Buying Land Under a Conservation Easement

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alpenglow
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Buying Land Under a Conservation Easement

Post by alpenglow »

As background, I have been looking around upstate NY for a bunch of years for undeveloped land. I already own 40+ acres in VT, but it getting to be too far away to enjoy enough.

I recently found a beautiful parcel of land at what I consider to be an attractive price. It has good road frontage on a well-maintained paved road, view potential, nice "neighborhood", electric at the road, and long frontage on a cascading trout brook. My #1 concern is the fact that the owner put the property under a conservation easement. There is a building envelope that allows for construction of a substantial home (4000 sq ft - much larger than I would ever build). The property is about 40 acres in size. Further subdivision is prohibited, but that isn't my goal. I am a conservation minded person and would like to keep the land more or less the way it is. In this area, large lots appear to be norm and others seem to under a conservation easement as well.

The rub is that, according to the realtor, the first buyer dropped out after conversation with the land trust that holds the easement. Now the seller and his attorney are planning a meeting with the land trust because of "disagreements in interpretation of the easement document". I'm concerned about the land trust being overzealous. I have read and understand the language of the easement, though IANAL. Bottom-line, I gave an oral offer (largely meaningless IMO) subject to these issues being ironed out. I just don't want to find myself owning this land and down the road having to hire a lawyer when the land trust decides they don't agree with me.

Does anyone have experience with land under a conservation easement that can share experiences? I also have no idea of how to discount the value of the land due to the easement. It is clearly being offered at a significant discount compared to similar, unencumbered properties.
livesoft
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Re: Buying Land Under a Conservation Easement

Post by livesoft »

I do volunteer work for an entity that is recognized by the Land Alliance Trust. My take is that people give land in trust so that they get a tax break and also because the land is not developable anyways because it floods and their heirs do not want the hassle of dealing with it. Then the non-profit can do things with the land such as put nature trails on it and allow the public to use it.

I'd guess the entity that has the conservation easement would just buy the land at a reduced price when it came up for sale. It is possible that the owners know this, but need other interested parties to make offers in order to know the actual value of the property.
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London
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Re: Buying Land Under a Conservation Easement

Post by London »

I have land under a conservation easement but the trust is very hands off. No one has viewed the land in 7 years. I’m aware of the rules and follow them (but I’m sure not perfectly).

What are your goals for owning the land?
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Re: Buying Land Under a Conservation Easement

Post by livesoft »

London wrote: Sun May 15, 2022 9:01 am I have land under a conservation easement but the trust is very hands off. No one has viewed the land in 7 years. I’m aware of the rules and follow them (but I’m sure not perfectly).
I know that the place I help, they are legally required to annually at least walk the boundaries of their easements and report encroachments and mis-use of the land under the conservation easement. Generally the actual landowners would have no knowledge that they sent people out wearing snake boots and did this.
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Re: Buying Land Under a Conservation Easement

Post by Jack FFR1846 »

I would think that you would want to get all documents that define the easement and how the trust can treat the property. If this is a state tax reduction program, get documents that define the program and assuming the property you're looking at has sent a plan to the state, get that plan along with any applications for the tax reduction program. In short, you need to understand what the restrictions would be for you if you buy and if there is a way you can take the property out of the easement.

I have property that is under a state (MA) program that is in the same family of a conservation easement, but it a forest management program. With this program, which is 10 years for each period, the managed forest is taxed at 1/10th the normal tax rate. In my case, I paid a licensed forester to create a plan which for me is to keep boundaries marked, take down storm damaged trees for firewood, insect damaged trees and to remove trees that interfere with other trees. I also have to maintain trails that were originally snowmobile trails (private, I don't have to let anyone on my property) but are now simply tractor trails so I can get firewood down near my house. In my state's plan, if I want to sell, the town gets first right of refusal. I also have to pay a certain number of years of the tax breaks depending on which year of the 10 year plan I leave. At the 10 year point, the plan has to be revised by a state licensed forester and I have to re-apply for another 10 years. We have a large plot of land in town under a similar plan (Weston Nurseries) who had an accepted offer to sell to a developer who would put in a bunch of houses. The town hemmed and hawed and brought the possible multi million dollar purchase to town meeting which was declined. So now there are a bunch of houses full of kids requiring yet another new school to be built (which seems to surprise stupid people). Anyways, end of tangent. You need info.
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Re: Buying Land Under a Conservation Easement

Post by Newaygo »

If you are planning to build, make sure that you can get a mortgage.
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Re: Buying Land Under a Conservation Easement

Post by London »

livesoft wrote: Sun May 15, 2022 9:11 am
London wrote: Sun May 15, 2022 9:01 am I have land under a conservation easement but the trust is very hands off. No one has viewed the land in 7 years. I’m aware of the rules and follow them (but I’m sure not perfectly).
I know that the place I help, they are legally required to annually at least walk the boundaries of their easements and report encroachments and mis-use of the land under the conservation easement. Generally the actual landowners would have no knowledge that they sent people out wearing snake boots and did this.
Generally I would say that this is possible. But I have a bunch of cameras to keep track of unwanted hunters and haven’t seen anyone.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

livesoft wrote: Sun May 15, 2022 8:43 am I do volunteer work for an entity that is recognized by the Land Alliance Trust. My take is that people give land in trust so that they get a tax break and also because the land is not developable anyways because it floods and their heirs do not want the hassle of dealing with it. Then the non-profit can do things with the land such as put nature trails on it and allow the public to use it.

