Understanding Conservation Easements

Preserving Land for Future Generations

A conservation easement is a legal agreement that permanently determines land use possibilities. Conservation easements are set up between landowners and land trusts or government agencies. The purpose of a conservation easement is to prevent development of open space.

When a landowner donates a conservation easement they retain the right to use the land in accordance with the easement and they retain ownership. The land may be sold or passed on to heirs however as owners of the land change, the conservation easement remains as a permanent part of the deed. Any future owners will be bound to the terms of the easement and the land trust or government agency which holds the conservation easement rights is responsible for ensuring that those terms are followed.

These terms may exclude building structures or roads but allow for open space activities like growing crops or flowers. The terms may be set by the landowner and be customized to specific needs. Conservation easements may apply to part or all of a property. They may also be kept privately without the need for public access.

The land used for a conservation easement may be sold by the landowner or donated. A donated parcel can qualify as a tax deduction. Even parcels that are sold may qualify as a tax deduction because the sale excludes the property from “highest and best use” from a real estate perspective. In other words, selling a parcel to a land trust excludes the potential that the property could yield millions in revenue if developed. Removing the land’s development potential lowers the market value of the property. The difference between the land trust sale price and the “highest and best use” potential constitutes the tax deductible value. Not all conservation easements result in property tax savings so it is always necessary to have specialized legal advice to help structure the agreement.