Beware of Conservation Easements!

by Angie Many

   The acquisition of conservation easements (CEs) by land trusts and governments is growing, and that increase is alarming to people concerned about property rights. The money acquired by selling a CE is often appealing to farmers and ranchers trying to hold their lands together. The fact that their lands will remain undeveloped is appealing to others. The property tax breaks that they will receive hooks still others. CEs are a quick financial fix that often cause long-lasting heartbreak. Because this subject is so important to us, we want to reiterate some of the negative aspects of CEs.

1. CEs are perpetual. That means forever. If you change your mind twenty years down the road, you’re out of luck. The easement will be attached to your deed, resulting in a split title. The CE is a legal contract, and land trusts share their experiences so that these contracts have evolved into basically unbreakable documents written in manners that give the land trust excessive authority, often while appearing harmless to the landowner.

2. By granting a CE, the land will never belong to an individual again. Title will be shared among some combination of a landowner, a land trust, and the government to which the easement can be transferred. Forever.

3. CEs often convey more rights to the land trust than you can imagine. For instance, wording may say that “Livestock grazing may continue provided that it does not cause significant deterioration of stream banks, water quality, vegetative communities, or soil structure and composition.” What qualifies ‘significant deterioration, who makes that determination, and by what standards? Short answer: if the land trust says it has deteriorated, it has deteriorated.

   The contract may say that the land trust “has the right to preserve and protect the conservation values of the property.” This is a powerful statement. Conservation values can include scenic values, which can include the color that you’re forbidden to paint your home. It can mean that you can’t alter the exterior of your home. (In at least one instance, a landowner had to actually tear down his brand new home.) It may mean that you can’t cut trees for firewood or dig a ditch.

   There will be someone looking over your shoulder to approve or disapprove your actions and management practices -- forever.

4. If you disagree with the land trust’s interpretation of the contract and decide to go to court, you must pay all legal fees -- your and theirs. In almost every case, the landowner has lost.

5. Need a loan? Most major banks will no longer lend money on land encumbered by a CE because such an easement prohibits most financially profitable future uses of the land. Because most CEs do not specifically spell out what the landowner can do, a land trust can increase its restrictions, forbid spraying of weeds, lower cattle numbers due to their perception of ‘degradation’, and essentially bankrupt a rancher. Banks do not want to be associated with such restrictions or split titles and they don’t want to have to take possession of such lands. In addition, they run the risk of the land trust acquiring the property through legal action.

6. The split title and limited opportunities engendered by a CE limits the buyer pool if you ever decide to sell.

7. If your kids inherit the land, you have limited their options -- and their children’s and grandchildren’s, etc., forever. Your inheritance might be virtually worthless for their purposes. If raising mushrooms became very profitable and your conservation easement specified cattle, which was a losing proposition, they’re out of luck. If they want to build a house, they’re probably out of luck.

8. Don’t want a different land trust or the government having an interest in your land? Too bad. You generally have no choice, since most CEs are transferable to such entities.

9. Most CEs specify that the holder must be granted access to the property at any time -- which could include even through your crops during growing season. In at least one instance, a land trust held its annual fundraising parties on land covered by the CE, even though the landowners objected to dozens of people traipsing around, leaving gates open, and throwing trash in the creek.

10. CEs increase the tax burdens on your friends and neighbors. Land trusts, ‘environmental’ organizations, and the government are controlling more and more lands, and they pay no taxes. Someone else must make up that tax deficit. In addition, the IRS might not agree with the value assigned to the CE.

   Every landowner considering granting a CE should carefully research the consequences. Seek reviews from competent legal and tax counsels. Take a copy of the proposed easement to your bank and ask what the value of your land would be before and after the easement. Since your local bank could well be gobbled up by one of the huge banks in the near future, visit a nation-wide bank officer and ask his opinion, too. Look on the Internet for experiences of those who have granted CEs (a good place to start is www.prfamerica.org). And if you decide to grant a CE despite all these warnings, make sure that the contract is specific (how many animals you can have, what specific practices are allowed, what modifications or changes can be made to buildings {one landowner was unable to paint the barn!}, etc.). Beware! 

   (With thanks to the Paragon Foundation and to Rachel Thomas for their great articles on CEs, from which much of this is drawn. -Ed.)