I'd guess the entity that has the conservation easement would just buy the land at a reduced price when it came up for sale. It is possible that the owners know this, but need other interested parties to make offers in order to know the actual value of the property.
I think it is great that you do volunteer work for your local land trust. It is something that I would like to do in retirement.

As for this property, it is a good quality, buildable parcel. The seller subdivided the original lot in 2, but could have gotten many more lots IMO. Both lots are about 40 acres and are subject to this conservation easement. The other lot was successfully built on. The other lot sold for a similar price as the ask on this lot.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

London wrote: Sun May 15, 2022 9:01 am I have land under a conservation easement but the trust is very hands off. No one has viewed the land in 7 years. I’m aware of the rules and follow them (but I’m sure not perfectly).

What are your goals for owning the land?
We are looking for a recreational property that is closer to home. We would initially use it to camp, but would eventually want a cabin.

EDIT: Did you buy this property with the easement already in place or did you enter into the agreement later?
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Re: Buying Land Under a Conservation Easement

Post by London »

alpenglow wrote: Sun May 15, 2022 12:46 pm
London wrote: Sun May 15, 2022 9:01 am I have land under a conservation easement but the trust is very hands off. No one has viewed the land in 7 years. I’m aware of the rules and follow them (but I’m sure not perfectly).

What are your goals for owning the land?
We are looking for a recreational property that is closer to home. We would initially use it to camp, but would eventually want a cabin.

EDIT: Did you buy this property with the easement already in place or did you enter into the agreement later?
I bought with it in place. The property is in a very expensive town in NJ. Of the 56 total acres, 53 have an easement. It definitely scared off buyers. That was great for us as our goal was privacy. It’s been so easy that I don’t think of it often.
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Re: Buying Land Under a Conservation Easement

Post by mw1739 »

Father in law is currently selling land he owns in a conservation easement. The likely buyer is our state which will turn it into a state park/forest area. The land trust is aware he’s interested in selling but I believe they don’t have the resources to purchase the property. As someone else mentioned, other than visiting the property once a year, the land trust is pretty hands off.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

Jack FFR1846 wrote: Sun May 15, 2022 9:15 am I would think that you would want to get all documents that define the easement and how the trust can treat the property. If this is a state tax reduction program, get documents that define the program and assuming the property you're looking at has sent a plan to the state, get that plan along with any applications for the tax reduction program. In short, you need to understand what the restrictions would be for you if you buy and if there is a way you can take the property out of the easement.

I have property that is under a state (MA) program that is in the same family of a conservation easement, but it a forest management program. With this program, which is 10 years for each period, the managed forest is taxed at 1/10th the normal tax rate. In my case, I paid a licensed forester to create a plan which for me is to keep boundaries marked, take down storm damaged trees for firewood, insect damaged trees and to remove trees that interfere with other trees. I also have to maintain trails that were originally snowmobile trails (private, I don't have to let anyone on my property) but are now simply tractor trails so I can get firewood down near my house. In my state's plan, if I want to sell, the town gets first right of refusal. I also have to pay a certain number of years of the tax breaks depending on which year of the 10 year plan I leave. At the 10 year point, the plan has to be revised by a state licensed forester and I have to re-apply for another 10 years. We have a large plot of land in town under a similar plan (Weston Nurseries) who had an accepted offer to sell to a developer who would put in a bunch of houses. The town hemmed and hawed and brought the possible multi million dollar purchase to town meeting which was declined. So now there are a bunch of houses full of kids requiring yet another new school to be built (which seems to surprise stupid people). Anyways, end of tangent. You need info.
I have a copy of the easement, but apparently there is disagreement between the seller and the land trust that holds the easement regarding some of the language. The easement runs with the land in perpetuity. This is not a tax reduction program. My land in VT is in a similar program as you described called Use Value Appraisal (aka Current Use).

The Weston Nursery story was interesting btw. Sometimes people are short sighted with conservation. FWIW, Weston Nurseries provided the world with the ubiquitous PJM Rhododendron (for better or worse).
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

Newaygo wrote: Sun May 15, 2022 9:18 am If you are planning to build, make sure that you can get a mortgage.
Everything would be cash, both for the land and eventually construction.
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Re: Buying Land Under a Conservation Easement

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alpenglow wrote: Sun May 15, 2022 1:14 pm
I have a copy of the easement, but apparently there is disagreement between the seller and the land trust that holds the easement regarding some of the language.
Not sure that I understand the question without know the nature of the dispute. I am a board member of an open space organization and there are many, many properties around the US with conservation easements with a variety of purposes. You seem comfortable with the price and the concept of owned property with an easement so it just seems like you need to get informed about whatever the dispute is.
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Re: Buying Land Under a Conservation Easement

