Buying land for a conservation easement

[LD_TAndK]

I'm thinking through buying ecologically significant land to create a conservation easement, 40 or more acres, no building. The land would be donated to a local land trust after our passing.

I've only ever bought small suburban personal residences, are the channels for buying empty land different? A special breed of realtor?

Will banks lend money to buy empty plots? Or are these typically cash transactions?

Anyone have experiences or issues with conservation easements?

[GilesMM]

If you buy the land now, it will just sit there.  Your cash will sit with it, doing nothing.


If, instead, you leave the cash invested, it has the potential to grow in value faster than the cost of land appreciates. Thus, if you defer the purchase until later in life you may be able to afford a lot more land and do a lot more "conservation".

[NorCal]

I don't have direct experience, but I have an uncle that did a conservation easement on a cattle ranch that's been in the family for a few generations.

His case was a little different.  He was paid for the easement to build some ponds as salamander habitat.  It was paid for due to the construction of a highway that was going to destroy an endangered salamander habitat in a different location.

Unfortunately I don't know too many details about the transaction.

The Nature Conservancy might be an organization to reach out to.  I've seen some news articles recently where TNC helped broker some transfers of land from private landowners to be incorporated into state parks.  Even if they're not the right fit, they might be able to point you in the right direction.

[uniwelder]

My neighbor is the director of the land trust that operates in our area.  They are funded mostly by government grants and facilitate land conservation easements with landowners.  Generally speaking, most people are willing to go through the process to create a conservation easement if it at least costs no money out of pocket to them to do so.  I was told 100 acres is usually the break even point for our area.  This might have more to do with the resources available to the area land trust, I'm not sure.  I think the land trust generally absorbs the legal fees and advocates for the change in zoning at the local level.  The landowner gets significant tax credits for each acre conserved, with a value assigned according to the type of terrain.  If the tax credits exceed the amount the landowner could make use of, they can be sold off at about 80 cents on the dollar to anyone willing to buy them for a 1:1 reduction of their federal taxes.

Friends of mine operate a farm that is located on land protected by a conservation easement.  There were restrictions placed regarding how much land could be disturbed, building locations and size, etc.  These were all negotiated beforehand.

There are 70 acres behind my house that the owner uses for a smalltime lumber operation.  He has trails throughout and harvests fallen or dead (mostly ash) trees, that are then cut on his one man sawmill.  He wants to place a conservation easement on it, but there has been some friction regarding what that entails.  Neither he nor the land trust director will tell me details, but the limited size of the property came up as part of it.  That might not be the main factor though.

OP, I would start by talking with your local land trust.  They can walk you through the process, who pays for what, and perhaps have suggestions of properties that have the biggest impact through a permanent conservation easement.  I may have some of my information wrong since what I learned comes from casual conversations, but if you have specific questions I can ask, or I can send you information through a private message.

edited to add-- To get more involved and educated, when contacting the local land trust, ask about volunteer opportunities.  My group has an email listing that they advertise fundraising events and tree plantings.  Spending a day planting trees with one of the employees of the group will allow you talk for hours about how it all works.

[Poeirenta]

I agree that the best option is to start with the land trust that operates in the area where you want to buy the land. A CE is legally the extinguishment of development rights and is placed on a property's deed in perpetuity. This process usually takes a couple of years to go through the various steps. It's faster if the owner is donating the easement, takes longer if the owner wants funding for it. Many land trusts will ask owners to contribute to the ongoing costs of maintaining the easement in perpetuity, usually as a lump sum at the end of the process. Our local land trust (where one of us works and the other volunteers) typically asks for a percentage of the value of the easement (which is the difference between what the land is worth with and without its development rights). It's fairly complicated stuff, which is why it takes a couple of years to get squared away.

A CE is a different matter than how to buy raw land. For that I would recommend the book Finding and Buying Your Place in the Country. It was extremely helpful for us.

Sent from my SM-G973U using Tapatalk

[LD_TAndK]

Thank you all for the input. I'm picking up Finding and Buying Your Place in the Country, thanks for the suggestion.

We will be talking to our conservation easement authority. Also talking to our intended land trust to identify particularly valuable areas. I believe they would want a lump sum in addition to the donated property, to pay for maintaining the area.

We're in our thirties, but plan on buying the property now so we can implement a conservation plan ourselves, as a hobby. It'll probably involve reforesting as well as keeping a meadow area, nest boxes, removing invasives.

[uniwelder]

Keep us posted on what you learn.  I'm curious how different land trusts operate.

[PVD_Kev]

I'm thinking through buying ecologically significant land to create a conservation easement, 40 or more acres, no building. The land would be donated to a local land trust after our passing.

I've only ever bought small suburban personal residences, are the channels for buying empty land different? A special breed of realtor?

Will banks lend money to buy empty plots? Or are these typically cash transactions?

