land conservation agreements: how they work

8/3/2019 Land Conservation Agreements: How They Work

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Land Conservation Agreements -

How They Work

We hope the following information will answer your questions about Land ConservationAgreements (also called Conservation Easements, or easements) and how SouthernConservation Trust (the Trust) can help you protect the natural features of your land.

What is a land conservation agreement?

A Land Conservation Agreement (LCA) is a legal agreement between a landowner and aland trust which places permanent restrictions on the land use. An LCA is a practical wayfor landowners to protect their property and still retain ownership.

What activities might an LCA prohibit?

Generally, an LCA will either limit or prohibit the subdivision of a property and/or theconstruction of structures. Most conservation agreements prohibit commercial andindustrial activity, topsoil removal, billboards and any activities that might disturb wildlifehabitat. However, the terms of the agreement are dependent upon the individuallandowner’s desires.

What uses are permitted?

Agricultural, forestry and wildlife management activities may be allowed. Limitedsubdivision to allow home sites for family members may be permitted. In some cases, aneasement may allow limited development that protects the property’s natural resourcessuch as wetlands, mature forest, etc.

Does a land conservation agreement give the public access?

Not necessarily. The landowner decides whether or not to allow public access. If alandowner permits public access, it is usually for a specific area of the property, such as amarked trail or an access point to a body of water.

Must a Land Conservation Agreement cover a person’s entire property? No. A landowner can place restrictions on all or a portion of the property, or different areasof the property may have specific restrictions.



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Does a conservation agreement restrict the landowner’s ability to sell or bequeath the property in the future?

Landowners can sell or bequeath property that is protected with an LCA. Sinceconservation agreements are permanent, the restrictions run with the land and bind allfuture owners.

Are there financial benefits to donating a conservation easement?

Income taxes

Federal Tax Deduction: Entering into a land conservation agreement may qualify alandowner for charitable deductions if certain IRS criteria are satisfied. The gift value,determined by an appraiser, is the difference between the fair market value of the propertybefore and after the restrictions are placed on the property. Generally, the amount of thededuction in one year is limited to 30% of the adjusted gross income (increased to 50% foreasements donated through 2009). Any remaining value can be carried forward for thenext five years (increased to 15 additional years for easements donated through 2009) but

is subject to the same 30% (or 50%) limit.

Georgia Tax Credit Program: The State of Georgia approved a Conservation Tax Creditin 2006 for land donations, bargain sales to land trusts and for land conservationagreements. The taxpayer already benefits from reduced taxes because the taxableincome on your state return is indexed to the Federal Adjusted Gross Income. The totaltax credit value is limited to an amount not to exceed the lesser of $500,000.00or 25 percent of the fair market value of the donated real property (easement value). Thetax credit in any one year cannot exceed the total tax liability and is limited to $250,000for an individual and $500,000 for corporations. The carry over period is 5 years. Eachdonation must be certified by the Georgia Department of Natural Resources in order for

the taxpayer to qualify for the tax credit

Estate Taxes

Land conservation agreements usually lower the value of a landowner’s estate, thereforereducing estate and inheritance taxes. Families have found that an LCA enables them tokeep land that otherwise might be sold to pay estate taxes.

Gift and Property Taxes

Land conservation agreements may also provide landowners with gift and property tax

benefits. If tax reduction is an important factor, the Trust recommends a landowner consultwith a tax advisor before proceeding with negotiations.

How is an LCA enforced?

Southern Conservation Trust, as the conservation easement holder (grantee), is legallyobligated to uphold the terms of the LCA, forever . The grantee is responsible for guardingagainst violations. With a regular, well-documented monitoring program, violations are



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generally prevented. The periodic monitoring visits serve as a reminder that the landowneris legally bound to keep the property maintained according to the terms of the agreement.

What are the steps in entering into a land conservation agreement?

1. A landowner and a Trust representative meet to discuss the landowner’s goals forthe land, how an easement could accomplish those goals, the potential tax benefits,

the Trust’s role, and the landowner’s donation to the Trust’s Stewardship andDefense Endowment Funds.

2. The project is reviewed by the Trust’s Land Committee to make sure it satisfies ourConservation Project Criteria.

3. If both the landowner and the Trust agree that a conservation easement is desirable,restrictions and permitted uses are discussed in more detail. When agreement isreached on uses and restrictions, the Trust provides the landowner a request for acontribution to the Conservation Stewardship and Defense Funds.

4. The Trust recommends the landowner consult legal and tax advisors to review thepotential financial implications of entering into a land conservation agreement. A

preliminary appraisal may be helpful at this point to estimate the potential taxbenefits.

5. If landowner is ready to proceed, legal work begins, including drafting the document,and obtaining a mortgage subordination. The Trust prepares the easementdocument. A title search and certificate of title is provided by the landowner.

6. In some cases, the landowner may be required to provide an updated survey if theboundaries are unclear or in dispute. A survey may be needed and boundariesmarked if portions of the property will be used and restricted in a different mannerthan other portions, as an exhibit to the easement.

7. The landowner and the Trust review the draft agreement. Revisions are made ifnecessary. Both the landowner and the Trust should consult their respective legalcounsel about the finalized document.

8. If the landowner intends to claim the easement as a charitable deduction, a qualifiedappraisal must be obtained no more than 60 days prior to the easement donation. (Apreliminary appraisal may be updated.)

9. The Trust compiles a baseline property inventory, which includes mapping andphotographs. This documentation is required if tax benefits are sought by thelandowner and will serve as a guide when the Trust monitors the easement property.

10. Once the final document is reviewed, a formal vote of acceptance is obtained from

the Trust Board of Directors.11. The landowner makes a donation to the Trust’s Conservation Stewardship and

Defense Funds. The Land Conservation Agreement is signed and recorded.

12. The Trust monitors the property annually.

If you believe a Land Conservation Agreement may be the answer to your concerns aboutthe future of your property, please contact the staff with Southern Conservation Trust at770-486-7774 or [email protected].

land conservation agreements: how they work

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