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WhyNotUs wrote: Sun May 15, 2022 1:21 pm
alpenglow wrote: Sun May 15, 2022 1:14 pm
I have a copy of the easement, but apparently there is disagreement between the seller and the land trust that holds the easement regarding some of the language.
Not sure that I understand the question without know the nature of the dispute. I am a board member of an open space organization and there are many, many properties around the US with conservation easements with a variety of purposes. You seem comfortable with the price and the concept of owned property with an easement so it just seems like you need to get informed about whatever the dispute is.
I have served on a couple of land trusts and am currently serving on our City's Open Space Committee. I'd have a meeting with the Land Trust and your City/County Planning Dept so you understand what is expected. And keep in mind the worst Nimbys may not be on the Land Trust.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

WhyNotUs wrote: Sun May 15, 2022 1:21 pm
alpenglow wrote: Sun May 15, 2022 1:14 pm
I have a copy of the easement, but apparently there is disagreement between the seller and the land trust that holds the easement regarding some of the language.
Not sure that I understand the question without know the nature of the dispute. I am a board member of an open space organization and there are many, many properties around the US with conservation easements with a variety of purposes. You seem comfortable with the price and the concept of owned property with an easement so it just seems like you need to get informed about whatever the dispute is.
The bone of contention relates to the ability to open a view from the designated building site (this is all per the realtor, so take that with a grain of salt). The potential for a beautiful mountain view exists and would add significant value IMO. The 1st buyer approached the land trust with questions about opening this view and was told no. However, the conservation easement states, "With prior notice to the Grantee, trees many be removed...for firewood for use on the property, new open spaces for recreation, and views may be created." This seems very clear to me.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

Carefreeap wrote: Sun May 15, 2022 1:38 pm
WhyNotUs wrote: Sun May 15, 2022 1:21 pm
alpenglow wrote: Sun May 15, 2022 1:14 pm
I have a copy of the easement, but apparently there is disagreement between the seller and the land trust that holds the easement regarding some of the language.
Not sure that I understand the question without know the nature of the dispute. I am a board member of an open space organization and there are many, many properties around the US with conservation easements with a variety of purposes. You seem comfortable with the price and the concept of owned property with an easement so it just seems like you need to get informed about whatever the dispute is.
I have served on a couple of land trusts and am currently serving on our City's Open Space Committee. I'd have a meeting with the Land Trust and your City/County Planning Dept so you understand what is expected. And keep in mind the worst Nimbys may not be on the Land Trust.
The seller and his lawyer are having a "sit down" with the land trust this Friday in light of what happened with buyer #1. If there is agreement regarding tree removal, I will follow-up and confirm. Bear in mind that I am looking to do something very minor over a very small area.
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Re: Buying Land Under a Conservation Easement

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alpenglow wrote: Sun May 15, 2022 8:29 am As background, I have been looking around upstate NY for a bunch of years for undeveloped land. I already own 40+ acres in VT, but it getting to be too far away to enjoy enough.

I recently found a beautiful parcel of land at what I consider to be an attractive price. It has good road frontage on a well-maintained paved road, view potential, nice "neighborhood", electric at the road, and long frontage on a cascading trout brook. My #1 concern is the fact that the owner put the property under a conservation easement. There is a building envelope that allows for construction of a substantial home (4000 sq ft - much larger than I would ever build). The property is about 40 acres in size. Further subdivision is prohibited, but that isn't my goal. I am a conservation minded person and would like to keep the land more or less the way it is. In this area, large lots appear to be norm and others seem to under a conservation easement as well.

The rub is that, according to the realtor, the first buyer dropped out after conversation with the land trust that holds the easement. Now the seller and his attorney are planning a meeting with the land trust because of "disagreements in interpretation of the easement document". I'm concerned about the land trust being overzealous. I have read and understand the language of the easement, though IANAL. Bottom-line, I gave an oral offer (largely meaningless IMO) subject to these issues being ironed out. I just don't want to find myself owning this land and down the road having to hire a lawyer when the land trust decides they don't agree with me.

Does anyone have experience with land under a conservation easement that can share experiences? I also have no idea of how to discount the value of the land due to the easement. It is clearly being offered at a significant discount compared to similar, unencumbered properties.
I am extremely knowledgeable in conservation easement enforcement. I did it for a Federal agency for about 10 years in the Midwest/Dakotas.

Most conservation easements are way less complicated than most land owners think. These easement is like any other contract. What does the contract say the conservation easement prohibits??? Then, you the landowner simply don’t do those things. Please don’t forget these conservation prohibitions were bought and paid for. The argument that is purely is a waste of breath is that a previous landowner signed the easement contract, not me.

Those protections, if a perpetual easement, it protects what the contract says it protects forever.

A landowner disagreeing with the restrictions of the easement, is normal. No one wants restrictions on Their land. That said, and you may think I’m biased but I am not, typically the landowner is wrongly interpreting the restrictions…simply because They don’t like the restrictions.

There are all kinds of easement types, wetland, forests, grassland, etc.

I can ensure you that the primary goal of any easement violation is to have the easement made whole…the damage fixed. Sometimes the landowner can fix the damage and sometimes a contractor is needed and that’s when costs become expensive.

