What is a Conservation Easement?
A Conservation Easement is a voluntary legal agreement between a landowner and a Land Trust (or government entity) that permanently restricts certain aspects of land use in order to protect the conservation values of the property. Landowners may either donate or sell a Conservation Easement. When a landowner places a Conservation Easement on his or her land, he or she maintains ownership and use of the property and can sell it or pass it on to heirs. The land is subject to certain restrictions agreed upon by the landowner and the Land Trust. For example, a landowner might agree to limit development on his or her property to one residence of a particular size.
Future landowners are bound by these restrictions as well, and the Land Trust is responsible for monitoring the property and upholding the terms of the easement. Conservation Easements have become one of the most commonly used land conservation tools in the country. Please refer to our Landowner Guide for more information about conserving your property.
What are the Benefits of a Conservation Easement?
In addition to the satisfaction landowners get from knowing their land is protected in perpetuity, there are also four potential tax advantages to granting a Conservation Easement:
- State income tax credit
- Federal income tax deduction
- Estate tax benefit
- Reduction in property taxes
Why Should I Consider Conserving My Land?
Conserving your land may be the single most important contribution you can make for future generations. Many landowners execute a Conservation Easement because they love their open space land and want to protect it from development while keeping private ownership of the property. Depending on your individual circumstances, there may be income tax, property tax and estate tax benefits.
In Addition to Conservation Easements, What Other Conservation Methods Do Land Trusts Use?
Land can be given to a Land Trust as an outright donation, or it can be donated to a Land Trust in a number of other ways, such as through a remainder interest or a bequest. Most land is donated to Land Trusts for its important conservation values and is protected in perpetuity; however, commercial and residential property can also be donated to a land Trust with the understanding that it will be sold to support the organization’s conservation work.
Are Conservation Easements Popular?
Conservation Easements are a very popular tool for the protection of land. Landowners have found that Conservation Easements can be flexible tools and yet provide a permanent guarantee that the land won’t ever be developed. Conservation Easements are used to protect all types of land, including: farm and ranch land, historical or cultural landscapes, scenic views, streams and rivers, wetlands, wildlife areas and working forests.
How can a Conservation Easement be Tailored to my Needs and Wishes?
A Conservation Easement restricts development to the degree that is necessary to protect the significant conservation values of that particular property. Sometimes this totally prohibits construction, and sometimes it doesn’t. Landowners and Land Trusts, working together, can write Conservation Easements that reflect both the landowner’s desires and the need to protect conservation values. Even the most restrictive Conservation Easements permit landowners to continue such traditional uses of the land as farming and ranching.
What Steps do I Take to Write a Conservation Easement?
First, contact MALT to become acquainted with the organization and the services provided. Explore the conservation values you want to protect on the land with them. Discuss with MALT what you want to accomplish and what development rights you may want to retain. For example, you may already have one home on your property and want to preserve the right to build another home. That is one provision that must be specifically written into a Conservation Easement agreement. Always consult with other family members regarding a Conservation Easement, and remember that you should consult with your own attorney or financial advisor regarding such a substantial decision.
How Long does a Conservation Easement Last?
Conservation Easements “run with the land,” binding the original owner and all subsequent owners to the Conservation Easement’s restrictions. The easement is recorded at the County or Town records office so that all future owners and lenders will learn about the restrictions when they obtain title reports.
Can Easements ever be Terminated or Amended?
Conservation Easements are permanent encumbrances on a property that cannot be revoked or terminated, except by a court order. If the property is condemned or circumstances change such that the purposes of the Conservation Easement becomes impossible to accomplish, there are mechanisms by which the easement may be legally terminated in a court of law, and any condemnation proceeds are distributed between the landowner and the Land Trust.
Amendments to easements may be made to further the conservation purposes of the easement, account for unforeseen circumstances, correct typographical, clerical or factual errors or clarify language in the easement deed. No amendment may be made to confer private benefits onto the donor, landowner or any other individual that exceed the benefits gained by the general public. Amendments may also not affect the perpetual nature of the Conservation Easement or its qualification according to C.R.S Section 38-30.5-101, et seq., or Section 170(h) of the Internal Revenue Code. Land Trusts are under no obligation to amend an easement and may decline to do so at their sole discretion.
Will Placing my land under Conservation Easement Reduce my Property Taxes?
If your property is assessed as agricultural at the time of the Conservation Easement, you may be eligible to permanently retain that agricultural status even if agricultural operations stop on the property. For more information, please contact MALT at (303) 679-0950 or malt@savetheland.org.
What does it Cost to Donate a Conservation Easement?
Land Trusts require a fee to cover the costs of the transaction and then a contribution to help cover the costs of ongoing monitoring and future defense of the easement, and the IRS requires that the easement donation be properly documented, including an appraisal, baseline inventory and geologist’s report. In addition, we recommend that you hire an attorney and/or tax advisor to counsel you through the process. After all is said and done, creating an easement may cost about $40,000 – $50,000 depending on the transactions complexity. These costs are commonly referred to as “transaction costs”. Most of the time, the tax benefits for the donation of a Conservation Easement far outweigh the initial transaction costs. For a more detailed accounting of transaction costs for your Conservation Easement or to discuss ways to offset these costs, please contact MALT at (303) 679-0950 or malt@savetheland.org.
