Conservation Easement Defined

Conservation easements have been the subject of misinterpretation or misunderstanding for quite some time, probably since they were first created and implemented. Crosby Land Company would like to take this opportunity to provide information to help clear the air regarding this highly effective tool for land conservation and the financial incentives that may be associated with an easement.

What is a Conservation Easement?

A conservation easement is much like other easements in the respect that it “runs with the land”; it is a voluntarily entered upon legal agreement that attaches to the deed of a property. Each differs depending on the needs and objectives of the property owner.

The donor, in collaboration with a conservation organization, will design an easement that best works for both parties involved. It typically restricts future development rights and certain uses of the property. The right to develop is a limited, though, valuable portion of the entire bundle of rights that is commonly associated with land ownership.

The landowner relinquishes these specific rights in order to protect the “conservation values” of the property in perpetuity by donating these rights. Typically these rights are donated to qualified non-profit organizations like Ducks Unlimited, The Nature Conservancy or to a local Land Trust, such as the Lowcountry Land Trust in our area. These organizations “hold” the easement, and more particularly the specific rights that have been donated, and conduct annual visits to monitor the land to ensure that the stipulations of the easement are being followed, and that the land and its associated conservation values are being protected. As mentioned, these restrictions run with the land in perpetuity.

What are the Benefits?

Financial incentives include tax deductions, credits, and easements can also be “purchased” which is referred to as a “bargain sale” whereas the donor may receive a cash payment for a portion of the easement value. In addition to the financial incentives, there are many other benefits to be considered. The owner still maintains possession, fee simple title ownership and the right to quiet use and enjoyment. The land will continue to be utilized for historic usages.

Growing timber, hunting, shooting sports, farming, and the construction of permanent residences, outbuildings, pools and ponds are all usually allowable practices. The most important benefit for many landowners is the assurance of the protection of the property in its natural state for generations to come.

Will a Conservation Easement affect the marketability of my property?

It may be a surprise to you that Crosby Land Company has seen properties with conservation easements be a desirable attribute by some buyers. This is especially true in areas where protected properties are adjacent to or near other lands with conservation easements. A cluster of properties with conservation easements in the general vicinity of one another has had the effect of creating a “conservation neighborhood” or “community”. In many cases, this reinforces and bolsters land values because these areas are desirable places to live and provide recreation . Buyers and sellers can rely on the fact that they will remain conserved for present and future enjoyment without all the influences and disruptions that can accompany growth and development.

What makes a property a candidate for a Conservation Easement?

Any lands that are increasingly being threatened by commercial or residential development pressures and the fragmentation of natural habitats are all potential candidates. Lands that provide or border compelling live water resources such as rivers, lakes, streams that help provide a source for clean and fresh water, these may include active operating farms, lands that provide scenic attributes and critical habitat for wildlife or rare and endangered species, these may include industrial managed timberlands, lands that are conducive to the growth of and provide unique forms of flora and fauna, and lands that are adjacent to other protected properties located in a specific focal area such as the “ACE Basin” of lower coastal South Carolina are of great interest and value to conservation organizations — and provide significant benefits to local communities and the entire geographical region when they are protected.

A good conservation candidate may come from varying types of properties and usage types, we would be happy to consult with interested landowners to help determine if their property is a viable candidate.

How are Easement Values determined?

Prior to the donation of an easement, the landowner will have a third party appraisal conducted by a licensed appraiser experienced in the process of determining values that will meet the legal criteria. A draft of a preliminary easement citing the restrictions that will be purchased or donated to the easement holder will be provided to the appraiser. The appraiser will conduct an appraisal valuing the property after these rights have been determined and relinquished.

The fair market value of the land before the easement and the value after the easement is in place is called the “diminution value”, which is typically considered a charitable donation by the IRS. Generally, this value can be used to offset federal income taxes over 15 years, and can effectively lower an owner’s basis in the property.