Introduction to Conservation Easement Donations

What is a conservation easement?
A conservation easement is a voluntary agreement between a landowner and a qualified conservation easement ‘Holder’, a 501C-3 land trust or other qualified government entity, that establishes restrictive covenants on all or a portion of a property, in perpetuity.

This agreement negotiated between the landowner and the qualified conservation easement holder establishes limits on how the landowner’s property will be used in the future. A conservation easement is legally binding on all future landowners and will protect the land from development and uses that are inconsistent with the defined conservation purpose of the easement, while allowing the landowner to retain the rights of private ownership.

How can MTM help?
Conservation easements are tailored to the land and the landowner. We can help you to think about the present and potential future uses of your property and the reserved rights you want to preserve to maintain these uses. Assisting landowners in their efforts to permanently protect their land is our primary focus.

We know how to effectively facilitate the conservation easement donation process by working efficiently and supportively with you, the landowner, the conservation easement holder, and your legal, financial, forestry and appraisal advisors. We can work with you, the donor, and conservation easement holders to negotiate the terms and establish limits on how a given property will be used in the future.

Will my land qualify?
A variety of existing land uses have potential. The land should be largely undeveloped, but may be composed of working forest or cropland, bottomland hardwood or mesic forests, creeks or rivers, meadows or orchards.
For IRS purposes, an easement must contain at least one of the following ‘Conservation Values’, as defined by the IRS:

  • Open space (including farmland and forest land) that is either:
    • Preserved for the scenic enjoyment of the general public, or
    • Protected pursuant to clearly delineated federal, state, or local government conservation policy and that will yield a significant public benefit;
  • Protection of a relatively natural habitat for fish, wildlife, or plants, or similar ecosystems;
  • Outdoor or educational use by the general public; or
  • The preservation of a historically important land area or certified historic structure.

The Who, What, and Why

Landowners protect their land for many reasons. Many donate a conservation easement in order to permanently protect the things that they love about their land, such as its scenic beauty, wildlife habitat, historic integrity, or its ability to provide a farming or forestry livelihood. Conservation easements are a vehicle for ensuring that the landowner’s vision for his or her land is carried out and is perpetuated through successive generations. These benefits may include: helping pass family land to future generations and family members, gaining peace of mind that the land’s special features will be protected forever, and financial benefits for the landowners and their heirs – potential reduction in taxes (income, estate, and property).

Granting a conservation easement on your land is significant. It can create significant benefits, but because these are donated in perpetuity, the process should be taken seriously and done correctly. Creating a properly documented and enforceable conservation easement donation generally requires several types of professionals and can be time-consuming.

The donation process may take several months or more, it will depend upon the complexity of the project and the landowner’s goals. The staff at MTM can help landowners by providing the expertise to discuss possibilities you may not have considered and to streamline the process significantly.

Conservation easement donors may wonder why it costs money to make the donation. Understandably, landowners are providing a valuable gift to their communities and the general public by making such a donation. However, there are most often costs associated with making a conservation easement donation. This is largely for three reasons – (1) the landowner has the opportunity to realize significant tax incentives for which a conservation easement appraisal is required; (2) the holder of the easement, often a non-profit land trust or government entity, has accepted a permanent role in upholding the terms of the conservation easement forever; (3) the negotiation and document preparation required to make the donation a successful perpetual gift, for which your tax incentives are based, is a very detailed and cooperative process that requires professional assistance, either through the holder itself, your own professional advisors, or consultants like us who can help you to manage all of the steps and people in the process. Good professional help is an essential and valuable investment.

Careful deed preparation by an experienced attorney is necessary to ensure that the easement is properly crafted to meet your needs, to detail your long-term plans for your property, and to comply with all applicable legal requirements.  In addition, an easement appraisal is a complex undertaking that requires significant expertise on the part of the appraiser.  A qualified accountant is also an important member of the easement donor’s team when seeking a deduction.

Private charitable organizations commonly known as “land trusts” hold conservation easements. Some governmental entities also can be Holders. “Holding” a conservation easement means that the land trust or government entity has agreed to accept the donation of a conservation and will ensure the restrictions you’ve agreed to in the deed are enforced forever.

As the owner of the land, you retain the responsibility for its use, care, and management in accordance with the terms of the conservation easement. The conservation easement holder will inspect the land at least annually and is available to consult with you to make sure the use of the land is consistent with the terms of the conservation easement.

MTM Environmental can help you to decide which conservation easement holder(s) you should consider for your donation. Depending upon the features and location of your property, you may be able to choose among several local, regional, and national conservation easement holders. Each easement holder will have its own process for reviewing and accepting new donations, which will always include a discussion of the terms of your conservation easement. The holder’s processes, capacity, and existing endowment are important components for a successful perpetual donation. Representatives from the holder will want to visit with you and tour your property early in the donation process. Because the conservation easement should be designed to meet the needs of the present and future, it is important to get the terms of the conservation easement ironed out early in the process!

Much of the undeveloped private land in this country is providing significant benefits to the public in the form of agriculture, forestry, clean water, scenic views, wildlife habitat, and so on—benefits that would be lost if the land were developed. When a landowner donates a conservation easement to a qualified holder, the public receives a long-term guarantee that these benefits will continue, unimpaired by subdivision and development.