If I Put a Conservation Easement on my Property, Must I Allow Public Access?
No. Conservation Easements held by MALT do not require that a landowner provide public access to their property.
What Happens to the Conservation Easement if I Sell the Land or Die?
Land protected with a Conservation Easement may be sold or passed down to one’s heirs. The easement agreement remains a permanent part of the title and will run with the land even after its transfer. The landowner may continue to use and enjoy the land in ways consistent with the easement, which may include ranching, recreation or other uses. In some circumstances, easements may allow for additional home sites on a small portion of the property, or may provide for small “building envelopes” within which the uses are not restricted by the easement.
Are Water Rights included in a Conservation Easement?
If a landowner owns the water rights, water rights are usually part of the Deed of Conservation Easement. Some or all of the water rights stay with the land to protect wetlands, river corridors, irrigated hay meadows and other water-dependent conservation resources.
How Does MALT Provide for the Long-Term Stewardship of its Conservation Easements?
No, MALT does not own the property. The organization only has an interest in the property and helps control those rights that the landowner wishes to restrict or eliminate (such as development rights). The landowner continues to own the property under the terms of the Conservation Easement.
What is Conservation Easement Monitoring?
Conservation Easements held by the Land Trust are monitored annually to ensure that the conservation values of the land are being preserved and to determine if the terms of the Conservation Easement are being upheld. Each year, MALT monitors each of the Conservation Easements it holds, using staff or qualified independent contractors. They walk the property checking areas of interest, taking notes and photos at designated photo points along the way to verify that there have not been any significant changes to the natural resources from the prior years or the baseline report.
If I am Interested in Donating Land, are Funds Available to Assist with the Transaction Costs?
Potentially. Some entities can provide funding assistance for transaction costs associated with donated Conservation Easements. These organizations including Great Outdoors Colorado, County Open Space programs, Colorado Conservation Trust, Colorado Division of Wildlife and others have helped cover Conservation easement costs. However, competition for limited dollars is tough and projects must be especially compelling in order to qualify for such funds. In addition, most funders want to be involved throughout the process which can lengthen timelines and may impose restrictions that are unacceptable to the landowner. MALT has the experience and contacts to pursue such funds if the project would compete well.
Does MALT Own the Property if I Donate a Conservation Easement to them?
No, MALT does not own the property. The organization only has an interest in the property and helps control those rights that the landowner wishes to restrict or eliminate (such as development rights). The landowner continues to own the property under the terms of the Conservation Easement.
What are a Land Trust’s Responsibilities Regarding Conservation Easements?
The Land Trust is responsible for enforcing the restrictions that the Conservation Easement document spells out. Therefore, the Land Trust monitors the property annually to determine that the property remains in the condition prescribed by the Conservation Easement document. The Land Trust maintains written records of these monitoring visits, which also provide the landowner with a chance to keep in touch with the Land Trust.
Can Land Trust Staff Come on my land Whenever They Want?
No. MALT’s staff sets up an appointment with each landowner once a year to monitor their Conservation Easement. The time is mutually agreed upon by MALT and the landowner.
Can a Conservation Easement Stop Condemnation?
A Conservation Easement will not automatically prevent public condemnation. The government’s power of eminent domain will supersede any number of private covenants, Conservation Easements or other legal devices. Having an interest in the property through a Conservation Easement, MALT will partner with the landowner to oppose any government action that would damage the conservation values of the property.
Do I Have to Hire an Attorney or Accountant to Represent Me?
While MALT does not require that you have an independent counsel in a conservation transaction, we highly recommend it. At the very least, you should discuss your financial situation and any potential tax consequences with an experienced tax advisor prior to a Conservation Easement being signed and have them help you prepare your tax forms. In addition, it is your responsibility to understand the legal requirements and consequences of a Conservation Easement. Conservation transactions are permanent, and while MALT will guide you through the steps required to create a Conservation Easement, we cannot provide legal or tax advice.
What are the Public Benefits of Conservation Easements?
The public benefits from the permanent protection of scenic landscapes, wildlife habitat, recreational trail access, productive ranch and agricultural acreage, buffers between communities, wetlands and watershed protection and the preservation of unique natural lands. The economic viability of our communities is also dependent in large part on the preservation of the natural beauty and wide open spaces for the enjoyment of the public and protection of wildlife. Not all land protected by a Conservation Easement is available for public access. Even where conserved land is closed to public use, the public still benefits from the protection of scenic views, wildlife habitat, watershed protection and ranching and agricultural lands.
For many of us, saving the places that enrich our lives is reason enough to support conservation, but much more is at stake. Ensuring that our natural areas are preserved is critical to the quality of the air we breathe, the water we drink and the food we eat.
How is the Value of a Donated Easement Determined?
Only a qualified real estate appraiser can determine the value of a Conservation Easement donation for tax purposes. The appraiser will consider the property’s “before” value on the open market without any Conservation Easement restrictions and its “after” value with a Conservation Easement restrictions on it. The difference between these two figures is the donated value of the Conservation Easement.
