Conservation Tools

A conservation easement is a power vested in a land trust or government to constrain, as to a specified land area, the exercise of rights otherwise held by a landowner so as to achieve certain conservation purposes. The conservation easement is established by agreement between a landowner and a land trust or government government. A real property interest that is recorded at the county recorder of deeds office, the conservation easement runs with the land, meaning it is applicable to both present and future owners of the land.

The conservation easement agreement is tailored to the particular property and to the goals of the landowner and conservation organization. For example, a conservation easement might allow sustainable forestry but restrict most other uses. Another might prohibit construction and logging within 100 feet of a stream but allow it elsewhere. Another might support farming but forbid development.

Most conservation easements are donated by landowners who wish to protect a beloved place. Under certain circumstances, easements are sold at a bargain price or fair market value. Donations and bargain sales that meet IRS requirements can result in federal tax benefits.

The Pennsylvania Conservation Easement & Commentary, published and maintained by the Pennsylvania Land Trust Association, includes a state-of-the-art easement document as well as more than sixty pages of in-depth guidance for using the model.

The Conservation and Preservation Easements Act resolves a number of legal issues affecting conservation easements and stands as a strong policy statement of the Commonwealth of Pennsylvania in support of conservation and preservation easements. A few items must be incorporated in the granting document to conform to the Act and, thus, be entitled to its advantages. A non-conforming conservation easement may be amended by holder and landowners to bring it under the protection of the Act. Conservation easements not conforming to the Act remain valid and enforceable under the common law.

When accepting a conservation easement, a holder is responsible for ensuring the eased property’s conservation values are protected in perpetuity: the holder must uphold the easement’s conservation objectives forever. Proper stewardship of conservation easements includes regular site monitoring visits, responding to landowners’ questions about the easement, maintaining positive relationships with landowners, building relationships with new landowners, ensuring easement violations are appropriately resolved, responding to landowners’ requests to exercise reserved rights, and amending the easement when necessary.

This guide helps readers better understand the options and costs associated with these stewardship activities. The average costs and average amount of staff time needed presented in this guide are based on an internet search and are composed mostly of averages found in sample stewardship cost calculators. Readers should be aware that sample size for this data is small and readers will need to estimate costs based on the specificities of each easement.

The digital spreadsheet that accompanies this guide can help readers to estimate the stewardship costs associated with a project and identify the investment needed to finance the stewardship.

This guide describes the range of costs incurred by land trusts and agricultural land preservation boards in completing due diligence for conservation easement acquisition. It reports costs for surveys, baseline data, appraisals, title search, phase 1 environmental assessments, and legal fees. The presented information is based on a 2011 survey of land trusts and agricultural land preservation boards and a review of land trust grant applications. Although the data was gathered in the context of conservation easement projects, much of the information is relevant to fee acquisition of land.

Prospective donors sometimes hesitate to make a substantial donation of cash, land or other property because of their concern that they may deplete assets that may be needed later in their lives. A gift by will avoids this concern.

A gift of cash or other personal property by will, sometimes called a bequest, can be made in a specific dollar amount or calculated as a formula based upon other requirements of the estate.  The gift can be to a specific conservation organization or the person(s) administering the estate (the "personal representatives") can be given the power in the will to identify the beneficiary of the gift. The gift can be unrestricted or can be given for a specific purpose.

A gift of land or other real estate interests by will, sometimes called a devise, can be made of the entire ownership interest, a percentage interest in common with others, or a remainder interest after the lifetime of some individual or individuals identified in the will. The will may authorize or direct the personal representative to donate a conservation easement on a property to a conservation organization before it is conveyed out of the estate in accordance with the terms of the will.  Unrestricted gifts of cash or items of personal property that can be converted into cash may come as delightful, and much appreciated, surprises to the beneficiary.  That's not always true with gifts of real estate.  The prospective beneficiary should be consulted before including a devise of real property in a will -- particularly if it is the donor's intent to restrict its use or transferability.

GPS can be useful for conservation organizations and local governments for monitoring their conservation easement holdings and managing their land preserves. GPS enables users to record positional data in the form of points (e.g., location of a tree or property corner), lines (e.g., a trail) or areas (e.g., a lake). Users can record the locations of any property features that they consider useful for conservation planning such as wildlife habitat units, fences, topography, soil erosion problems, invasive species and easement violations. The recorded data can be imported into Geographical Information System (GIS) software, enabling users to create highly accurate maps of their conservation holdings. Users can also use GPS to quickly re-identify in the field the precise location of previously recorded features. 

If the conservation organization needs time to obtain acquisition funding, and if the seller is willing to defer payment in full for that time, there are two ways to achieve the desired result:

• Seller Take Back Financing.  At closing, seller deeds the property to the conservation organization.  At the same time, the conservation organization delivers a promissory note to the seller for the unpaid purchase price and records a mortgage on the property in favor of the seller to secure that debt.
• Installment Payment Financing (i.e., Installment Agreement).  At closing, the seller and conservation organization sign and record an agreement that sets out the terms for payment of the unpaid purchase price.  The seller retains title to the property until the purchase price is paid. 

