The U.S. is covered in vast amounts of rural farm and ranch land. But as urban sprawl continues to stretch farther out and develop rural lands, landowners want to preserve their property from such expansion.
One way to protect land is through a conservation easement. These easements allow for flexibility while ensuring the land will remain undeveloped but still function as viable working land.
1. What are conservation easements?
A conservation easement is a voluntary legal agreement between a landowner and a qualified holder that allows a landowner to permanently limit the type or amount of development on their property in order to protect the property’s conservation and agricultural values. A conservation easement can serve several purposes, such as the protection of significant natural resources including water and endangered species and their habitats, the protection of historical resources, public access for recreation and education, or providing open space. Holders are typically nonprofit land trusts, and several such trusts specialize in agricultural lands.
Through a conservation easement, the landowner retains ownership over the land. Landowners also maintain traditional uses of the land under a conservation easement. The easement holder, in return, is responsible for monitoring and protecting the easement. The limits placed by the easement are decided upon by the landowner and easement holder, and vary from restricting development and mining, designating the property to only be used for farming and agriculture, maintaining the habitat for specific wildlife, providing scenic views, protecting water quality or preserving the property as timberland.
The conservation easement only grants the rights necessary to protect the public benefit of the land with conservation priorities. Landowners still maintain the right to exclude others from the named property as long as it does not inhibit the purpose of the conservation easement. However, holders of the conservation easement have the right to inspect the property. Each conservation easement is unique to the agreement entered into by the landowner and the easement holder. Thus, each easement varies greatly.
2. How do conservation easements work?
Conservation easements can be used as a tool to protect a landowner’s interest in preserving the current use of their land. As conservation easements restrict development, they can be used to protect vital ecosystems. Conservation easements can protect aesthetic appeal, endangered species habitat or fishing habitat protection. These easements can also have a positive impact on water supply, flood mitigation and food production.
Conservation easements remove certain rights from the title of the land. Easements may be limited to only a small portion of property or encompass the whole property. Also, as conservation easements can determine the future of the property forever, they can be used to protect land from development even after a landowner passes away.
Conservation easements can be sold but are most often donated, generating an income tax deduction. These easements are generally unlimited in duration. Because of the perpetuity of these easements, conservation easements are binding on future property owners.
3. What can a conservation easement do for landowners?
Conservation easements can preserve and protect lands, provide water access, protect water quality and mitigate flooding. Financial incentives to conservation easements are income tax deductions from donations, lower estate value appraisals and property tax impacts. Conservation easements have the ability to protect open space or critical habitat, preserve agricultural values and traditional land uses, safeguard historically or culturally important structures, and conserve land with significant scenic, biodiversity or other value for outdoor recreation or education. They can also provide economic benefits by providing land suitable for farming, water access and natural resources.
A conservation easement must also include a legally sufficient land description, inventory of the property’s description, appraisal of the easement, subordination agreement and a mineral remoteness report. These requirements are the terms, conditions and materials needed to obtain an IRS tax incentive.
The decision whether to place a conservation easement on one’s property depends on whether a landowner wants to restrict certain activity and does not mind putting restrictions on the land in perpetuity. Each decision is an individual evaluation and is solely at a landowner’s discretion. But it is the most effective planning tool to ensure the country’s heritage ranches remain in place.
