Conservation easements may be purchased, donated, or bequeathed as part of a landowner’s will. The value of a conservation easement is determined by a qualified appraiser, and will vary considerably depending upon the terms of the agreement and local development pressure. Conservation easement values for working ranches in the West often range from 30% to 60% of fair market value of the property.

Conservation easements are often purchased at a price below its appraised value, and this difference in value may be considered a charitable donation that qualifies for reductions in both income and estate taxes. At present, conservation easement donors may deduct up to 50% of their adjusted gross income over a 16 year period. Qualifying farmers and ranchers may deduct up to 100% of their income, over the same time period.

Restricting a property’s development rights can substantially reduce inheritance taxes that otherwise may force a family to sell all or a portion of their ranch. Landowners may also be eligible for an additional inheritance tax exclusion of up to $500,000.

Most conservation easements are valued according to what is called the “before and after test”. The appraiser establishes the value of the property both with and without a conservation easement, and the difference between the two is the value of the easement. The appraiser will rely on comparable sales of nearby properties, with and without conservation easements.

One can amend the provisions of a conservation easement, as long as such amendments do not result in a net loss in the ability of the easement to maintain the natural features of the property or reduce the easement’s value. Conservation easements can be terminated by judicial action whenever the purpose of the easement can no longer be fulfilled, and also by government through an act of condemnation.

No. However, the amount of the loan must reflect the reappraised value of the property.

“Perpetuity” simply means that a conservation easement cannot be amended or terminated unilaterally by the grantor, which is no different from any other deed or contract. Perpetuity is a requirement of federal tax law for an easement donation to be tax deductible.

Yes.

Most agricultural conservation easements put limitations on future development of the property in order to retain the land’s agricultural capacity and open character. The terms of most agricultural conservation easements are designed to preserve these features without undermining the ability of the landowner to make day-to-day decisions for the management of their ranch.

When an easement is recorded, any mortgage on the land must be subordinated to the easement. This allows the conservation easement to remain intact if the property is ever in foreclosure. Otherwise, in the event of foreclose the mortgage would receive priority and the easement may be ruled invalid. When considering a conservation easement, one should confirm that the lender is willing to subordinate the mortgage and also that any reduction in the market value of the property would not fall below the mortgage amount.

Conservation easements that qualify for federal income tax benefits must prohibit surface mining. If the landowner does not own the mineral rights, a letter must be obtained from a certified geologist stating the chances of mineral development are “so remote as to be negligible.” The extraction of minerals, including oil and gas, by techniques that have minimal surface disturbance may be allowed. However, such techniques cannot have a significant negative impact on the natural and productive values of the property.

No, decisions regarding public access to the property are typically left to the landowner.

The landowner gets all the money from the future sale of lands upon which there is a conservation easement. The only exception would be sales that involve the termination of the easement. Typically, this would only occur when the land is being expropriated by the government for public purposes. In such a case, proceeds from the sale of the land would be divided between the land trust and the landowner according to the proportion of the total value of the land that the easement represents. This value is determined by a qualified appraiser.

Although conservation easements are considered both a contract and a property interest, the easement agreement does not give the organization holding the easement the right or ability to sell or dispose of the easement for financial gain. Rather, it only gives the organization holding the easement the authority to restrict the use of the land as specified in the agreement. Most conservation easements contain provisions that they cannot be transferred to other organizations without the mutual consent of both the easement holder and the landowner.

Current growth patterns across North America and the West show that people are choosing to locate and remain in areas that have high natural amenities such as scenic vista, abundant recreational opportunities, clean air, clean water, and wildlife. Open spaces conserved through conservation easements maintain these features and preserve the quality of life that attract businesses and people to the region.

Conservation easement deeds typically contain provisions for transferring the easement to another like-minded nonprofit organization, should the holder of the conservation easement cease to exist.