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Conservation Easements (How a property owner becomes a tenant)
Conservation easements actually are not easements at all. Easements generally imply an affirmative use of land for roads, power lines, etc. for the benefit of a third party or the public. Conservation easements actually are covenants that stipulate a negative use of the land. Conservation easements prohibit the landowner from acting in a manner that will change the ecological, open, natural, scenic or historical aspects of the land. The negative use can include obligations imposed upon the landowner. Conservation easements are also known as scenic easements, restrictive easements, open-space easements, and development rights.
A property owner must understand that by granting a conservation easement, he is not only restricting the future use of his property, he is actually conveying an interest in the property to a government agency or Non-Governmental-Organization (NGO) such as The Nature Conservancy. The conveyance of that interest results in a reduction in value of the property because it creates an unusual type of undivided interest in the property that may give rise to future conflicts and it prohibits prospective financially beneficial uses of the property.
Some examples of the actual wording in a conservation agreement are: (comments are in parentheses):
1) The owner conveys to XYZ Conservancy a perpetual conservation easement over and across the property. (perpetual = forever)
2) The purpose of the easement is to assure that the property will be retained forever as open space to provide for a diversity of wildlife habitat, education and agriculture and to prevent any use of the property that will significantly impair or interfere with these values. (This means prohibits prospective financially beneficial uses of the property.)
3) Livestock grazing may continue provided that it does not cause significant deterioration of stream banks, water quality, vegetative communities, or soil structure and composition. (What is significant deterioration of all these resources? Who makes that determination and what quantity and/or quality measurements will
be used?)4) The Grantee (The XYZ Conservancy) has the right to preserve and protect the conservation values of the property. (This is a re-statement of 2 & 3 above and puts all decision authority in the hands of The XYZ Conservancy.)
5) The Grantee (The XYZ Conservancy) has the right to enter upon the property at reasonable times (not defined) in order to monitor property owner (whose status is now that of a tenant) compliance with and otherwise enforce the terms of this easement. (This gives The XYZ Conservancy absolute authority over the property and the tenant.)
6) If The XYZ Conservancy determines that the property owner (now tenant) is in violation of the terms of the easement, The XYZ Conservancy can demand corrective action sufficient to cure the violation. If the violation has caused injury to the property, the property owner (tenant) will be responsible for all cost to restore the property to condition desired by The XYZ Conservancy. If property owner (tenant) fails to take corrective action within a short time frame, appropriate legal action will be initiated.
7) All legal cost incurred by The XYZ Conservancy in enforcing the terms of the conservation easement including, without limitation, costs of suit and attorneys' fees and any cost of restoration of the property will be borne by the owner (tenant).
One has to ask, "Who would enter into such an agreement?" Additionally, major agricultural financial institutions have discontinued the practice of making loans on any property, which has been encumbered by a conservation easement. These financial
institutions recognize the risk involved in making such loans.
Because of the loss of management control by the landowner and the accompanying transfer of the management decisions to The XYZ Conservancy, two dangerous scenarios exist (comments are in parentheses):
1. The XYZ Conservancy, through legal action, could acquire the property, leaving the financial institution without a secured asset.
2. If the owner defaults on his loan, the financial institution inherits the unidentified management standards (which could be costly), and run the risk of The XYZ Conservancy applying the same legal action against the financial institution.
Land ownership as a combination of privileges that allows landowners to exercise certain rights. Being allowed to cut timber, explore for minerals, dig a ditch, and build a house are all examples of a landowner's rights. A conservation easement restricts some or all of these rights in order to protect the habitat, flora, or fauna found on the land. The rights the owner relinquishes are transferred to an organization or body, such as a qualified conservation organization or government body, by a legal document called a conservation easement.
When the document is properly drawn, signed, and recorded in the land records, the owner and future owners of the property can no longer exercise the rights relinquished in the conservation easement. While there may be some benefits for some landowners in granting conservation easements, those instances are rare. Prudence dictates that every landowner considering a conservation easement carefully explore the far-reaching consequences for entering into such a scheme.
The complexity of the conservation easement demands that competent legal and tax counsel fully review and analyze any conservation easement proposal under consideration by a landowner. The landowner should carefully weigh the present benefit to be derived against the long-term burdens any such easement will place, not only upon himself, but upon his heirs.
WEBMASTER's NOTE: We were mailed this document. While the author is unknown we believe it an excellent synopsis of the issues.
