it. Most easement donors do not want, and therefore do not allow, public access to their property. However, one of the four acceptable purposes of a conservation easement is for public outdoor recreation and education. If this purpose is used, then the property must be for the “substantial and regular use of the general public or the community.” If there is a scenic value to the public, this will also support the easements purpose of benefiting the public.
How long does an easement last and who upholds it in the future?
To be eligible for a federal income tax deduction the easement must be “perpetual,” that is, it must last forever. The Conservancy monitors the property, generally once a year, to assure that the easement is not being violated. If the easement has been breached the Conservancy will take whatever steps are necessary to uphold the terms of the easement, including taking legal action. Because of this obligation the Conservancy asks all easement donors to make a financial contribution to the Conservancy’s Endowment Fund. This fund ensures long-term monitoring and enforcement of every easement the Conservancy receives.
Who owns the conservation easement?
To qualify for a tax deduction the easement must be donated to the government or a qualifying conservation or historic preservation organization. Foothills Land Conservancy qualifies as a federally recognized public charity under Internal Revenue Code Section 501(C)(3).
What kind of land can be protected by conservation easements?
IRS regulations require that the property have “significant” conservation values. This includes forests, wetlands, endangered species habitat, beaches, scenic areas and more. In order for a charitable contribution to be made under the provisions of IRC § 170(h)(4)(A) (conservation easement) must be made exclusively for at least one of the following conservation purposes:
- Preservation of land for outdoor recreation by, or the education of, the general public.
- Protection of relatively natural habitat or ecosystem.
- Preservation of open space, where there is significant public benefit, and (1) the preservation is for the scenic enjoyment of the general public, or (2) pursuant to a clearly delineated Federal, State or local governmental conservation policy.
- Preservation of historically important land area or a certified historical structure.
Public access (either physical or visual) to the property is generally required for the conservation easement to be deductible except with respect to protection of a relatively natural habitat or ecosystem or pursuant to specified governmental policies. The type of access depends on the claimed conservation purpose.
If physical access is required, access must be substantial and on a regular basis. If only visual access is required, the entire property need not be visible to the public for a donation to qualify, although the public benefit from the donation may be insufficient to qualify for a deduction if only a small portion of the property is visible to the public.
Each land trust will also have its own criteria for accepting easements.
Who owns and manages easement protected land?
The landowner retains full rights to control and manage their property within the limits of the easement. The landowner continues to bear all costs and liabilities related to ownership and maintenance of the property. The Conservancy monitors the property to ensure compliance with the easement’s terms, but it has no other management responsibilities and exercises no direct control over other activities on the land.