Conservation Easement Content

As a landowner, you want to understand the basic components of a conservation easement as you negotiate the terms of the agreement with a land trust. The five basic components common to all conservation easements are the preamble describing conservation purposes, the reserved uses and rights, the extinguished or prohibited uses and rights, the affirmative rights of the easement holder (land trust), and the administrative provisions describing the relationship between landowner and easement holder.

Conservation easements are complex and perpetual legal contracts. The following information is intended to prepare you for further discussions with a land trust, and should not be considered a substitute for obtaining legal and other professional advice. Landowners and land trusts should both utilize competent and experienced legal representation in negotiating conservation easements.

The preamble states the major goals, conservation purposes and conservation values to be protected by the conservation easement. The goals, purposes and values statements should be carefully tailored to reflect the terms of the agreement.

At a minimum, the preamble should include one or more of the conservation purposes acceptable to the IRS (per IRC Section 170 (h)(4):

i. The preservation of land areas for outdoor recreation by, or the education of, the general public;

ii. The protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem;

iii. The preservation of open space (including farmland and forest land) where such preservation is

I. For the scenic enjoyment of the general public; or

II. Pursuant to a clearly delineated federal, state, or local governmental conservation policy, and will yield a  significant public benefit; or

iv. The preservation of a historically important land area or a certified historic structure.

The statement of conservation purposes should relate to one or more of the IRS criteria and should identify the specific ways in which the easement satisfies the relevant criteria. The conservation values are the specific values that the property possesses that are being protected through the easement. The preamble may also include any relevant statements that are linked to state and local government objectives associated with land conservation. These are particularly important if state or local grant funding will be involved with the purchase of your conservation easement.

Be cautious, however, to avoid the use of vague language that may be subject to interpretation. The preamble should reflect your goals and purposes for the conservation easement and be compatible with rights that you specifically reserve later in the easement.

Reserved rights are the rights you retain for your property. In crafting the terms of the conservation easement, you will want to broadly retain the rights to use your property not only for its current purposes, but also for potential future uses compatible with maintaining conservation values. Rights that you retain must fundamentally be consistent with the objectives of the conservation easement.

Since you will most likely continue using the property for the foreseeable future, you will want to retain the right to maintain existing buildings, structures and improvements on the property. You will also want to retain the right to sell, lease, transfer, or exchange the property in the future. The rights that you reserve today will be very important to your heirs and a potential buyer in the future.

Depending on the type conservation easement (agricultural, forestry, wildlife, open space or scenic), you will want to retain as many rights to your property as possible. The following examples of reserved rights are intended to inspire thought for identifying the current and future uses that are important to your property:

• All uses consistent with the goals and purposes of the conservation easement
   
• All current uses of the property
   
• Granting easements and public and private access
   
• Selling, leasing or transferring property
   
• Permitting the construction of a limited number of residential homes in specific locations on the property
   
• Subdividing property to an extent that permits economic use of the property while protecting and keeping conservation values in tact
   
• Maintaining structures, utilities, pipelines, ditches, wells and septic systems
   
• Home occupations, cottage industries and compatible commercial uses
   
• Cell towers and wind energy conversion systems in identified locations
   
• Ranching, farming and agricultural activities
   
• Timber harvesting and forest management activities
   
• Hunting, trapping and predator control
   
• Horseback riding and all-terrain vehicle use for permitted activities

Many landowners have found that identifying one or more specific areas on the property where principal activities can occur is a way to limit the impact of those activities on the remainder of the property while permitting economically sustainable uses. These building areas or envelopes are usually identified on maps that are in the appendices of the easement. If the land trust is reluctant to permit activities that have impacts that are difficult to predict now, a provision that permits the land trust to determine whether a proposal from the landowner at that point in the future is acceptable might be used and is far preferable to an outright prohibition.

Extinguished rights are the property rights that you relinquish in order to conserve the identified conservation values. The focus of the description of extinguished rights should be on major activities that will destroy conservation values, such as surface mining, clear cutting, major land development and removing all water from the property. The land trust will want to ensure that certain uses in conflict with the conservation values will not be permitted. These often include the ability to develop the land for residential, commercial or industrial purposes. Other uses commonly extinguished are widespread grading or soil extraction, surface mining and salvage yards.

Depending on the type conservation easement (agricultural, forestry, wildlife, open space or scenic), you will want to retain as many rights to your property as possible. Blanket restrictions which limit any activity not otherwise listed as a reserved right or an affirmative right should be avoided. Keep in mind that the fewer property rights that you extinguish, the more valuable your property may be to a future landowner but may significantly reduce the value of the easement. This is a challenging balancing act of ensuring that you flexibly retain sufficient freedom to undertake economic uses of the property in a manner that does not destroy conservation values and in some cases may help sustain them.

Many of the examples of retained rights may also be proposed as extinguished rights, so it is very important to consider what rights you are willing to forgo in exchange for the benefits that may be derived from placing a conservation easement on your property. 

Affirmative rights are what the landowner permits the land trust to do on or with your property. The most basic affirmative right is the right to inspect the land and monitor and enforce the conservation easement. Normally the land trust will request the right to enter the property at least annually for the purposes of monitoring compliance with easement terms and discussing any issues with the landowner. In addition, the land trust may be granted affirmative rights to conduct wildlife management studies or practices, obtain emergency access to the property, and post signage on property boundaries indicating that the property is encumbered by a conservation easement.

Depending on the type of conservation easement (agricultural, forestry, wildlife, open space or scenic), you will want to carefully define affirmative rights and avoid potential conflicts with your retained rights. Make sure you can live with the activities associated with the affirmative rights on your property, or alternatively, can influence how those activities are conducted.

The administrative provisions within a conservation easement are the other terms and conditions that are important for administering the agreement and defining the relationship between the landowner and the easement holder. Among the many issues addressed, administrative provisions spell out the relationship between the land trust and the landowner, address IRS requirements, cite responsibility for property tax, insurance and property management payments, address liability and indemnification and provide a process for amendment.

Some of these administrative provisions are standard legal “boilerplate” clauses, while others have significant implications in defining the landowner’s relationship to the land trust and may be critical depending on the particular circumstances of your property or your personal objectives. As indicated earlier, experienced and competent legal advice should be sought to ensure that your interests are fully represented and that you understand the implications of many of these complicated provisions.

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