Anyway, feel free to PM me. I’m retired but may have some good advice for you. If you can live with the conservation easement restrictions on a property, it’s one of the Best land deal to be had.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

Tundrama wrote: Sun May 15, 2022 3:37 pm
alpenglow wrote: Sun May 15, 2022 8:29 am As background, I have been looking around upstate NY for a bunch of years for undeveloped land. I already own 40+ acres in VT, but it getting to be too far away to enjoy enough.

I recently found a beautiful parcel of land at what I consider to be an attractive price. It has good road frontage on a well-maintained paved road, view potential, nice "neighborhood", electric at the road, and long frontage on a cascading trout brook. My #1 concern is the fact that the owner put the property under a conservation easement. There is a building envelope that allows for construction of a substantial home (4000 sq ft - much larger than I would ever build). The property is about 40 acres in size. Further subdivision is prohibited, but that isn't my goal. I am a conservation minded person and would like to keep the land more or less the way it is. In this area, large lots appear to be norm and others seem to under a conservation easement as well.

The rub is that, according to the realtor, the first buyer dropped out after conversation with the land trust that holds the easement. Now the seller and his attorney are planning a meeting with the land trust because of "disagreements in interpretation of the easement document". I'm concerned about the land trust being overzealous. I have read and understand the language of the easement, though IANAL. Bottom-line, I gave an oral offer (largely meaningless IMO) subject to these issues being ironed out. I just don't want to find myself owning this land and down the road having to hire a lawyer when the land trust decides they don't agree with me.

Does anyone have experience with land under a conservation easement that can share experiences? I also have no idea of how to discount the value of the land due to the easement. It is clearly being offered at a significant discount compared to similar, unencumbered properties.
I am extremely knowledgeable in conservation easement enforcement. I did it for a Federal agency for about 10 years in the Midwest/Dakotas.

Most conservation easements are way less complicated than most land owners think. These easement is like any other contract. What does the contract say the conservation easement prohibits??? Then, you the landowner simply don’t do those things. Please don’t forget these conservation prohibitions were bought and paid for. The argument that is purely is a waste of breath is that a previous landowner signed the easement contract, not me.

Those protections, if a perpetual easement, it protects what the contract says it protects forever.

A landowner disagreeing with the restrictions of the easement, is normal. No one wants restrictions on Their land. That said, and you may think I’m biased but I am not, typically the landowner is wrongly interpreting the restrictions…simply because They don’t like the restrictions.

There are all kinds of easement types, wetland, forests, grassland, etc.

I can ensure you that the primary goal of any easement violation is to have the easement made whole…the damage fixed. Sometimes the landowner can fix the damage and sometimes a contractor is needed and that’s when costs become expensive.

Anyway, feel free to PM me. I’m retired but may have some good advice for you. If you can live with the conservation easement restrictions on a property, it’s one of the Best land deal to be had.
Thank you for your input. I will PM shortly.
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Re: Buying Land Under a Conservation Easement

Post by WhyNotUs »

alpenglow wrote: Sun May 15, 2022 1:41 pm
The bone of contention relates to the ability to open a view from the designated building site (this is all per the realtor, so take that with a grain of salt). The potential for a beautiful mountain view exists and would add significant value IMO. The 1st buyer approached the land trust with questions about opening this view and was told no. However, the conservation easement states, "With prior notice to the Grantee, trees many be removed...for firewood for use on the property, new open spaces for recreation, and views may be created." This seems very clear to me.
That does seem pretty clear if it applies to the trees in question.

Here in CO, there are property owners trying to double dip these days, sell a CE on their property by showing a decline in value for which they are reimbursed at 90% of loss in tax credits and then marketing the property as if the value had not diminished. Tricky situation and the land trusts are responsible for assuring that the natural values being conserved. There has been abuse in the past and some in the present.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

WhyNotUs wrote: Sun May 15, 2022 5:45 pm
alpenglow wrote: Sun May 15, 2022 1:41 pm
The bone of contention relates to the ability to open a view from the designated building site (this is all per the realtor, so take that with a grain of salt). The potential for a beautiful mountain view exists and would add significant value IMO. The 1st buyer approached the land trust with questions about opening this view and was told no. However, the conservation easement states, "With prior notice to the Grantee, trees many be removed...for firewood for use on the property, new open spaces for recreation, and views may be created." This seems very clear to me.
That does seem pretty clear if it applies to the trees in question.

Here in CO, there are property owners trying to double dip these days, sell a CE on their property by showing a decline in value for which they are reimbursed at 90% of loss in tax credits and then marketing the property as if the value had not diminished. Tricky situation and the land trusts are responsible for assuring that the natural values being conserved. There has been abuse in the past and some in the present.
It seems that conservation easements are rife with tax abuse. I don't think that is the goal with the seller here. I certainly am not looking to abuse the situation.
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Re: Buying Land Under a Conservation Easement

Post by 123 »

alpenglow wrote: Sun May 15, 2022 1:15 pm
Newaygo wrote: Sun May 15, 2022 9:18 am If you are planning to build, make sure that you can get a mortgage.
Everything would be cash, both for the land and eventually construction.
Whether or not the property can be mortgaged will impact the ability of you, or your heirs to sell or liquidate the property. If the property can't be mortgaged the price for which the property can be sold will generally be less than if it can be mortgaged. Additionally the population of buyers who are willing, and able, to pay cash is much smaller than those that will acquire property with a mortgage. So the ability to mortgage a residential property can be a significant element of its value in the future.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