Anyone have experiences or issues with conservation easements?

I have worked with local and international land conservation organizations and have a lot of experience with this.

If you are buying vacant land with cash, then it is pretty straightforward. If you are borrowing, then the appraisal process can be a challenge. Appraising land is tricky. You would do well to work with a realtor and appraiser who are familiar with land sales. Yes a bank will lend on it but obviously it depends on the value of the property, amount of loan, etc.

IMPORTANT: Do not assume your generous idea of donating an easement will be readily accepted by a local land trust. They are responsible for monitoring and defending the easement in perpetuity, so they may have criteria for easements they prefer and those they do not want. Also, many land trusts now require a small endowment donation to support their obligation.

You should talk with a good attorney and/or accountant who is familiar with these kinds of transactions- they will ensure you get what you want and can also take advantage of tax deductions for your donation.

Let me know if you have any other questions!

[Michael in ABQ]

I'll just chime in as a former real estate appraiser and say that conservation easements are a big area that the IRS is watching. A lot of shady deals have occurred where some landowner found an unethical or inexperienced appraiser who valued a conservation easement as being worth millions of dollars so they could get a nice tax deduction. These are being scrutinized a lot more closely due to that. A lot of appraisers don't want anything to do with conservation easements due to that risk. However, if you're working with a local land trust they should be able to provide some recommendations of appraisers that are familiar with that kind of work.

[LiveLean]

I deal a lot with timberland. Whether you're talking about easements, appraisals, cutting timber, etc., 40 acres generally is too small for anyone to want to handle, unless you're in the path of progress and it can become a subdivision. In which case you can't afford that 40 acres.

[Finances_With_Purpose]

I'm thinking through buying ecologically significant land to create a conservation easement, 40 or more acres, no building. The land would be donated to a local land trust after our passing.

I've only ever bought small suburban personal residences, are the channels for buying empty land different? A special breed of realtor?

Will banks lend money to buy empty plots? Or are these typically cash transactions?

Anyone have experiences or issues with conservation easements?

I love the idea.  But realize that you may just be preserving it for the government to come take later.  They can build a school or highway on later, when other land is unavailable and this land is open -- and thus can be gotten more cheaply. 

[uniwelder]

I'm thinking through buying ecologically significant land to create a conservation easement, 40 or more acres, no building. The land would be donated to a local land trust after our passing.

I've only ever bought small suburban personal residences, are the channels for buying empty land different? A special breed of realtor?

Will banks lend money to buy empty plots? Or are these typically cash transactions?

Anyone have experiences or issues with conservation easements?

I love the idea.  But realize that you may just be preserving it for the government to come take later.  They can build a school or highway on later, when other land is unavailable and this land is open -- and thus can be gotten more cheaply.

Not knowing the fine details of conservation easements, I thought no future development was possible on the land, except as strictly outlined in the initial agreement.  They're always touted as "protected forever" in marketing literature.  You're saying the government can claim eminent domain of the property?

edited to add--- I answered my own question.  You're right, in Virginia at least.  Quoted as
"This chapter does not affect the power of the court to modify or terminate a conservation easement in accordance with the principles of law and equity, or in any way limit the power of eminent domain as possessed by any public body. In any such proceeding the holder of the conservation easement shall be compensated for the value of the easement."

[Finances_With_Purpose]

I'm thinking through buying ecologically significant land to create a conservation easement, 40 or more acres, no building. The land would be donated to a local land trust after our passing.

I've only ever bought small suburban personal residences, are the channels for buying empty land different? A special breed of realtor?

Will banks lend money to buy empty plots? Or are these typically cash transactions?

Anyone have experiences or issues with conservation easements?

I love the idea.  But realize that you may just be preserving it for the government to come take later.  They can build a school or highway on later, when other land is unavailable and this land is open -- and thus can be gotten more cheaply.

Not knowing the fine details of conservation easements, I thought no future development was possible on the land, except as strictly outlined in the initial agreement.  They're always touted as "protected forever" in marketing literature.  You're saying the government can claim eminent domain of the property?

edited to add--- I answered my own question.  You're right, in Virginia at least.  Quoted as
"This chapter does not affect the power of the court to modify or terminate a conservation easement in accordance with the principles of law and equity, or in any way limit the power of eminent domain as possessed by any public body. In any such proceeding the holder of the conservation easement shall be compensated for the value of the easement."

Check your local law/lawyer, but that's what I have seen happen.  The government can typically override it. 

And they will, because they want cheap land.  They do what benefits them, and it's easier for a government to fight you / some non-profit steward than it is to fight a major developer. 

They'll argue the land is worth only a fraction of its value and screw the person holding it, who cannot buy replaceable land at that value - ever.

Then the government will turn around, void those restrictions, and using it as they would land that they had to purchase legitimately. 

So FYI, buyer beware.  These can often end up being little more than charity for some local government.