The federal government and many state governments offer income and estate tax incentives that reward and provide some compensation to donors of qualifying conservation easements for their loss in future economic value – Highest and Best Use Value. The value of the donation is determined by a qualified appraiser who looks at the before and after gift value of the property. By offering tax benefits to donors of qualifying easements, the government is offering to share with landowners the costs associated with permanently protecting the important conservation values of their land. Your attorney and accountant can tell you more about how available tax benefits will benefit you specifically.

The Rights and Restrictions

After you have protected your land with a conservation easement, you can still sell or lease the property; the conservation easement will remain in place. You can live on the land, farm the land, hunt, fish, recreate, and pass it on to future generations. Each easement is different, and customized based upon the landscape features and the negotiations between the landowner and the qualified conservation easement holder. Agriculture and forestry uses are commonly permitted, and landowners are often able to retain certain limited residential and commercial use rights too, so long as the conservation easement deed is drafted to protect the conservation values identified and protected on your land. Each conservation easement should be developed with the landowner’s goals in mind.

You give up the right to impair the conservation values of your land as provided in the conservation easement. ​Conservation easements typically permit landowners to largely continue traditional and existing uses of their land. For example, if a goal is to protect farmland, a conservation easement may restrict subdivision and development on prime farm soils while continuing to allow for activities necessary for agricultural operations as well as agricultural structures and improvements, such as barns and irrigation. If the land contains high priority habitat, the conservation easement will prohibit most activities that would alter the present natural condition of those areas. If the land is used for timber production, restrictions may be designed to keep the property as working timberland instead of cleared and converted for other agricultural uses or development. Most conservation easement property has diverse landscape features allowing for a variety of mixed uses, and therefore restrictions, that are tailored to each area. While the land should remain largely undeveloped, new and existing structures, including homes, may be permitted.

No, public access is not required. Landowners can choose to grant public access on their property, but that is not a requirement, and not the only way a conservation easement can benefit the general public. Conservation easements created and drafted to allow for use by the general public for recreation or educational purposes are required to provide some form of public access. Many conservation easements do not contain terms for preserving or creating future public access. For some property, considering the needs associated with allowing public access in the future can be beneficial in drafting the terms of the conservation easement.

The Process

Once you have a basic understanding of how the process works and have decided you are interested in looking into it further, you will want to coordinate a site visit on the property with us and/or a potential qualified conservation easement holder.  This initial site visit will begin the process for evaluating the existing conservation value, and then creating the necessary documents to complete the donation.

The conservation easement donation begins with an initial site visit to get to know you and your property. The land trust will want to see the property and meet you. You will be asked about the history of the property, current uses, and plans or goals for the future. We will discuss the steps in the process, including costs. We can coordinate and assist with this initial site visit and open discussions with a potential holder. Our goal is to discuss your land use and conservation goals and priorities and see that they are met throughout the process by working with the holder and your own advisors.

A conservation easement deed must be negotiated and drafted through careful planning and discussion between the landowner and the proposed holder. If the landowner is interested in the federal or state tax benefits, then a qualified conservation easement appraiser must be engaged by the landowner to complete a before and after conservation easement appraisal of the property. Donations commonly require an accurate survey and a title opinion or certificate of title for the proposed property. This certificate of title shows the record owner, legal description, and any “exceptions” or encumbrances on the title (like easements, liens, or mineral right reservations). Mortgages will need to be subordinated to the conservation easement before closing and any mineral rights reservations found to encumber the property must be proven negligible or quieted in the chain of title.

The Baseline Documentation Report or BDR is typically conducted by a follow-up site visit to complete more in-depth field work and compile a complete ecological inventory of the property. This report consists of text, photographs, and maps depicting the current condition of the property to be used as a baseline for future compliance. This will help you and the land trust or other qualified government entity to ensure that your land use and conservation goals are consistent with each other and the terms of the conservation easement deed after the donation is complete. Our staff includes a Certified/Registered Forester and Conservation Biologist with significant experience doing the field work and writing reports that are consistent with the terms of the conservation easement deed.

With all the final documentation completed and reviewed by the landowner, the final step is for the landowner and qualified conservation easement holder to sign the Conservation Easement deed and Baseline Report. The landowner will retain private ownership of the property, gain enhanced land and water management information and planning, and receive ongoing stewardship assistance from the easement holder and MTM. The land trust or other qualified government entity will contact the landowner annually to stay connected, discuss the condition of the property, and notify/schedule an annual stewardship monitoring visit to the property to ensure the conservation purposes preserved remain intact, forever. Our staff can help to facilitate the final closing and recording of the conservation easement donation and with ongoing stewardship as desired by the landowner or land trust/government entity.

I’m interested… what should I do first?

Call MTM Environmental, LLC! We can get you started, help you find a conservation easement holder, and introduce you to highly experienced attorneys, appraisers, accountants, and any other professionals you need to help you with your decision. Once you decide to move forward, we will work closely with you and your advisors through each step of the donation process.

*Note: We cannot guarantee that there will not be an audit of the conservation easement, or that the conservation easement donation will qualify for a federal tax deduction and/or state tax credits. We will offer the best professional advice available to ensure the conservation easement and accompanying documents are accurate and in compliance with federal, state and local laws and best management practices.

** Note this is not a substitution for review of an appraisal report by another qualified appraiser, nor is this a guarantee of the accuracy of the valuation determined by the appraiser(s). We are not appraisers qualified to determine the value of a conservation easement but we do have extensive experience reviewing conservation easement appraisal reports and IRS Form 8283 for consistency with the conservation easement documents.