123 wrote: Sun May 15, 2022 6:35 pm
alpenglow wrote: Sun May 15, 2022 1:15 pm
Newaygo wrote: Sun May 15, 2022 9:18 am If you are planning to build, make sure that you can get a mortgage.
Everything would be cash, both for the land and eventually construction.
Whether or not the property can be mortgaged will impact the ability of you, or your heirs to sell or liquidate the property. If the property can't be mortgaged the price for which the property can be sold will generally be less than if it can be mortgaged. Additionally the population of buyers who are willing, and able, to pay cash is much smaller than those that will acquire property with a mortgage. So the ability to mortgage a residential property can be a significant element of its value in the future.
This is a fair and important point. Thank you.
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Re: Buying Land Under a Conservation Easement

Post by Newaygo »

What really bothers me is dealing with the Land Trust. Today, they may be reasonable. In the future, they may not. For the uncertainty, I would need a big discount for shouldering the uncertainty.
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Re: Buying Land Under a Conservation Easement

Post by WhyNotUs »

123 wrote: Sun May 15, 2022 6:35 pm
Whether or not the property can be mortgaged will impact the ability of you, or your heirs to sell or liquidate the property. If the property can't be mortgaged the price for which the property can be sold will generally be less than if it can be mortgaged.
[/quote]

What makes you believe that there is an issue getting a mortgage on land with a conservation or any other easement on it?
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Re: Buying Land Under a Conservation Easement

Post by London »

WhyNotUs wrote: Sun May 15, 2022 9:00 pm
123 wrote: Sun May 15, 2022 6:35 pm
Whether or not the property can be mortgaged will impact the ability of you, or your heirs to sell or liquidate the property. If the property can't be mortgaged the price for which the property can be sold will generally be less than if it can be mortgaged.
What makes you believe that there is an issue getting a mortgage on land with a conservation or any other easement on it?
[/quote]

I got a mortgage on a property with a CE with no issues from Wells Fargo. In fact, it never came up in the process at all. Also did a refi with another lender and it also wasn’t mentioned. That concern seems overblown.
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Re: Buying Land Under a Conservation Easement

Post by forgeblast »

alpenglow wrote: Sun May 15, 2022 8:29 am As background, I have been looking around upstate NY for a bunch of years for undeveloped land. I already own 40+ acres in VT, but it getting to be too far away to enjoy enough.

I recently found a beautiful parcel of land at what I consider to be an attractive price. It has good road frontage on a well-maintained paved road, view potential, nice "neighborhood", electric at the road, and long frontage on a cascading trout brook. My #1 concern is the fact that the owner put the property under a conservation easement. There is a building envelope that allows for construction of a substantial home (4000 sq ft - much larger than I would ever build). The property is about 40 acres in size. Further subdivision is prohibited, but that isn't my goal. I am a conservation minded person and would like to keep the land more or less the way it is. In this area, large lots appear to be norm and others seem to under a conservation easement as well.

The rub is that, according to the realtor, the first buyer dropped out after conversation with the land trust that holds the easement. Now the seller and his attorney are planning a meeting with the land trust because of "disagreements in interpretation of the easement document". I'm concerned about the land trust being overzealous. I have read and understand the language of the easement, though IANAL. Bottom-line, I gave an oral offer (largely meaningless IMO) subject to these issues being ironed out. I just don't want to find myself owning this land and down the road having to hire a lawyer when the land trust decides they don't agree with me.

Does anyone have experience with land under a conservation easement that can share experiences? I also have no idea of how to discount the value of the land due to the easement. It is clearly being offered at a significant discount compared to similar, unencumbered properties.
Do you what easement it is? if its clean and green it in PA anyway, lowers your taxes on anything over 1 acres that does not have a building on it. If its crep then a portion of the land may be enrolled for a period of time normally 10-15 years.
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alpenglow
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

London wrote: Mon May 16, 2022 3:04 am
WhyNotUs wrote: Sun May 15, 2022 9:00 pm
123 wrote: Sun May 15, 2022 6:35 pm
Whether or not the property can be mortgaged will impact the ability of you, or your heirs to sell or liquidate the property. If the property can't be mortgaged the price for which the property can be sold will generally be less than if it can be mortgaged.
What makes you believe that there is an issue getting a mortgage on land with a conservation or any other easement on it?
I got a mortgage on a property with a CE with no issues from Wells Fargo. In fact, it never came up in the process at all. Also did a refi with another lender and it also wasn’t mentioned. That concern seems overblown.
[/quote]

Thanks for that data point. I was going to ask you!
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Re: Buying Land Under a Conservation Easement

Post by iamlucky13 »

alpenglow wrote: Sun May 15, 2022 1:41 pm
WhyNotUs wrote: Sun May 15, 2022 1:21 pm
alpenglow wrote: Sun May 15, 2022 1:14 pm
I have a copy of the easement, but apparently there is disagreement between the seller and the land trust that holds the easement regarding some of the language.
Not sure that I understand the question without know the nature of the dispute. I am a board member of an open space organization and there are many, many properties around the US with conservation easements with a variety of purposes. You seem comfortable with the price and the concept of owned property with an easement so it just seems like you need to get informed about whatever the dispute is.
The bone of contention relates to the ability to open a view from the designated building site (this is all per the realtor, so take that with a grain of salt). The potential for a beautiful mountain view exists and would add significant value IMO. The 1st buyer approached the land trust with questions about opening this view and was told no. However, the conservation easement states, "With prior notice to the Grantee, trees many be removed...for firewood for use on the property, new open spaces for recreation, and views may be created." This seems very clear to me.
How many trees may be removed, for a view of what features, and in what locations (eg - inside, on the margins of, or anywhere outside the development area)?

