Conservation easement transactions have many moving parts. In the runup to closing, even the most eagle-eyed practitioners and attorneys can miss things. Occasionally, errors contained in a recorded grant of conservation easement come to light days, weeks, or months after closing. Correcting these errors is generally worthwhile, though the approach may vary depending on the nature of the error.

Correction Defined

A “correction,” as the term is used in this guide, is an instrument recorded solely to correct what the parties mutually agree was an error contained in a previously recorded grant of conservation easement. While a correction is, in its literal sense, an amendment of the recorded grant, it should be distinguished from the common usage of the term “amendment” in conservation easement practice:

• Corrections resolve errors contained in the grant that the parties mutually agree were errors as of the execution date of the original grant.
• Amendments, in contrast, are used to effect the post-closing changed intentions of the parties to a previously recorded grant.

Types of Error

Some errors have no substantive legal effect on the rights and duties established by the grant. Correcting them is still worthwhile to ensure a clear and accurate record that will stand the test of time and avoid confusion in the future. Other errors affect the operation of the grant and the parties’ respective rights.

Non-Substantive Errors

Correcting non-substantive errors requires minimal deliberation and documentation. Examples of these errors might include:

• Erroneous transcription of tax parcel ID numbers or recorded document citations;
• Incorrect or misspelled party names;
• Incorrect mailing addresses;
• Using inconsistent defined terms;
• Wrong or duplicate exhibit references or labels;
• Mislabeled or incorrectly numbered articles and sections; or
• Incorrect dollar amounts for consideration paid in connection with the grant.

Substantive Errors

Other errors might affect substantive rights under the grant. For example:

• Incorrectly stating the variety or number of permitted improvements;
• Attachment of an outdated version of the easement plan with a larger or smaller Minimal Protection Area than was agreed upon;
• Inadvertent omission of an activity that the grantors bargained to be permitted in the Standard Protection Area; or
• Attaching an incorrect legal description or one containing an error.

Errors of this kind require more care than non-substantive errors. While it may be clear to the landowner who granted the easement and the holder who received it that the words used in the recorded grant do not reflect their mutual intent, changing the text of a publicly recorded grant of conservation easement to expand or contract substantive rights may bear on the interests of third parties, including beneficiaries of the easement, or draw the attention of others. Proper due diligence and documentation help ensure that neither the error nor the correction leads to confusion or conflict.

For the holder, the issues are most acute where (1) the error favored conservation such that its correction may appear to reduce the conservation benefits delivered by the easement or (2) where applicable, the error resulted in a higher reported value of the easement for tax deduction purposes than would have occurred otherwise. In general, the greater the passage of time between closing and correction of the error, the more care must be taken in correcting the error.

• The holder may consider preparing an internal file memo that explains the factual basis for the error, including evidence of mutual intent, such as email correspondence or a written explanation of the circumstances. This documentation will support the organization in responding to future questions.
• The holder and grantor may consider including brief explanatory content in the correction (which as a recorded document is available to the public) for the purpose of allaying potential concerns or suspicions about the reason for the change.
• In the case of a donated or bargain sale easement that gave rise to a federal tax deduction, ensure that the property described on Form 8283 is accurate, and that the landowner’s tax appraisal reflects the grant as corrected. See the “Optional: Addressing Tax Issues” section below.

Realty Transfer Tax Exemption

The corrections described in this guide meet Pennsylvania’s functional requirements of a “correctional deed,” as defined in 61 Pa. Code § 91.151 (relating to documents excluded from imposition of transfer tax). This regulation specifies that a correctional deed only confirms what the parties intended to convey with the original deed, and that, since the time of the original deed, the parties have only acted consistent with that intent (not in accordance with the error).[i] Thus, the corrections are exempt from Pennsylvania’s realty transfer tax.

When preparing the Realty Transfer Tax Statement of Value for a correction, check “Other” in Section IV.2, and write the following in the explanation box:

This document is a correctional deed as described in 61 Pa. Code § 91.151, exempt from transfer tax pursuant to 61 Pa. Code § 91.193(4).[ii]

Using the Model Correction

The following notes regard the content and (for the most part) the associated section headings contained in the Model Correction to Grant of Conservation Easement and Declaration of Covenants.

Background

This section links the correction to the original grant.

Intent

This section calls for users to provide a description of the error. In the case of a non-substantive error, this may be straightforward. For example, after the word specifically, write:

• “the tax parcel identification number listed for the premises was incorrectly transcribed.”
• “the names of the landowners were incorrectly spelled.”
• “page 8 of the Grant was omitted at the time of recording.”
• “a typographical error was contained in Section 3.02(b).”

In the case of an error affecting a substantive right, additional description can be included to explain why and how the error occurred. For example:

• “the blank on page __ was unfilled, contrary to the documented agreement of the Parties.”
• “the number of permitted improvements containing residential units was erroneously listed as ___, contrary to the Parties’ mutual intent.”

Correction

This section contains the operative provision that corrects the error.

Effect

This section ensures that nothing contained in the correction will modify the grant of conservation easement except for the change described in the preceding section.

Counterparts

This section eliminates the need for the parties to gather in one location or transport a single document from place to place to collect the necessary signatures.

Optional: Addressing Tax Issues

Most grants of conservation easement, including those based on the Model Grant of Conservation Easement and Declaration of Covenants, ensure that the holder has no responsibility or liability for any intended tax deduction. In the rare case of a correction that may negatively affect the value of a claimed deduction, the holder should avoid the risk of any impression that it has participated in a deceit at taxpayers’ expense. The following language may be added to the correction to publicly affirm the landowner’s sole responsibility for taking corrective action:

The undersigned Owner or Owners bear sole responsibility for addressing any effect of this correction on a tax deduction previously claimed or to be claimed in connection with the Grant (e.g., preparing and filing an amended return if applicable).

Signatures

The execution clause (beginning “INTENDING TO BE LEGALLY BOUND”) does not include reference to a nominal dollar amount of consideration. This intentional omission affirms the mere correctional function of the document and supports its exclusion from the imposition of transfer tax.