What does “conservation” mean?
Although there are secondary effects and complementary goals on the part of both the grantor and the grantee, the principle effect of a conservation easement on a parcel should be conservation of its environmental, agricultural or scenic character. It can be surprisingly easy to lose that reality when negotiating various individual restrictions, working out tax implications, determining development relaxations, etc.
All parties should have a clear – and shared – vision of what is meant by “conservation.” The legislation lays out allowable purposes, but the grantor and grantee need to clarify exactly what that intent is while drafting the CE document. As a way to keep everyone reminded of the “big conservation picture” grantors will often draft a letter of intent at the outset. When discussions get into the details such a letter can help bring perspective to the negotiated decisions, often being used in the future to reflect on original intent. All parties should also be aware that conservation of the parcel though a conservation easement should provide for the public interest first. Not all parcels are appropriate for a conservation easement, as not all parcels will have a verifiably high level of conservation value.
How is a conservation easement different from fee simple acquisition?
One of the best ways to understand the effect of a conservation easement on a parcel of land is to compare that process to the outright purchase of a parcel, or fee simple acquisition.
Non-government land conservation organizations (land trusts) refer to the process of acquiring a direct interest in a land parcel for the purpose of conservation as “land securement.” The two primary mechanisms by which they do this are conservation easements and fee simple acquisition (i.e., the title transfers from the landowner to the land trust. The following table compares the grant of a conservation easement and the sale of the same parcel.
|Conservation Easement||Fee Simple|
|Ownership||Ownership retained by the landowner except for the rights s/he granted away.||Ownership transfers in full to the conservation organization or municipality.|
|Management and use||The landowner (grantor) remains the land manager and must manage the land subject to the restrictions and prescriptions in the CE.||The purchaser becomes the land manager and is restricted only by their mandate and the laws of the land.|
|Infractions||The landowner/manager is subject to the terms of the CE, and potential infractions/enforcement are subject to the grantee’s oversight.||The purchaser is restricted only by their mandate and the laws of the land so there are no potential “infractions” of the agreement to monitor.|
|Cost||Costs of managing the land are borne by the grantor and costs of monitoring and stewarding the CE are borne by the grantee.||Costs of managing the land (including maintenance and restoration activity) are borne by the new owner.|
|Compensation||Compensation is for the CE, which represents only a portion of the total land value. The grantee generally provides compensation in the form of a tax receipt, occasionally a split receipt (part tax receipt, part cash payment) and on rare occasions the full value in cash.||The conservation organization compensates for the full agreed-upon market value of the land parcel.|
|Property tax||Property taxes continue to be the responsibility of the landowner (grantor).||Property taxes become the responsibility of the land trust as the new owner.|
|Monitoring||The grantee is responsible for monitoring the CE.||There is no legal requirement for monitoring.|
What are the implications for other land uses?
The effect of a conservation easement on existing or potential land uses depends entirely on the rights and opportunities granted away through the conservation easement. The landowner retains all rights and opportunities that are not explicitly granted away by the CE, and can pursue any land use on that basis.
To better understand how this works, it is important to remember that conservation easements restrict or direct practices, not land uses. Restrictions on those practices (e.g., on subdivision, fence-building, construction of buildings, etc.) will have direct implications for any land use that depends on those activities. It is important to understand and engineer restrictions in such a way that the CE promotes conservation while also facilitating the uses of land the landowner still desires. Achieving this balance is the basis of an effective conservation easement.
In most cases, the land is a candidate for a conservation easement because of the state it is currently in, and presumably existing practices are in sync with the conservation goals. Land uses such as farming, ranching and forestry, which rely on an ecologically-sustainable yield for long-term success, are often managed in a manner supportive of conservation and production goals. Ensuring the perpetual use of the land in a well-managed way is the goal of the CE and its restrictions.
Potential new land uses are often the impetus for considering a conservation easement. Concerns often arise due to pressures for residential development in the area, advancing oil and gas exploration, and/or cultivation/overharvest of native vegetation. In these cases, the degree to which the conservation easement can impact the negative effects of these land uses relates to the rights and opportunities the landowner actually has.