If the easement is not more specific than you have stated, then there is clear opportunity for disagreement, and it could potentially be litigated. I am not a lawyer, but in my limited experience reading court documents for other purposes, it would be typical for parties to look for precedence to present to a judge how such terms had been treated in other property cases, or the judge may attempt to assess how a "reasonable person" would understand them. Unfortunately, it's not as clear as it seems at first glance.

One thing to keep in mind is a "reasonable person" in court is not "a typical person" but I'd say more like a person who applies reason to words according to their typical meaning. For example, I would not presume that the difference between "may...with prior notice" and "may...with prior approval" is as big as you think, because a "reasonable person" arguably should notice there also a difference between "may...with prior notice" and simply "may."

I presume what the trust wanted with such language is the opportunity to learn the details of such an action to decide if they object and inform you they consider a planned action outside the terms of the easement, and would seek an injunction if you intended to proceed, or potentially even restoration if you had already started. One of the conditions I think would have been beneficial for both parties, but especially for the landowner, is a duration of notice required, so an objection doesn't come by surprise after work starts.

I know you said the current owner has an attorney holding a discussion with the trust, but you might want to consult with an attorney yourself to be sure you understand the overall implications.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

iamlucky13 wrote: Mon May 16, 2022 10:58 am
alpenglow wrote: Sun May 15, 2022 1:41 pm
WhyNotUs wrote: Sun May 15, 2022 1:21 pm
alpenglow wrote: Sun May 15, 2022 1:14 pm
I have a copy of the easement, but apparently there is disagreement between the seller and the land trust that holds the easement regarding some of the language.
Not sure that I understand the question without know the nature of the dispute. I am a board member of an open space organization and there are many, many properties around the US with conservation easements with a variety of purposes. You seem comfortable with the price and the concept of owned property with an easement so it just seems like you need to get informed about whatever the dispute is.
The bone of contention relates to the ability to open a view from the designated building site (this is all per the realtor, so take that with a grain of salt). The potential for a beautiful mountain view exists and would add significant value IMO. The 1st buyer approached the land trust with questions about opening this view and was told no. However, the conservation easement states, "With prior notice to the Grantee, trees many be removed...for firewood for use on the property, new open spaces for recreation, and views may be created." This seems very clear to me.
How many trees may be removed, for a view of what features, and in what locations (eg - inside, on the margins of, or anywhere outside the development area)?

If the easement is not more specific than you have stated, then there is clear opportunity for disagreement, and it could potentially be litigated. I am not a lawyer, but in my limited experience reading court documents for other purposes, it would be typical for parties to look for precedence to present to a judge how such terms had been treated in other property cases, or the judge may attempt to assess how a "reasonable person" would understand them. Unfortunately, it's not as clear as it seems at first glance.

One thing to keep in mind is a "reasonable person" in court is not "a typical person" but I'd say more like a person who applies reason to words according to their typical meaning. For example, I would not presume that the difference between "may...with prior notice" and "may...with prior approval" is as big as you think, because a "reasonable person" arguably should notice there also a difference between "may...with prior notice" and simply "may."

I presume what the trust wanted with such language is the opportunity to learn the details of such an action to decide if they object and inform you they consider a planned action outside the terms of the easement, and would seek an injunction if you intended to proceed, or potentially even restoration if you had already started. One of the conditions I think would have been beneficial for both parties, but especially for the landowner, is a duration of notice required, so an objection doesn't come by surprise after work starts.

I know you said the current owner has an attorney holding a discussion with the trust, but you might want to consult with an attorney yourself to be sure you understand the overall implications.
Thank you. I agree.
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Re: Buying Land Under a Conservation Easement

Post by happymob »

I own grassland (cattle land) where I have sold conservation easements. So we deal with both the ongoing requirements of the easement (mostly maintaining the land in a certain state and allowing periodic inspections to verify we are properly maintaining the land). We also are concerned with the reduction in resale value of the land as a result of the conservation easement.

We know the following:

1) We got 28% of the appraised value of the land for the easement. This was tax deferred as we didn't have to pay tax on the momney at the time, but it did lower the cost basis of the land by the easement amount.

2) We cannot develop the land for oil and gas (not an issue for this land), wind (which is a real thing for this land and the primary reason the conservation easement was valuable), housing, or even additional ranching improvements (we can maintain existing pens, ponds, fences, etc, but cannot build new ones).

