What is a Conservation Easement?

A conservation easement is a voluntary, written legal agreement between a landowner and a qualified conservation organization, like the Methow Conservancy, that permanently protects specific conservation values like:

  • wildlife habitat
  • scenic views and open space
  • riverfronts
  • forests
  • working farms and ranches

A conservation easement permanently limits a property's uses in order to protect its conservation values.

When you own land, you also "own" many rights associated with it, such as the right to harvest timber, build structures, excavate minerals, etc. When you place a conservation easement on your land, you permanently give up some of those rights in exchange for protecting the specific features of the land. For example, you might give up the right to build additional residences while protecting wildlife habitat.

A conservation easement is a legal agreement that can be tailored to protect the specific conservation values of each property and meet the financial and personal needs of the landowner. An easement on land containing wildlife habitat might prohibit development while an easement on a working farm may allow farming and the building of additional agricultural structures.

When you create a conservation easement with the Methow Conservancy, the Conservancy takes on the responsibility and legal right to monitor and enforce the easement. The conservation easement is recorded on the title to the land, so all future owners are bound by the terms of the easement. The Conservancy promises to maintain the characteristics you sought to protect, no matter how often theland changes ownership.

As holders of a conservation easement, the Methow Conservancy has a moral and legal obligation to ensure that the terms of the easement are being followed. We work with current and future generations of landowners to make sure they understand the intent and specifics of their easement to prevent any violations. When an easement term is violated-for example someone builds a house in an area that is not designated a homesite in the easement-we must, as a last resort, defend the easement legally.

Conservation easements may be purchased or donated. The Methow Conservancy receives grant funding to allow for the purchase of conservation easements in particular types of habitat. In these cases, a landowner will be compensated for some percentage of the value of the development rights he/she has voluntarily extinguished.

Donated easements can provide estate and income tax deductions. If a donated conservation easement meets federal tax code requirements, the value of the easement can be treated as a charitable gift and deducted from federal income tax following the IRS guidelines for a "qualified conservation contribution." In general, for property amounts (rather than cash), up to 30% of the taxpayer's adjusted gross income is deductible each year for six years. Thus the maximum total value allowed to be deducted is 30% of adjusted annual gross income times six. Any value that remains after the sixth year is lost for deduction purposes. The accepted value of the donated easement is the value of the land without the easement minus the value of the land with the easement (i.e. it is the opportunity cost to the donor of giving up the development rights).

Section 170(h) of the Federal Internal Revenue Code defines "Qualified Conservation Contributions." This part of the tax code indicates the conditions necessary for a conservation easement to qualify for deduction as a charitable contribution. In general, the contribution must be of a qualified real property interest to a qualified organization exclusively for conservation purposes. Specifically, the easement must meet several criteria:

1. Be "an easement or other interest in real property that under state law has attributes similar to an easement." The donor can and does retain any rights to use his/her land, such as to sell it, give it away, or transfer ownership. He/She also can continue to live on the property, reserve the right to develop some excludable portion of the property or keep subsurface mineral rights.

2. Be donated to a "qualified conservation organization." This includes charitable conservation organizations or governmental units, but not private foundations.

3. Be "for conservation purposes".

4. Be enforceable in perpetuity.

5. Have an agreement by the mortgage company that the easement remains in effect with any sale of the property, even if foreclosed.

6. Have "documentation sufficient to establish the condition of the property at the time of the gift."

Landowners should consult with an attorney experienced in this area and with their financial advisors or accountants to determine if they would benefit from granting a conservation easement. The legal transfer of the easement must be written very carefully so that the landowner's wishes are carried out and so that the maximum tax benefits are obtained.

Suggested References
Diehl, Janet, and Thomas S. Barrett. 1988. The Conservation Easement Handbook. Land Trust Exchange and the Trust for Public Land. San Francisco and Alexandria.

Small, Stephen J. 1986. The Federal Tax Law of Conservation Easements. Land Trust Exchange. Alexandria, VA.

Small, Stephen J. 1988. Preserving Family Lands. Land Trust Exchange et al. P.O. Box 2242, Boston, Massachusetts 02107.

If you own land and would like to see it protected, the Methow Conservancy can tailor a conservation easement to meet your needs. We have several publications that discuss easements and conservation techniques. You may make inquiries to the Methow Conservancy without obligation. All inquiries will be kept strictly confidential.

If you want to learn more about our upcoming state farmland protection program application, please contact our Conservation Biologist, Julie Grialou, at 509-996-2870.

315 Riverside Avenue / PO Box 71    Winthrop, WA 98862     509.996.2870