Information on easements

For most landowners, easements on their property are about as welcome as the annual tax assessment. Unfortunately, both property taxes and easements - the limited legal right one individual or entity has to use another’s real property - are fundamental evils of owning land. Of course, not all easements are created equal.

By: Scott Kauffman

For example, utility easements can be fairly innocuous and might simply encompass the right of a local municipality to maintain sewer and water lines beneath a certain landowner’s property. On the other hand, one of the more dreadful easements might entail an active railway line that allows freight trains to rumble through a property.

One type of easement, however, that is almost always beneficial to property owners is the little known conservation easement. Simply put, conservation easements are one of the “most powerful and cost-effective voluntary tools available for the conservation of private lands,” according to Jimmie Powell, the director of government relations for the Nature Conservancy.

Equally as compelling for many landowners is the fact conservation easements can result in federal tax advantages, and in some cases, state tax benefits.

 A conservation easement is a restriction placed on a piece of property to protect and preserve – in perpetuity - its associated resources. How it works is a landowner voluntarily agrees to sell or donate certain rights associated with his or her property – often the right to subdivide or develop – and a public agency or private organization such as the Nature Conservancy agrees to hold that right and enforce the landowner’s promise not to exercise those rights once associated with the land.

A conservation easement is legally binding and “runs with the land,” meaning it remains with the property even if it’s sold or bequeathed to heirs, thus binding forever  the original owner and all subsequent owners to the easement’s restrictions.

In some cases, conservation easements are designed to target only those rights necessary to protect specific conservation values, such as water quality or wildlife corridors. So conservation easements can be customized to suit whatever the property owner would like to leave as a legacy for his or her land.

Basically, conservation easements are excellent ways to protect one’s land for future generations while allowing owners to retain private property rights and continue living on and farming the land, for example. Therefore, the property continues providing economic benefits for the area in the form of jobs, economic activity and property taxes.

The downside to conservation easements is it limits the future value of a property. For instance, a rolling pasture in the heart of a booming suburb might have great potential for a new residential development. With the conservation easement in place, though, that prime tract is now being conserved forever as pristine open space within the heart of a growth corridor. Thus it truly never realizes its highest and best use in the current market conditions.

Want to read more? Check out Easements and Taxes

More Field Reports From The Land Report:

1. What is a conservation easement?
   Q: What is a conservation easement? A: This question seems basic for anyone that has owned any expanse land for some time. New landowners might not know the difference between...
2. What are the Tax Rules on Easements?
   With the increase in sale of easements for wind power or for recreational use, it is important to examine some of the rules and history of cases involving easements. The...
3. Tax Rules on Easements
   With the increase in sale of easements for wind power or for recreational use, it is important to examine some of the rules and history of cases involving easements. Editors...
4. The Nature Conservancy Purchases 161,000 acres in New York
   BY TREY GARRISON PUBLISHED AUGUST 2007 The Nature Conservancy purchased 161,000 acres of Finch Paper Holdings forestlands in New York’s Adirondack Mountains. The $110 million deal, which works out to...
5. Will Conservation Easement Tax Breaks Be Extended?
   BY JOSEPH GUINTO PUBLISHED MAY 2007 Act now or forever lose your easement. A tax break for conservation-related land donations-known as conservation easements-is about to expire. That is unless Congress...