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Most grants of conservation easement sharply limit the ability of current and future landowners to subdivide or transfer less than the entirety of eased land. This guide explains the substantial conservation value of these restrictions and reviews some considerations for planning exceptions to full prohibitions.
Grants of conservation easement generally and explicitly prohibit subdivision and transfers of less than the entirety of the eased land, making few if any exceptions to this prohibition. The ubiquity of these restrictions (referred to in this guide as “division restrictions”) reflects their profound importance for conservation. But to the uninitiated, the conservation necessity of division restrictions may not be obvious. After all, don’t the same use restrictions apply regardless of how many ownerships exist?
For the reasons discussed in this guide, any division of eased land ownership will bear directly on conservation outcomes. This makes division restrictions a necessity, with permitted exceptions, if any, clearly stated and planned for by the easement holder.
Division restrictions have received broad purchase among courts and the public. Litigants have occasionally challenged them, generally with some version of the argument that perpetual division restrictions are an unreasonable restraint on landowner rights. These arguments have all proven fruitless, as courts have clearly discerned what land trusts understand—that the critical conservation purposes of division restrictions are supported by law and public policy. The guide Enforceability of Restrictions on Division of Eased Land in Pennsylvania covers this subject in detail.
Limiting the legal fragmentation of ownership rights delivers conservation benefits organized here into three categories:
Many conservation benefits flow directly from keeping land in larger management and ownership regimes:
Each division of land results in more landowners acting within the same land area. More landowners doing more things means more risk of inappropriate decisions and actions harmful to the conserved resources, most (if not all) of which will be easement violations. Easement holders simply lack the means to monitor eased properties and landowners 24/7; they cannot head off all potential negative impacts to resources—harms that may be difficult or impossible to remediate.
The inescapability of this risk is reflected in the policy of Terrafirma Risk Retention Group LLC (insuring easement holders for costs of defending conservation easements) to charge a full additional premium for each separate ownership.
Division restrictions provide the cost containment necessary for the easement holder to accept a grant of easement. Holding a conservation easement is costly. Expenses include but are not limited to:
When an eased parcel with a single owner becomes two parcels with separate owners, most of these costs will double (while delivering no additional conservation benefit). It would be a waste of charitable or, in the case of a government-held easement, public dollars to allow for more division than necessary to reach agreement on the original granting of an easement. And, of course, it would be a waste of those dollars to subsequently amend a grant of easement to allow previously prohibited separate ownerships (unless the permission were coupled with substantial new, cost-justified conservation benefits).
If a division of eased land is not accompanied by dedicated funding to cover the increased stewardship costs, the holder will be forced to divert funding that would otherwise be available to pursue new conservation opportunities in the public interest.
Notwithstanding the clear benefits of outright prohibitions on subdivision, conservation easements are voluntarily granted, so their terms are (at least for land trust-held easements) subject to negotiation. A reservation of extensive subdivision rights may be wholly incompatible with an easement’s conservation objectives. But for some landowners, there are compelling personal reasons to reserve limited rights to subdivide or separately convey portions of the eased land, which may be reasonably compatible with the easement. For example:
While any of these rights will have impact on conservation, they may be perfectly acceptable concessions. In some cases, desires may be obtainable without a division right. If not, in many instances, an easement with appropriate reserved division rights is more beneficial than no easement at all, so long as the possible division is thoroughly considered in conjunction with all other terms of the easement (including the increased need for stewardship funding).
The conservation of eased land is served by both the holder’s easement stewardship and responsible land management by the landowner. Whenever a conservation easement includes the possibility of division, consider whether each resulting parcel, as encumbered by the easement, will retain economic value sufficient to encourage lasting interest in owning and managing the land. For example:
A parcel entirely covered by restrictions barring development and commercially viable production may lack sufficient market value to ensure that there will always be landowner interest in owning and maintaining it. This may lead to a number of undesirable outcomes:
The exercise of a subdivision right will invariably increase the holder’s stewardship costs. However, the existence of a right to subdivide doesn’t necessarily mean that the right will ever be exercised. The possibility of future subdivision must affect the holder’s planning for adequate stewardship funding. A number of strategies might address this risk.
The holder may attempt to project its potential cost increase associated with the exercise of the subdivision right and calculate a present dollar amount that is likely sufficient to cover it. A once-and-done approach provides a degree of certainty for the landowner and holder. However, an appropriate dollar amount to address a possible-but-uncertain future subdivision is likely substantial and potentially unaffordable to the landowner.
An alternative approach is to obtain a stewardship funding covenant from the easement-granting landowner, designed to run with the land, binding any future owner to make an inflation-adjusted contribution to holder as a condition to the exercise of the subdivision right. This approach is discussed at length in the guide Stewardship Funding Arrangements. The Model Stewardship Funding Covenant includes sample provisions for implementation.
Where a landowner’s subdivision motivations are targeted to a finite group of people, such as their living adult children, there may be value in drafting a subdivision right so that it expires upon some defined occasion, such as the transfer of the property, or the expiration of a term of years.