3) The owner of the easement (a non-profit) can choose to ease the restrictions. In our case, a gas pipeline was going to be built and the non-profit seemed willing (for some money) to let the pipeline be built, despite the easement. The pipeline company eventually decided to built it across the road on property not subject to an easement. But the key thing is the owner of the easement controls this and not the property owner. We could have still said no to the pipeline, but eminent domain may have come into play at that point.

4) This particular conservation easement had no effect on the ability to produce income by running cattle on the land (other than no new improvements).

5) We also carved out a couple areas for possible home building and as far as we know, there would be no problem developing the carve outs in any way we wanted to.

What we don't know:

1) How did this affect the actual value of the land. We were betting that getting 28% now (capital gains tax deferred) was much better than a probably less than 28% reduction in the eventual price when the land was sold. But this remains untested.

My advice is make sure you understand what your ongoing maintenance requirements are to stay in compliance with the easement, but I wouldn't fear buying the land in general. You might get a really good deal. But you won't 100% control the part that has the easement.
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Re: Buying Land Under a Conservation Easement

Post by WhyNotUs »

alpenglow wrote: Mon May 16, 2022 7:49 am I got a mortgage on a property with a CE with no issues from Wells Fargo. In fact, it never came up in the process at all. Also did a refi with another lender and it also wasn’t mentioned. That concern seems overblown.
Thanks for that data point. I was going to ask you!
[/quote]

The appraiser would consider it when setting market valuation. An ironic thing where I live is that the market for properties with CE is active enough that we see modest decreases in value compared to property with no easement. That will vary by market.
I own the next hot stock- VTSAX
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

Just to follow-up, I'm not moving forward with the property. It seems the seller and easement holder continue to disagree about the terms of the easement. Thank you very much to all that provided input!
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Re: Buying Land Under a Conservation Easement

Post by nerdymarketer »

I'm curious if you ever circled back on this...?

My guess is the two parties disagree, but they aren't lawyers... So if you hired a really good land attorney to take one look at the document and make a good guess on how a court would rule, you could get a decent gauge on the risk. It'd be a risk, but if you got the property cheap enough (ie, w/o factoring in the value of the view) it might be a gamble worth taking.

Also, how likely do you think the land trust would be to actually sue? Some really don't have the financial war chest to enforce their opinions. And to be clear, I'm conservation minded (I found this old thread by googling conservation easements), but this case to my reading the wording seems straightforward that you can cut trees to open up a view. I think the land trust is trying to overstep their actual legal claims.
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Re: Buying Land Under a Conservation Easement

Post by alpenglow »

nerdymarketer wrote: Wed Jul 10, 2024 1:21 am I'm curious if you ever circled back on this...?

My guess is the two parties disagree, but they aren't lawyers... So if you hired a really good land attorney to take one look at the document and make a good guess on how a court would rule, you could get a decent gauge on the risk. It'd be a risk, but if you got the property cheap enough (ie, w/o factoring in the value of the view) it might be a gamble worth taking.

Also, how likely do you think the land trust would be to actually sue? Some really don't have the financial war chest to enforce their opinions. And to be clear, I'm conservation minded (I found this old thread by googling conservation easements), but this case to my reading the wording seems straightforward that you can cut trees to open up a view. I think the land trust is trying to overstep their actual legal claims.
Given the situation, I never moved forward on the deal. I didn't want headaches down the road if/when there was further disagreement with the land trust. I have no idea how litigious a land trust might be, but I wouldn't want my own cost to "lawyer up" if a problem arose.

The land eventually sold, but I haven't been in the area recently to see if any clearing and/or development occurred.

In the future, I would only consider looking at unencumbered land.
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Re: Buying Land Under a Conservation Easement

Post by rogue_economist »

I would never buy property with an encumbrance like that. You don't want a random group of people deciding how you get to live on your own property. Same reason I won't touch an HOA. I'd look elsewhere.
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Re: Buying Land Under a Conservation Easement

Post by 24k »

Tundrama wrote: Sun May 15, 2022 3:37 pm
alpenglow wrote: Sun May 15, 2022 8:29 am As background, I have been looking around upstate NY for a bunch of years for undeveloped land. I already own 40+ acres in VT, but it getting to be too far away to enjoy enough.

I recently found a beautiful parcel of land at what I consider to be an attractive price. It has good road frontage on a well-maintained paved road, view potential, nice "neighborhood", electric at the road, and long frontage on a cascading trout brook. My #1 concern is the fact that the owner put the property under a conservation easement. There is a building envelope that allows for construction of a substantial home (4000 sq ft - much larger than I would ever build). The property is about 40 acres in size. Further subdivision is prohibited, but that isn't my goal. I am a conservation minded person and would like to keep the land more or less the way it is. In this area, large lots appear to be norm and others seem to under a conservation easement as well.

The rub is that, according to the realtor, the first buyer dropped out after conversation with the land trust that holds the easement. Now the seller and his attorney are planning a meeting with the land trust because of "disagreements in interpretation of the easement document". I'm concerned about the land trust being overzealous. I have read and understand the language of the easement, though IANAL. Bottom-line, I gave an oral offer (largely meaningless IMO) subject to these issues being ironed out. I just don't want to find myself owning this land and down the road having to hire a lawyer when the land trust decides they don't agree with me.

