Agricultural Conservation Easements
What is a Conservation Easement?
Many lands are best protected if landowners are motivated to pursue economically viable alternatives to development. A conservation easement is a voluntary, legal agreement between a landowner and a non-profit land trust which permanently restricts use of the land for agricultural production, wildlife habitat or open space.
Placing private land in a conservation easement:
- Keeps land in private ownership and available for agriculture habitat preservation and limited residential use. An agricultural conservation easement puts farm use as primary objective.
- Permanently alters the property deed to prevent or minimize subdivision, and limits construction to agricultural and limited residential building as negotiated with the owner.
- May include specific protections for important environmental, scenic or historic resources.
- May qualify the owner for significant income and inheritance tax savings.
- May be purchased with Land Trust conservation grants (although at this time funding for such purchases is extremely limited).
- Does not create any new government regulation, nor does it require public access.
- Requires the Land Trust to monitor and enforce the easement in perpetuity, including legal action if necessary.
Frequently Asked Questions: Donated Agricultural Easements
1. If I donate an agricultural easement to a land trust, what will my out-of-pocket costs be?
The costs incurred in connection with donation of an easement may be allocated in different ways, depending on the wishes of the donor and the capacity of the land trust. The following is a list of potential costs:
- attorney fees, drafting and/or review of the easement (Note: donors should have independent legal counsel)
- accountant advice to the donor (tax benefits or consequences to donor)
- appraisal (necessary if donor needs to document tax value of donation)
- full or partial boundary survey of the property (may not be required)
- title insurance or attorney’s certification of title (usually purchased by land trust)
- preparation of baseline data (often paid by land trust or done “in house”)
- filing fees at the registry of deeds
- stewardship donation to land trust
2. What is the effect of an agricultural conservation easement on the property taxes of protected farmland? Would it affect state valuations on land presently classified as Tree Growth or Farmland/Open Space land?
Property that is permanently protected by easement will generally qualify for reduction in property taxes under one of the state’s tax reduction programs. Sometimes landowners refrain from enrolling land in the Tree Growth or Farmland/Open Space programs, because they want to avoid the possibility of recapture of taxes if they were to later remove the property from the program. When land is protected in perpetuity, there is no option to later change the use of the property, and hence, no reason not to place the property in a tax reduction program. Some towns give a larger tax reduction on permanently protected land than they do on land which can be withdrawn from the program. Consequently, landowners placing an agricultural conservation easement on their property already enrolled in on of these programs should notify their town’s tax assessor to see if any further tax savings might be realized.
Because the cost of services for developed land is generally higher than the amount of taxes paid by the owner of the developed land, towns ultimately benefit from permanently protected land.
3. What conditions/restrictions could be applicable to a conservation easement?
Each conservation easement is drafted to meet the needs of the landowner (Grantor) and the requirements of the land trust (Holder). Agricultural conservation easements are drafted to be as flexible as possible, in order to promote continued use of the land for agriculture, while still protecting the agricultural values and preventing development.
4. What is the function of the Maine Land Trust Network in relation to local land trusts?
MLTN serves as a networking opportunity, source of information and support, and outreach program for local land trusts in Maine. It provides a coordinator and also maintains an informative website with web pages for each member land trust.
5. What is the function of the Maine Farmland Trust in relation to local land trusts?
MFT is a statewide land trust focused on the unique aspects of protecting farmland through conservation easements. It provides general information as well as assistance in developing farmland protection strategies, working with farmland owners, drafting agricultural easements, and educational programs and workshops.
6. What if the land trust holding the easement becomes inactive or dissolves?
Every conservation easement must contain language specifying that the easement can be transferred to another entity that meets certain requirements as defined by statute and IRS regulation. Holder land trusts have an obligation to monitor and enforce their easements; if they are unable to do so they must transfer the easement to an entity that is capable and willing. This could be a local land trust, a statewide land trust, or the State of Maine.
7. What could happen to make me regret giving the conservation easement?
Conservation easements permanently restrict the uses permissible for a property, and hence the land’s market value is reduced. Any development or division not addressed in the easement will not be permitted, and uses not contemplated at the time of creation of the easement may not be permitted. Options to bring in some money by “selling off a little of the south forty” or “setting up a little used car lot on the north pasture” will no longer exist, if the entire farm parcel is included in the easement.
8. Would sale of the farm have any effect on the easement? Would eminent domain apply once the easement is in place?
If the farm is sold, the new owners take it subject to the restrictions in the easement. The Holder land trust will want to establish a working relationship with the new owners to ensure continued compliance with the easement.
Eminent domain can apply, although the easement creates and supports a public policy argument against taking the land for other uses. If protected land is taken by eminent domain, the compensation paid by the governmental entity is split proportionately between the landowner and the Holder.
9. What information should one acquire before committing to a conservation easement?
In addition to being fully advised as to the legal effects of a conservation easement, the donor should discuss with family and anyone else who might believe he or she has a future interest in the property. Family members may have different perspectives on the value and potential of the property, an understanding of which will allow the donor to make a fully informed decision as to whether or not to proceed.