If you’ve ever considered placing a conservation easement on your property, make sure you understand everything you need to know before you sign on the dotted line.
Conservation easements are not an easement in the traditional sense. Rather, they are better thought of as servitudes, restrictive covenants, or negative restrictions that run in perpetuity with the land. There are only two entities that can legally hold them – non-profit land trusts and government agencies, which in most instances ought to raise red flags immediately.
Even the trusted Natural Resource Conservation Service is offering them in perpetuity or for lesser term of years, but be sure to find out from the IRS how much of a deduction, if any, you can claim for terms lesser than perpetuity. The primary purpose of conservation easements is to tie up private property forever and it wasn’t until recently that lesser terms came into play.
Proponents of conservation easements like to say they are "voluntary agreements." That is true, but once signed, they are nothing of the sort. But, everyone recognizes that it is strictly the right and choice of the individual landowner to place a conservation easement on their land.
To make an informed decision about conservation easements, landowners need all the facts.
Some believe conservation easements have more to do with controlling land than preserving the environment. Government land use agencies and environmental groups want private land, but they don’t want to pay for it as required by the Fifth Amendment to the Constitution: "Nor shall private property be taken for public use without just compensation."
So, they created a legal tool that allows them to pay less for the land and allow the landowner to declare a tax deduction off his income tax return at the end of the year. That is the incentive used to get landowners to place these on their land. "We get to keep our land and run it just like we always have." See No. 4 below to see why this is a fallacy.
Using these restrictive instruments, the land trusts or government agencies appear to be the good guys rescuing landowners from man’s destructive ways. But, these easements reduce the value of the property by placing restrictions on the land. This reduction is what allows landowners to deduct the difference from their taxes at the end of the year.
So, in reality, this is about not paying full market value for the land to preserve it and using taxpayer money to pay for it. While a landowner gets to deduct the loss at the end of the year, we end up footing the bill. They have figured out a way to "pay" a landowner without "taking" his land – a politician’s dream come true.
Conservation easements are, by design, used to take away most of a landowner’s "bundle of rights," which for the most part include the right to possess, use, sell, modify, develop, or lease your land. Conservation easements purchase most of those rights preventing any appreciation in value and leaving the landowner with nothing but title to the land, the ability to prevent trespass, and the privilege of paying taxes.
Conservation easements manage the land through conservation plans that restrict the use, which in turn, lowers the value. But, realize it is a onetime event and will only benefit you and no one else. It attaches to the land forever and cannot be changed by you or your great grandchildren. However, the government or land trust can make whatever changes they desire as shown below.
Some major concerns regarding every conservation easements include:
1. In perpetuity and can never be removed, except in extraordinary circumstances;
2. Merger of Estates – an easement can be removed by the holder buying the remainder of the estate in fee. This "merges" the two estates and the easement disappears leaving the land trust or the government free to do whatever with the land;
3. Baseline created – biologists and others survey the land for habitat, natural resources, endangered species and all other natural features to create a baseline from which if changes are made, they have to be approved by the managing partner.
4. Landowner becomes a "serf." The holder is the "dominant" owner of the estate and the owner of the land becomes the subservient (lesser of the two). The holder becomes the managing partner of the land and can make any unilateral management decision;
5. The landowner promises never to perform any act "inconsistent with the purposes of the conservation easement" and the land trust has sole discretion to make decisions about the "conservation purposes," like fewer cattle or buffer zones around water bodies and the landowner can do nothing about it;
6. Transfer easement to third party by the holder, but can only be a government entity or another land trust and they become the managing partner of your land with sole discretion without your consent;
7. Third party can enforce the easement by taking the landowner to court. If they don’t agree with the management of your property and it’s determined not to be consistent with the conservation purposes of the easement, a third party can use the court system to stop those farming practices;
8. Condemned as Mitigation. In today’s environmental laws, if habitat for an endangered species is "taken" or destroyed for development, replacement habitat must be found and mitigation is used to replace it. Conservation easements are placed in computer databanks called "mitigation banks" that can be condemned as replacement habitat when developers or government agencies want to build roads or electric transmission lines or other public necessities.
Now, you can make an informed decision whether you should place a conservation easement on your land.
Dan Byfield is CEO of American Stewards of Liberty, a non-profit, private property rights organization. Contact Dan at www.AmericanStewards.us or call 512-365-2699.