A conservation easement (or conservation agreement) is a legal agreement between a landowner and a land trust or government agency that permanently limits uses of the land in order to protect its conservation values. It allows you to continue to own and use your land and to sell it or pass it on to heirs knowing it will always be protected according to your wishes.
When you enter into a conservation easement with a land trust, you give up some of the rights associated with the land. For example, you might give up the right to build additional structures, while retaining the right to grow crops. Future owners also will be bound by the easement's terms. The land trust is responsible for making sure the easement's terms are followed.
Conservation easements offer great flexibility. An easement on property containing rare wildlife habitat might prohibit any development, for example, while one on a farm might allow continued farming and the building of additional agricultural structures. An easement may apply to just a portion of the property, and need not allow public access.
All of the conservation easements that we have completed were donated to HeadWaters Land Conservancy. If the donation benefits the public by permanently protecting important conservation resources and meets other federal tax code requirements it may qualify as a tax-deductible charitable donation. The amount of the donation is the difference between the land's value with the easement and its value without the easement. Placing an easement on your property may or may not result in property tax savings. Regardless of the value of the conservation easement, this is not a financial gift to HeadWaters. Rather, our mission is to protect wild or agricultural lands from development, so the value of the conservation easement is to the community at large. The Conservancy, by accepting the easement, is accepting a perpetual responsibility to enforce the terms of your conservation easement at significant cost to us. We look to our conservation easement partners to make a financial donation at the same time as the donation of the easement to provide for the long-term stewardship of your easement. One of our staff can explain this to you in greater detail. Just call our office.
Perhaps most importantly, a conservation easement can be essential for passing land on to the next generation. By removing the land's development potential, the easement lowers its market value, which in turn lowers estate tax. Since 2006 the State of Michigan has had a law which prevents property taxes from "popping-up" when transferred to a new owner, whether through inheritance or sale, if the land owner has placed a conservation easement on the land with a qualifying land trust such as HeadWaters. The savings to the next landowner can be enormous. Whether the easement is donated during life or by will, it can make a critical difference in the heirs' ability to keep the land intact rather than having to sell land to pay the tax bill.
Why should I grant a conservation easement to a land trust?
People execute a conservation easement because they love their land, and want to protect it from inappropriate development while retaining their private ownership of the property. We have the expertise and experience to work with landowners and ensure that the land will remain as open space forever. Granting an easement to a conservation organization that qualifies under the Internal Revenue Code as a "public charity" - such as HeadWaters Land Conservancy - may yield significant income tax savings.
Are conservation easements popular?
They are very popular. In the 5 years between 2000 and 2005, the amount of land protected by local and state land trusts using easements doubled to 6.2 million acres. Landowners have found that conservation easements can be flexible tools, and yet provide a permanent guarantee that the land won't ever be developed. Conservation easements are used to protect all types of land, including coastlines; farms and ranches; historical or cultural landscapes; scenic views; streams and rivers; trails; wetlands; wildlife areas; and working forests.
How can a conservation easement be tailored to my needs and wishes?
An easement restricts development to the degree that is necessary to protect the significant conservation values of that particular property. Sometimes this totally prohibits construction, and sometimes it doesn't. Landowners and land trusts, working together, can write conservation easements that reflect both the landowner's desires and the need to protect conservation values. Even the most restrictive easements typically permit landowners to continue traditional uses of the land such as farming and ranching.
What steps do I take to write a conservation easement?
First, us to become acquainted with the services we can provide. We will explore with you the conservation values you want to protect on your land, what you want to accomplish, and what development rights you may wish to retain. For example, you may already have one home on your property and want to preserve the right to build another home. That is one provision that must be specifically written into an easement agreement. Always consult with other family members regarding an easement, and remember that you should consult with your own attorney or financial advisor regarding such a substantial decision.
How long does a conservation easement last?
Most easements "run with the land," binding the original owner and all subsequent owners to the easement's restrictions. Only gifts of perpetual easements can qualify for income and estate tax benefits. The easement is recorded at the county or town records office so that all future owners and lenders will learn about the restrictions when they obtain title reports.
What are HeadWaters Land Conservancy's responsibilities regarding conservation easements?
The conservancy is responsible for enforcing the restrictions that the easement document spells out. We monitor the property on a regular basis -- typically once a year - to determine that the property remains in the condition prescribed by the easement document. We maintain written records of these monitoring visits, which also provide the landowner a chance to keep in touch with the conservancy. HeadWaters Land Conservancy has established a special fund to provide for long-term stewardship of the easements we hold, with the bulk of the principal coming from monetary donations by landowners who place conservation easements on they land.
Are there tax benefits associated with land protection?
There may be income and property tax benefits for donating your land, donating a conservation easement, or selling the property as a "bargain sale" at below market value. The amount and type of tax benefits depends on a variety of factors, including the legal tool you've used to protect you land, the value of the donation, your income level and the total amount of your estate. We can give you a generalized overview, but again, you should consult with a financial advisor and/or an attorney to fully understand your tax implications.
Thanks to The Land Trust Alliance for information used in preparing this page.
This page last updated on 9/18/2008.