Either financing alternative allows the conservation organization the right to use the property while paying off the purchase price.  In either case, the seller can defer recognition of gain on the sale for federal tax purposes until payments are received.

The Model Grant of Conservation Easement and Commentary includes a state-of-the-art legal document as well as 73 pages of in-depth guidance for using the model. First published in 2005, the sixth edition was published in 2011. The latest edition can be downloaded free-of-charge at ConserveLand.org or ConservationTools.org. Published by the Pennsylvania Land Trust Association for the benefit of private and public holders, landowners and their respective legal counsels, it is written to conform to Pennsylvania law and is the standard of choice in Pennsylvania. It is easily adapted for use in other states and is used across the country. The model and commentary are the products of countless hours of research, regular feedback from users, scrutiny by legal professionals, and discussion and drafting by the development team. The model is characterized by plain language, consistent form and easy-to-read formatting. It is written to achieve meaningful resource protection while being fair to both landowner and holder.

The Pennsylvania Land Trust Association maintains a suite of model legal documents and accompanying commentaries to assist land trusts, government units, landowners and donors, as well as their respective legal counsels, in implementing conservation transactions and other conservation-related activities. The models and commentaries are the products of countless hours of research, regular feedback from users, scrutiny by legal professionals, and discussion and drafting by the development team. They are characterized by plain language, consistent form, easy-to-read formatting and incorporation of best practices.

The models are regularly used in conservation projects and reviewed for potential improvement. They are updated as needed to reflect advances in knowledge and to maintain them as state-of-the-art legal documents.

The model easement documents are written to achieve meaningful resource protection while being fair to both landowner and holder. The other models are likewise written to be fair to all parties in advancing the purpose of the particular document. The models are written to conform to Pennsylvania law but are easily adapted for use in other states.

Mortgage subordination is mandatory for the donation of a conservation or trail easement to qualify as a charitable deduction for federal tax purposes and, to assure that the easement will survive a foreclosure of the mortgage, it is usually required in other easement transactions as well. Obtaining a subordination has never been quick or easy but it’s become even more difficult and time consuming due to the consolidation of mortgage servicing into an industry comprised of a few huge databanks. This guide shows users how to take advantage of this development by setting out a process that conforms to industry requirements.

In legal terms, an option is simply a right without any corresponding duty.  Applied to real property, the most common option contracts give the holder of the option the right to purchase or lease real property without any obligation to do so.  Less common, but sometimes useful, is a "put" option that gives the landowner the right to compel another to purchase their land.  An option gives the holder the benefit of time to decide whether and when to enter into a transaction.  The landowner often receives cash compensation for giving up their right to sell freely on the open market during the option period.  The option is a flexible tool that can be used for a variety of purposes in which control -- rather than immediate rights of ownership or occupancy -- is desired.

Conservation organizations often rely on promises by donors to donate at a future time money, land, conservation easements, services and other valuables. Before investing time and money in a prospective project, a conservation organization may want the prospective donor’s promise to support the project to be a legally binding obligation of the donor. Donors may fear that a legally binding obligation will nullify the wholly voluntary nature of their gift, thereby eliminating the possibility of receiving a federal income tax deduction for making a charitable contribution.

This guide offers suggestions on ways to create a legally enforceable promise to make a gift. The guide also offers suggestions on ways to preserve the voluntary nature of donor’s investment in the project and, hence, allow for the possibility of the donor claiming a deduction for federal tax purposes.

A carefully crafted document evidencing the proposed terms of donation (the “donation document”) can insure that there is a meeting of the minds between a donor and donee about the investments each will be expected to make to bring a project to fruition while addressing the concerns outlined above.

Pennsylvania’s Recreational Use of Land and Water Act limits landowners’ liability for personal injury or property damage if they make their land available to the public for recreation free of charge. Landowners may further limit their liability using the other tools outlined in the guide Reducing Liability Associated with Public Access.

Pennsylvania’s Recreational Use of Land and Water Act and other statutes provide substantial protection from liability to landowners who permit the public to come onto their land for outdoor recreation. These protections also apply to holders of trail and other easements. The best defense for landowners and easement holders, however, is preparedness: posting signs, obtaining releases, requiring indemnity, securing insurance coverage and taking steps to warn users of potentially dangerous conditions. This guidance discusses a variety of legal and other means to avoid or minimize liability.

The ownership of real estate can be divided into a present interest (called a "life estate") and a future interest (called a "remainder" or a "remainder interest"). The division is effectuated, unconditionally and absolutely, by delivery of a deed that includes a clause reserving to the transferring owner (sometimes called the "grantor") ownership of the land for the term of the reserved present interest. Reservation of the present interest allows the owner to retain ownership for a period of time measured by the life of one or more individuals, by a term of years, or by a combination of the two.  The transferee owner identified in the deed (sometimes called the "grantee") holds the remainder interest -- the ownership interest that immediately begins when the life estate ends.