We all know that we can’t give away your neighbour’s car to someone else. The same principle applies to understanding how a conservation easement affects potential new land uses. If you have the right to cultivate or to seek subdivision or building approvals, you can grant that to a qualified organization; if you do not have the subsurface rights, you cannot grant those away. For this reason, conservation easements have significant ability to affect (e.g.) residential development, but limited ability to affect oil and gas exploration and development. In the case of oil and gas development, though, a landowner retains the rights they have to press for certain practices, and additionally have the support and expertise of the qualified organization or municipality in doing so.
Similarly, if someone else has an “interest” in the land, one which is registered on title, the landowner is not able to grant those interests away. For example, an existing utility easement will remain. Where there are conflicts between these interests and the conservation easement, whichever was registered first in time will have precedence. If this is a concern to the parties negotiating a CE, they can seek a “postponement” from the other interest, which has the effect of raising the CE higher on that priority list.
In some cases, multiple land uses are allowed or even protected by the conservation easement. In these cases, care must be taken to ensure that potential conflicts are identified in advance to the greatest degree possible, and the conservation easement drafted to accommodate and prioritize these (see How is a multiple-purpose conservation easement agreement drafted?
How does a conservation easement affect land management?
In the simplest sense, a conservation easement affects future land management by 1) restricting certain practices and opportunities, and 2) prescribing certain practices (in this way it is different from a restrictive covenant, which can only restrict practices and opportunities).
Land use restrictions are included in the conservation easement document, and the landowner (existing or future) is bound by these restrictions when they are choosing amongst management options. Restrictions tend to be at a higher level, and reflect conversion or physical transformation of the land base.
Land management prescriptions are generally included in a management plan, either within the conservation easement document or as an attached schedule. Prescriptions lay out practices deemed to be supportive of the easement’s conservation goals, with which the landowner must align. They tend to be at an operational level.
In practice, however, one of the core principles of the conservation easement tool is to affect land management as little as possible. The goal is to leave the landowner in charge of land management to the greatest degree possible. Restrictions and prescriptions are intended to operate as much as possible in the background and to prevent unintended consequences. This is possible because in many cases the existing conservation value of the parcel is due to the conservation-focused management regime that has been in place.
For more information, see the following:
What access is the landowner required to provide?
There are two primary considerations for access to a parcel subject to a conservation easement: public access and access for the qualified organization.
There is no requirement to allow public access to land with a conservation easement. Conservation easements are intended to serve the public interest through the conservation of environmental, agricultural or scenic features deemed to have value to society as a whole, not through individual use or benefit. Often conservation easements are silent on public access and access is left to the landowner’s discretion.
However, in some cases, the grantor and grantee may both benefit from allowing public access. For example, one of the secondary purposes for conservation easements as defined in the Alberta Land Stewardship Act is environmental education, and the parties may agree that managed access for this purpose is important.
The challenge in these cases is that public access often leads to degradation of the very features the CE seeks to protect, so restrictions and public access provisions must be crafted in such a way as to continue to uphold the goals of the conservation easement. These are generally laid out in the CE’s Management Plan.
Access for the Qualified Organization
Through the conservation easement agreement, the qualified organization gains the right of access to the property for the purposes of monitoring and enforcement. This is not an unfettered right of access, and the conditions under which that access can occur, the frequency, and the permissions required/waived are outlined in the agreement.
Is the grantor’s ability to sell or will the land affected?
The grantor of the conservation easement is free to sell, will or otherwise dispose of the land subject to the CE with no restriction. The conservation easement is said to “run with the land,” meaning the sale of the land (for example) will have no effect on the CE and will apply in exactly the same way to subsequent landowners.
The impact of the conservation easement on a subsequent sale may be felt in the sale process and the determination of the sale price. A parcel that has certain rights and opportunities removed can be expected to fetch a lower price; however, there are cases where a parcel with a conservation easement sold for a higher price, based on the perceived amenity value.
It is important to note that not all subsequent landowners will be made immediately aware of the conservation easement, nor perhaps fully understand what the CE implies. It is vitally important for the conservation easement holder (the grantee) to contact new landowners as soon as possible to ensure there is clarity on what it means to own a parcel subject to a conservation easement.
Future landowners may seek to make changes to the conservation easement, and both the grantee and the landowner need to be aware of the implications of such efforts (see How is a conservation easement changed? )