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A conservation easement limits certain uses of the land to advance identified conservation objectives while keeping the land in the owner’s control. It is established by mutual agreement of the landowner and a nonprofit land trust or government. The easement continues no matter who owns the land in the future.
The conservation easement is a tool for protecting land to ensure it continues to provide benefits—like clean water, scenic views, wildlife habitat, local food, or sustainable timber production—without requiring government regulation and with the private landowners maintaining ownership and control of their property.
Tens of thousands of properties important to people—millions of acres of farms, forests, historic landscapes, urban green spaces, and other lands—have been conserved with conservation easements. The first conservation easement was established in the late 19th century, with use becoming widespread in the late 20th century.
A conservation easement is established by mutual agreement between a landowner and a holder (which can be a private land trust or government.) [i] The landowner either donates, sells, or bargain sells the easement to the holder. The easement limits certain uses of the land in order to achieve particular conservation objectives while keeping the land in the owner’s control. The owner may continue to use the land as the owner wishes—within the constraints agreed to when establishing the easement. As the holder of the conservation easement, the land trust has the right (and responsibility) to block uses that violate these constraints.
A conservation easement does not create a right for the public to access a property unless the owner explicitly establishes that right.
The conservation easement continues in force no matter who owns the land in the future. Practically all conservation easements are designed to be perpetual; for nearly all land trusts and circumstances, this is non-negotiable.
A conservation easement cannot be created without a land trust or government that is willing to hold it. WeConservePA and the Land Trust Alliance both provide tools for finding land trusts appropriate to a particular geography.
Holding and stewarding a conservation easement is costly. Land trusts must assemble funding (often including a landowner contribution) to cover the costs of establishing the easement and upholding it long term.
Although usually not the determining factor in a landowner’s decision-making, federal income tax and potentially other tax benefits are available in conjunction with the donation and bargain sale of easements that meet certain requirements.
Soon after a landowner or land trust broaches the idea of creating a conservation easement, the land trust will want to talk with the landowner about the conservation objectives to be advanced by the easement. These objectives will be shaped by the character of the property, the mission of the land trust, and the wishes of the owner. For example, the land trust and owner might include any one or more of the following as conservation objectives:
Once the owner and land trust agree on the objectives, they typically discuss which uses of the land are and are not compatible with the objectives. Depending on the objectives, the owner and land trust may agree that restrictions such as the following may be necessary:
They may agree that the easement will need to clearly permit the owner certain uses of the land. For example, an owner may want to ensure that they can:
They also may agree that certain uses of the land might (or might not) be appropriate depending on the details and that the land trust should have the right to approve or disapprove an owner’s proposal to engage in such uses based on the land trust’s analysis of the potential impact on the protected natural resources.
Whether the landowner first approaches the land trust or the land trust approaches the owner about a potential conservation easement, both parties benefit from a formalized understanding of what is—and is not— being committed to as the conversations proceed and they devote more time and resources to the endeavor. This formalization may take the form of a donation agreement, sales agreement, or other form used by the land trust. The formalization ensures that the land trust doesn’t waste charitable dollars planning a project that the owner isn’t reasonably committed to seeing through to completion and, conversely, that the landowner doesn’t waste effort if the land trust is unlikely to find the owner’s needs compatible with the land trust’s aims.
The conservation objectives, restrictions, and permitted uses agreed upon by the owner and land trust are incorporated into a legal document usually provided by the land trust. Like most legal documents affecting real estate, the document creating a conservation easement is relatively long and detailed. This level of thoughtful detail is necessary to responsibly address the complexities of the law and prevent issues from cropping up in the future.
Fortunately, just as Realtors use a time-tested, standard agreement for purchase and sale transactions, so too do many land trusts. A prominent example is the Model Grant of Conservation Easement and Declaration of Covenants, a standard document to create conservation easements published by WeConservePA. Land trusts across the country have adopted this model and adapted it for local use.
The planning of the conservation easement also requires documenting the conditions of the property in a baseline documentation report, subordination of mortgages (if any) on the property, and other tasks, which the land trust will help the landowner understand early in their conversations. Depending on the project, survey work may be required and, if the owner intends to seek a tax deduction, an appraisal will be necessary.
At closing, the land trust and landowner will sign the finalized easement document. With this action, the owner grants to the land trust the conservation easement, which gives the land trust the power and right to uphold the conservation objectives. The document will be immediately recorded with the county recorder of deeds, ensuring that all future owners and others with interests in the property will have notice of the easement and its effect.
With the recording of the easement document, the land trust’s work has only just begun—and will never end. The land trust is now responsible for ensuring that all future owners respect the conservation objectives of the easement. The land trust’s stewardship work includes:
As a private, independent, charitable organization, a land trust, before accepting any particular conservation easement, will consider:
Landowners exploring whether to establish a conservation easement on their land will want to consider a number of factors including:
The owner’s aims should be compatible with the land trust’s goals and priorities. An owner who wants to protect their forested wildlife habitat may not be a good match for a land trust focused on preserving farmland for sustainable agriculture.
Conservation easements entail a lot of responsibility for their holders. A landowner should confirm that:
Most conservation easements are donated by owners who wish to protect the natural character of the land they love. In certain narrow circumstances, easements are purchased at a bargain price or fair value.
Some government programs purchase conservation easements. These programs generally have tightly focused purchase priorities and, especially for programs that pay at or near fair value, experience high demand, meaning long waits for owners who want to participate. A review of these programs is beyond the scope of this guide. (For an example of a government program that purchases easements on productive farmland, see the guide Agricultural Conservation Easement Purchase Program. The guide Farm Preservation Options for Landowners compares this program to land trust easement work.)
The planning of a conservation easement involves costs to the land trust and owner. The owner will likely be asked to help the land trust with its costs.
The land trust’s stewardship of an easement also takes time and money. A land trust that does not raise funds to cover its perpetual stewardship responsibilities cannot assure that conservation will be lasting. For this reason, it is a normal practice for a land trust to make a stewardship funding arrangement with an owner to help with the land trust’s financial burden. This arrangement may involve one or more cash contributions by the owner at or following the establishment of the easement.
Since not all owners can afford to make cash contributions, the land trust might alternatively seek to arrange for payments by future owners of the land or find financial support from other individuals or organizations who want to see the conservation easement established.
Easement planning and stewardship expenses vary widely depending on the specifics of the project. The land trust that the owner is exploring a potential easement with is best positioned to estimate the costs for a particular project.
The following information is offered for general educational purposes only. Prospective donors must consult with their advisors to understand the complexities of federal tax law that may apply to a particular transaction.
Contributions to land trusts, including donations or bargain sales of conservation easements, that conform with tax rules might qualify the donor for a federal tax deduction in the amount of the contribution.
A conservation easement contribution is generally valued by subtracting the fair market value of the land with the easement from the fair market value without the easement. Further adjustments are required in various circumstances. Values must be demonstrated by an appraisal that meets specific legal requirements. For a bargain sale, the value is reduced by the amount paid to the donor.
A donor may deduct up to 50% (100% if a qualified farmer) from their income each year using this contribution and may spread the deduction over as many as 15 additional tax years.
A donor’s ultimate tax savings can be approximated by multiplying the deductible amount by the donor’s marginal tax rate. For example, a donor in the 35% tax bracket with sufficient income to use the full deduction over not more than a 16-year period could save $140,000 on their taxes when making an easement gift valued at $400,000.
Other tax benefits may be available to those with high-value estates subject to the federal estate tax.
More than a dozen states[ii] offer income tax credits to easement donors. Property tax reductions are available in some locales.