The transfer of the future interest can occur via gift or a sale by the landowner and can be an important tax and estate planning tool. The donation of a personal residence or farm subject to a reserved life estate can result in a federal income tax deduction. If appropriate, coupling this with the donation of a conservation easement may provide additional tax benefit as well as permanent protection of conservation values.

If an owner is willing to donate or sell land only for so long as it is used, or not used, for a particular purpose, the owner can transfer the land on a conditional rather than absolute basis. The deed used to convey the property can include terms that will trigger a change in ownership back to the original owner (or owner’s heirs, successors and assigns) if use or ownership of the land falls out of compliance with the conditions set forth in the deed.

The right of first purchase can be a right of first offer, a right of first negotiation, a right of first refusal or a combination of these rights. The right of first offer requires the owner to offer the property, on owner’s terms, to the person who holds the right (called the “holder”) before offering the property to others. The right of first negotiation goes one step further and requires the owner to negotiate with the holder in good faith for some period of time. The right of first refusal allows the holder the right, after offers are solicited from others, to match any offer that the owner is willing to accept. These rights are often combined so that the holder has the opportunity for first response and the assurance that, if owner’s expectations are unrealistic before exposing the property to the market, there is still the opportunity to match a market price.

A riparian buffer protection agreement limits construction on and uses of land bordering a waterway to protect that resource and advance other conservation purposes agreed to by the landowner and a private charitable conservation organization or government (the “holder”). While the property remains in the landowners’ control, the landowner grants to the holder the power to constrain actions impacting the land to ensure that the agreed to conservation purposes are respected. This power is often called a “conservation easement” or “conservation servitude” because it is an interest, albeit narrow, in real property. The riparian buffer protection agreement is recorded at the county recorder of deeds office and “runs with the land”, binding both present and future owners to its terms.

The agreement is tailored to the particular property and to the goals of the landowner and conservation organization or government. For example, within the first 50 feet of a stream, activities inconsistent with water and habitat protection may be ruled out but, extending further outward, a variety of sustainable uses may be allowed depending upon their potential to erode soil or otherwise degrade water resources.

The Pennsylvania Land Trust Association publishes and maintains the Model Riparian Buffer Protection Agreement and Commentary for the benefit of private and public holders, landowners and their respective legal counsel.

If a conservation organization needs time to obtain acquisition funding, and if seller is willing to defer payment in full for that time, there are two ways to achieve the desired result:

• Seller Take Back Financing.   At closing, seller deeds the property to the conservation organization.  At the same time, the conservation organization delivers a promissory note to seller for the unpaid purchase price and records a mortgage on the property to secure that debt.
• Installment Payment Financing (i.e., Installment Agreement).  At closing, seller and conservation organization sign and record an agreement that sets out the terms for payment of the unpaid purchase price.  Seller retains title to the property until the purchase price is paid.

Either financing alternative allows the conservation organization the right to use the property while paying off the purchase price.  In either case, seller can defer recognition of gain on the sale for federal tax purpose over a period of two or more years.

If a conservation easement, rather than land, is being purchased, then the only alternative is installment payment financing.  A conservation easement is not the kind of property interest that can be the subject of a mortgage to secure payment of the purchase price.

A stewardship fee is a means for a conservation organization to secure the financial commitment necessary to undertake long-term stewardship of a conservation easement. The landowner who cannot or will not make a cash contribution or pledge up front to cover the easement holder’s long term stewardship liability may be willing to establish a fee that will be borne by future owners of the land or that will only be paid upon certain triggering events.

Ensuring that the conservation organization can collect a fee from future landowners who did not, themselves, promise to make payment, requires careful planning. A funding commitment (e.g., a stewardship fee) that is enforceable against the donor who made the promise is relatively easy to create (see discussion in Pledges and Donation Agreements). To enforce the funding commitment as the personal obligation of a future owner is far more challenging: Either the commitment must meet the requirements of a covenant running with the land (including that the payment be directly connected to the future owner’s use and enjoyment of the land) or the future owner must adopt the commitment as his own. The commitment may also be collected from the value of the conserved land by having it secured by a mortgage recorded after the recorded conservation easement.

By donating or selling a trail easement to a nonprofit organization or government (the “Holder”), a landowner may provide their land for a public trail without having to subdivide the land or lose ownership and control of the land. The easement may address matters such as:

• How wide is the trail and what sort of facilities are allowed?
• Are bicycles allowed? Horses? Picnicking?
• May the landowner close the trail temporarily for hunting? Timber harvests? Manure spreading?
• Who is liable if there is an accident?

The Pennsylvania Land Trust Association has created the Model Trail Easement Agreement as well as other models to assist in establishing public trails on private property.