Does anyone have experience with land under a conservation easement that can share experiences? I also have no idea of how to discount the value of the land due to the easement. It is clearly being offered at a significant discount compared to similar, unencumbered properties.
I am extremely knowledgeable in conservation easement enforcement. I did it for a Federal agency for about 10 years in the Midwest/Dakotas.

Most conservation easements are way less complicated than most land owners think. These easement is like any other contract. What does the contract say the conservation easement prohibits??? Then, you the landowner simply don’t do those things. Please don’t forget these conservation prohibitions were bought and paid for. The argument that is purely is a waste of breath is that a previous landowner signed the easement contract, not me.

Those protections, if a perpetual easement, it protects what the contract says it protects forever.

A landowner disagreeing with the restrictions of the easement, is normal. No one wants restrictions on Their land. That said, and you may think I’m biased but I am not, typically the landowner is wrongly interpreting the restrictions…simply because They don’t like the restrictions.

There are all kinds of easement types, wetland, forests, grassland, etc.

I can ensure you that the primary goal of any easement violation is to have the easement made whole…the damage fixed. Sometimes the landowner can fix the damage and sometimes a contractor is needed and that’s when costs become expensive.

Anyway, feel free to PM me. I’m retired but may have some good advice for you. If you can live with the conservation easement restrictions on a property, it’s one of the Best land deal to be had.
As a new Conservation Easement land owner in the past year, we love the property but not so much the Land Trust. They have been very aggressive in making odd interpretations and determinations along with demanding we do different things that are not clearly not in our very old CE paperwork. Unfortunately, it will likely lead to a Judge making the decision for us, but I was prepared for that in the beginning and have since hired a specialist attorney firm. Would certainly be open to hearing advice from anyone qualified on how Judges typically handle disputes on CE document language interpretations?
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Re: Buying Land Under a Conservation Easement

Post by Tundrama »

24k wrote: Thu Jul 11, 2024 1:36 pm
Tundrama wrote: Sun May 15, 2022 3:37 pm
alpenglow wrote: Sun May 15, 2022 8:29 am As background, I have been looking around upstate NY for a bunch of years for undeveloped land. I already own 40+ acres in VT, but it getting to be too far away to enjoy enough.

I recently found a beautiful parcel of land at what I consider to be an attractive price. It has good road frontage on a well-maintained paved road, view potential, nice "neighborhood", electric at the road, and long frontage on a cascading trout brook. My #1 concern is the fact that the owner put the property under a conservation easement. There is a building envelope that allows for construction of a substantial home (4000 sq ft - much larger than I would ever build). The property is about 40 acres in size. Further subdivision is prohibited, but that isn't my goal. I am a conservation minded person and would like to keep the land more or less the way it is. In this area, large lots appear to be norm and others seem to under a conservation easement as well.

The rub is that, according to the realtor, the first buyer dropped out after conversation with the land trust that holds the easement. Now the seller and his attorney are planning a meeting with the land trust because of "disagreements in interpretation of the easement document". I'm concerned about the land trust being overzealous. I have read and understand the language of the easement, though IANAL. Bottom-line, I gave an oral offer (largely meaningless IMO) subject to these issues being ironed out. I just don't want to find myself owning this land and down the road having to hire a lawyer when the land trust decides they don't agree with me.

Does anyone have experience with land under a conservation easement that can share experiences? I also have no idea of how to discount the value of the land due to the easement. It is clearly being offered at a significant discount compared to similar, unencumbered properties.
I am extremely knowledgeable in conservation easement enforcement. I did it for a Federal agency for about 10 years in the Midwest/Dakotas.

Most conservation easements are way less complicated than most land owners think. These easement is like any other contract. What does the contract say the conservation easement prohibits??? Then, you the landowner simply don’t do those things. Please don’t forget these conservation prohibitions were bought and paid for. The argument that is purely is a waste of breath is that a previous landowner signed the easement contract, not me.

Those protections, if a perpetual easement, it protects what the contract says it protects forever.

A landowner disagreeing with the restrictions of the easement, is normal. No one wants restrictions on Their land. That said, and you may think I’m biased but I am not, typically the landowner is wrongly interpreting the restrictions…simply because They don’t like the restrictions.

There are all kinds of easement types, wetland, forests, grassland, etc.

I can ensure you that the primary goal of any easement violation is to have the easement made whole…the damage fixed. Sometimes the landowner can fix the damage and sometimes a contractor is needed and that’s when costs become expensive.

Anyway, feel free to PM me. I’m retired but may have some good advice for you. If you can live with the conservation easement restrictions on a property, it’s one of the Best land deal to be had.
As a new Conservation Easement land owner in the past year, we love the property but not so much the Land Trust. They have been very aggressive in making odd interpretations and determinations along with demanding we do different things that are not clearly not in our very old CE paperwork. Unfortunately, it will likely lead to a Judge making the decision for us, but I was prepared for that in the beginning and have since hired a specialist attorney firm. Would certainly be open to hearing advice from anyone qualified on how Judges typically handle disputes on CE document language interpretations?
Feel free to pm me the contract elements/restrictions and I’d interpret for you.
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