Transfer Fees and Stewardship Funding Covenants for Conservation Easements

An open-end mortgage can secure payment of an obligation that has not come into existence yet. The excerpt from the Unofficial Purdon's Pennsylvania Statutes from West regarding open-end mortgages as well as Pennsylvania Senate Bill 693 enacted as Act 126 of 1990 are included here.

Pennsylvania’s Act 8 of 2011 (House Bill 442) prohibits private transfer fees but provides exceptions for fees payable to nonprofit corporations in association with conservation easements as well as for fees payable to governments.

This primer on using private transfer fees in New Hampshire, subtitled "The conservation gifts that keep on giving," explains the need for finding money to cover the long-term monitoring and enforcement obligations of conservation easement and fee land holders. It discusses the use of "Stewardship Transfer Fees" (built into a conservation easement) and "Stewardship Legacy Agreements" (a separate document) as revenue-generating mechanisms. 14 pages.

Effective 7/16/2012, the Federal Housing Finance Agency's final rule restricts Fannie Mae, Freddie Mac and the Federal Home Loan Banks from dealing in mortgages on properties encumbered by certain types of private transfer fee covenants.

Pennsylvania courts and federal courts applying Pennsylvania law have held, in several of the cases arising from the French and Pickering v Natale matter, that the breaching landowner is personally liable for compensatory damages arising from a breach of a restrictive covenant in a conservation easement. There are no other reported cases in which enforcement of a promise to pay in a conservation easement has been sought in any Pennsylvania court of appeals.

<p>In accepting a conservation easement from you, the land trust takes on the responsibility of ensuring that your land is forever conserved. Fulfilling this duty requires money. This is why the land trust seeks financial support from you or subsequent owners of the land. WeConservePA guide. 2 pages.</p>

<p>A landowner may agree to funding arrangements that require the landowner or successor owners of an eased property to make one or more payments to the easement holder to support stewardship of the property. An understanding of what makes promises binding is critical for crafting arrangements that are enforceable over time. WeConservePA guide. 14 pages.</p>

The Martha's Vineyard Land Bank has conserved 3000 acres of the island by collection of a 2% transfer fee on most transactions. Although administered by a private conservancy, the fee is not a private transfer tax imposed by covenant but was, instead, created by enabling legislation

The Martha's Vineyard Land Bank has conserved 3000 acres of the island by collection of a 2% transfer fee on most transactions. Although administered by a private conservancy, the fee is not a private transfer tax imposed by covenant but was, instead, created by enabling legislation and is enforced by detailed regulations governing the administration of the fee. This 29 page document outlines the rules and regulations governing the processing of the land bank transfer fee.

<p>The Model Conservation Easement Donation Agreement helps land trusts avoid getting stuck with unreimbursed major expenses if a would-be easement donor walks away from a project. It outlines the steps to completing a project and the responsibilities of the land trust and donor. It also helps the parties avoid common misunderstandings. A DRAFT OF A NEW EDITION IS BEING OFFERED FOR PUBLIC REVIEW AS OF NOVEMBER 2024. It is suitable for use but won&#39;t be finalized by WeConservePA until interested parties have ample time to review and comment. Send comments to Justin Hollinger, Esq., at jhollinger_at_weconservepa.org</p>

<p>The Model Stewardship Funding Covenant&nbsp;is a tool for making funding arrangements for&nbsp;conservation easement stewardship that are both affordable to landowners and adequate to cover the easement holder&#39;s stewardship expenses in the long run. With the model, landowners can stretch a financial commitment over time, either deferring their intended contributions to future dates respectful of&nbsp;their financial situation or extending payment obligations to future owners of the land. The model offers a variety of financial&nbsp;arrangements, from installment payments to private transfer fees, in support of conservation. Download and review both the model and the commentary.</p>

This opinion discusses the history of covenants running with the land, and specifically the covenant's "touching" or "concerning" the land with which it runs (the “touches and concerns“ requirement).

A strategy that will assure payment of the stewardship fee is to secure the obligation with an open-end mortgage on the conserved property. An open-end mortgage can secure payment of an obligation that has not come into existence yet; for example, an obligation to provide additional funds for stewardship upon certain changes in the conserved property. This is the section of the Pennsylvania Consolidated Statutes dealing with open-end mortgages.

Provisions requiring payments by owners of eased land to the easement holder upon each transfer of the land (or other triggering event) may be placed in the document that grants a conservation easement. This guide suggests best practices and provides sample provisions to maximize the effectiveness of this strategy for funding easement stewardship. WeConservePA guide. 5 pages.

Private transfer fees (sometimes referred to as private transfer taxes by those opposed to them) have had a mixed reception. This article expresses the views against private transfer fees.

The Pennsylvania Land Trust Association prepared this sample brochure to illustrate how a land trust might communicate with owners concerning the need and options to fund the land trust's easement stewardship obligations.

<p>A landowner may agree to an arrangement that requires the owner <i>or successive owners</i> of an eased property to make payments to the conservation easement holder to support stewardship of the land. The arrangement may be customized to fit the stewardship demands created by the particular easement and the financial circumstances and wishes of the owner. WeConservePA guide. 12 pages.</p>

The Treasure Lake Homeowners' Association case decided by the Pennsylvania Superior Court in 2003 upholds the principle that there is a duty on the part of the landowner to share in the costs of services that benefit his ownership in land. The Treasure Lake case also confirms that the remedies available to the beneficiary of a promise to pay a sum of money that qualifies as a covenant running with the land are not limited to remedies against the land (such as an injunction or foreclosure of a lien against the land) but also include the right to obtain a judgment for the unpaid sum against the owner collectible from the owner's assets including but not limited to the land. For more information, see the Stewardship Fees Binding Future Owners to Present Promises guide.