Conservation easements are a type of binding legal agreement that is enacted to restrict the development of a certain area of land. This type of agreement is usually concluded between the person who holds the land and another party, normally the Federal government. It is an agreement that must be notarized with an official legal document in order to be binding. The act must be entered into the public record as a Deed of Conservation Easement. It cannot be entered into via an oral or "handshake" agreement.
Who Benefits From Conservation Easements?
There are many reasons why a conservation easement may benefit the landholder as well as the public. For example, a certain area may be set aside as the future site of a historic or National Park area. It may be reserved by the Federal government as an area for future research or development. In any case, once granted, the status of the conservation easement will restrict any future development of the land in question. This restriction will remain in force unless and until a mutually beneficial agreement is reached between the two parties.
Can A Conservation Easement Qualify You For a Tax Deduction?
Conservation easements can, in some cases, qualify the owner of the land in question for a tax deduction. The circumstances under which this may occur include, but are not limited to, the following:
Entering Into a Conservation Easement Must Be Voluntary
No landowner can be forced into submitting to a conservation easement against their will. The agreement must be completely voluntary on the part of both signers. Once the agreement has been signed and officially recorded, a conservation easement may be donated by the owner of the land to a third party easement holder. It may also be sold to a third party who holds an easement. However, both parties who are privy to the conservation easement must be in agreement regarding any future sale or donation.
The Easement Is Only Valid if Held By a Qualified Party
In all cases, a conservation easement will only be valid if agreed to and entered into by parties who are qualified to hold this qualification. Any government entity, such as the Bureau of Land Management or U. S. Fish and Wildlife Service, is qualified to do so. City and county governments will also frequently enter into this type of easement. A privately owned land trust may also do so, as long as it is a fully nonprofit organization.
What Are The Responsibilities That a Conservation Easement Entails?
Once the easement is entered into, both parties involved have the right and the obligation to enter upon and inspect the land on a regular basis to make sure that the agreement is being observed to the letter. This responsibility will be binding on both parties, with either one subject to liability if the land in question should be abused or damaged during the time that the conservation easement is in place.
A Conservation Easement Is Required To Be Permanent
Once signed and notarized, a conservation easement is expected to be permanent. If there is any sort of time limit on the easement, this must be specifically stated in the terms of the agreement. Otherwise, the agreement must be completely ironclad, especially if the owner of the land intends to use it to qualify for a tax deduction from the IRS.
The total amount of the deduction will be calculated based on the total value of the land before the easement and the total value after the easement. The exact value of the easement will be the difference between the two figures. If the value of the land is more than $5000, the total value of the conservation easement will need to be calculated by a certified land appraiser.