Conservation Easements - Q & A

• What is a conservation easement?
• Why do people grant conservation easements?
• What are the financial and tax benefits of donating a conservation easement?
• What activities are allowed on land protected by a conservation easement?
• Can the landowner still sell or give the property away?
• Do conservation easements require public access?
• How long does a conservation easement last and who upholds it in the future?
• Who owns the conservation easement?
• Who owns and manages land protected by a conservation easement?
• Does the conservation easement have to cover all of the landowner's property?
• What kind of land can be protected by conservation easements?
• Do conservation easements require public access?

What is a conservation easement?

A conservation easement is a voluntary agreement that allows a landowner to limit the type or amount of development on his or her property while retaining private ownership of the land. The easement is signed by the landowner (the easement donor) and the Land Trust (the easement holder). The Land Trust accepts the easement with the understanding that it must enforce the terms of the easement in perpetuity. After the easement is signed, it is recorded with the county auditor and applies to all future owners of the land. The conservation easement “runs” with the land, not the owner.

Another way to visualize a conservation easement is to think of land ownership as holding a hand of cards. Each card represents the landowner's right to do something with the property, such as the right to subdivide, build a house, harvest timber, farm, lease the property, pass it on to heirs, or allow hunting or public access. The landowner may choose to relinquish some of those rights—in effect, discarding some of the cards in the hand--through a conservation easement. Those development rights are then extinguished. top

Why do people grant conservation easements?

People grant conservation easements to protect their property from unwanted development while retaining ownership of their land. By granting a conservation easement, a landowner can ensure his or her property will be protected forever, regardless of who owns the land in the future. An additional benefit is that the donation of an easement may provide significant financial advantages to the donor. top

What are the financial and tax benefits of donating a conservation easement?

Federal Income Tax Benefits—Under the Internal Revenue Service (IRS) code, the donation of a qualified conservation easement may be treated as a charitable contribution. The IRS allows a deduction if the conservation easement is perpetual and donated “exclusively for conservation purposes.” Currently, the value of the contribution can be deducted at an amount up to 50 percent of the donor's adjusted gross income in the year of the gift. If the easement's value exceeds 50 percent of the donor's income, the excess may be carried forward and deducted (again, subject to the 50 percent limit) over the next 15 years. (Currently, this benefit is good through December 31, 2009)

Estate Tax Benefits—Donation of conservation easements, whether during a landowner's life or by bequest, can reduce the value of the land on which estate taxes are calculated. This can greatly benefit the landowner wishing to transfer land to relatives. The estate tax benefits of a conservation easement often can mean the difference between heirs having to sell property to pay estate taxes or being able to keep the property in the family. The 1997 Taxpayer Relief Act (IRC Section 2031(c)), provides an additional exclusion of up to $500,000 from estate tax for land subject to a qualifying conservation easement. It also allows heirs to donate an easement after the death of the descendent, but before the estate tax return is filed.

Property Tax Benefits—Conveyance of a conservation easement may reduce a landowner's property taxes. Under Washington law, county assessors must take a conservation easement into consideration in establishing the market value of the land subject to the easement. However, this depends on current zoning and land use, current assessed value, and whether the owner participates in a current-use assessment program, like designated forest land or agricultural open space. The exact terms of each individual easement also have a bearing on property taxes. top

What activities are allowed on land protected by a conservation easement?

The activities allowed by a conservation easement depend on the landowner’s wishes and the characteristics of the property. In some instances, no further development is allowed on the land. In other circumstances, some additional development is allowed but the amount and type of development may be restricted. Conservation easements can be designed to cover all or only a portion of a property. Every easement is unique, tailored to a particular landowner's goals and the features of the land. top

Can the landowner still sell or give the property away?

The landowner continues to own the property after executing a conservation easement. Therefore, the owner can sell, give or lease the property, as before. However, all future owners assume ownership of the property subject to the conditions of the easement. top

Do conservation easements require public access?

The public does not have access to property protected by a conservation easement unless the landowner who grants the easement specifically allows it. top

How long does a conservation easement last and who upholds it in the future?

Conservation easements are “perpetual,” that is, they last forever and run with the land, not the owner. The Land Trust monitors the property, generally once a year, to assure that the easement terms are not being violated. If the easement has been breached, the Land Trust will take whatever steps are necessary to uphold the terms of the conservation easement, including taking legal action. Because of this obligation, the Land Trust asks all easement donors to make a financial contribution to the Land Trust's Land Stewardship Fund. This fund ensures funding for long-term monitoring and, as a last resort, enforcement of every easement the Land Trust receives. top

Who owns the conservation easement?

To qualify for a tax deduction, a conservation easement must be donated to a qualifying government agency or a qualifying conservation or historic preservation organization. The Whidbey Camano Land Trust qualifies as a federally recognized public charity and nature conservancy organization under Internal Revenue Code Section 501(c)(3). In addition, the Land Trust is qualified to receive conservation easements under Washington State law. top

Who owns and manages land protected by a conservation easement?

The landowner retains full rights to control and manage his or her property within the limits of the conservation easement. The landowner continues to bear all costs and liabilities related to ownership and maintenance of the property. The Land Trust monitors the property to ensure compliance with the easement's terms, but generally has no other management responsibilities. top

Does the conservation easement have to cover all of the landowner's property?

No, some conservation easements cover only a portion of the landowner's property. Again, it depends on the landowner's wishes and the importance of the property. For example, if someone owns 100 acres, of which 80 acres are wetlands, forest or wildlife habitat, the owner may decide to restrict development only on these 80 acres. The remaining 20 acres would not be covered or affected by the conservation easement. top

What kind of land can be protected by conservation easements?

IRS regulations require that the property have “significant” conservation values. This includes forests, wetlands, endangered species habitat, beaches, scenic areas and more. The Land Trust also has its own criteria for accepting easements. At the invitation of the landowner, the Land Trust staff and board will evaluate the property to determine whether it meets Land Trust evaluation criteria. top

What rights does the easement holder have to my property?

If the Whidbey Camano Land Trust or another qualified organization accepts a conservation easement, it is obligated in perpetuity to oversee and enforce the easement's terms and conditions. For example, such an organization has the right to enter and inspect the property (usually once a year) to ensure that the terms of the agreement are being upheld. Except in unusual circumstances, these visits are scheduled with the landowner. Unless specifically addressed in the easement, the organization does not have the right to use your property. top