This proposal is not meant as a compromise of the position
of the Property Rights Foundation of America to retain property
in private ownership, unsullied by deeded encumbrances held by
government or the powerful non-profit land trusts, which currently
operate in effect as quasi-government agencies. Rather, the proposal
is meant to offer creative thought to attorneys who are attempting
to protect landowners who are being driven by cash flow considerations,
including global marketing pressures, real estate taxes, estate
taxes, and income taxes to divert the bulk of their equity to
land trusts and government as conservation easements.
This article is not intended to offer legal advice. Landowners
should consult specialized real estate attorneys for expert advice
when embarking on such complex legal relationships as those created
by conservation easements.
Introduction
The Problem of Perpetual Inflexibility
The fundamental objections to conservation easements are that
they divert most of the landowner’s equity and that, with
fewer and fewer exceptions, they are perpetual, splitting the
title in two for the indefinite future. The objections point to
the harm to the landowner and the threat to preservation of the
nation’s free heritage for future generations. Connected
to both these objections is the problem that conservation easements
are set in stone.
Because conservation easements are inflexible, they provide little or no allowance for future changes in circumstances and for future realizations by the landowner that vague, overly broad, or, on the other hand, overly specific, or even formerly unnoticed, clauses, have become burdensome.
The Threat of Third Party Enforcement
Property owners are largely unaware that the Uniform Conservation
Easement Act, a model law that has been enacted in one form or
another in at least half the states of the Union, can be enforced
by third parties.
Even in the simplest type of conservation easement transaction, the two original parties to the easement—the landowner, known in legal terms as the “grantor,” and the land trust/government, or “grantee,”— may be placed in a position that is not ordinarily sanctioned in our traditional system of contract law. In contract law, only the parties to the contract can enforce it. There are generally two parties. But when the state has enacted the important parts of the Uniform Conservation Easement Act, a third party, non-profit organization that is not the land trust that holds the easement can also enforce the terms if the grantee, the usual author of the easement, puts the third party’s name in the easement. This means that both the landowner and the land trust or government agency may be satisfied with the way the conservation easement is working out so far, but another party with whom the landowner has no dealings except to note the party’s name in the complex easement language for some purpose, can bring the landowner to court.
The topic of this feature of the Uniform Conservation Easement Act is avoided by land trusts when they promote conservation easements. In fact, the seeming good faith relationship between the landowner and the particular land trust with whom he is dealing is important to facilitate the sealing of the transaction.
Because third party enforcement is buried in the body of state law and the easement’s fine print, the landowner may not realize that another organization with which he has never had any dealings can go to court to enforce the easement.
Renegotiation Provision
Unforeseen circumstances may arise in the future where the grantor
of the conservation easement may find that he cannot tolerate
the original terms of the easement. Since the conservation easement
is a perpetual encumbrance, the owner cannot count on being able
to alter its terms in the future. A possible, but untried, solution
to the problem of perpetual inflexibility is to incorporate into
the original conservation easement a pre-agreement for
periodic renegotiation.
The concept behind the renegotiation provision, is that the grantor would set up a procedure, agreed to by both parties, whereby certain clauses in the conservation easement can be periodically renegotiated.
Initially, the conservation easement could establish a five-year review process with both parties. A mediator or mediation process could be specified. But the essential feature would be that the cited restrictions in the conservation easement cease to be in effect until they are renegotiated to the satisfaction of both parties.
After the five-year initial review, standardized ten-year reviews would follow on a regular basis, as provided for in the original easement.(1)
Potential Areas for Renegotiation
• Assuring Adequate Water Supply for Ranching
In western states where water rights may be quantified in a conservation
easement, the stated goal of protecting ranching could be foiled
if the water rights reserved to the rancher turn out to be inadequate.
A renegotiation clause specifically focused on water rights provisions
would allow future revelations of realistic water needs to be
applied in a practical way.
• Other Likely Areas for Possible Renegotiation
These include access of cattle to riparian areas and other aspects
of protection of riparian areas; access by recreational vehicles;
development of aggregate resources to maintain roadways; or even
changes in focus of land use over the years to, say, educational
uses requiring more structures.
• Vague or Overly Broad Terms
The renegotiation clause could also be used to deal with future
realities when vague terms in the original conservation easement
are applied as scientific knowledge becomes available or new opinions
predominate. For instance, a conservation easement provision for
land of Champion International Corporation that passed to the
Conservation Fund, then to the State of Vermont, then to the Vermont
Land Trust, then by quitclaim deed to The Nature Conservancy,
included the following:
“As primary purposes, a) to conserve and protect biological diversity, wildlife habitat, natural communities, and native flora and fauna on the Protected Property, and the ecological processes that sustain these natural resource values as these values exist on the date of this instrument and as they may evolve in the future...”(2)
Even though this land is considered to be preserved as “working forest,” this “primary purpose” clause could relegate a substantial portion of timberland off-limits to production or access if new species that “evolved in the future” are deemed worthy of protection. Renegotiating such terminology could save the productive future of the timberland.
• Future Penalties, Real Estate Taxes
One clause that a major land trust includes in some western conservation
easements could take the grantor by surprise if the state legislature
changes real estate tax law. This clause requires that if the
law changes so that the real estate tax benefit is eliminated,
the tax will fall entirely on the grantor, leaving the land trust
free and clear. A rancher might be in the untenable position of
not being able to pay real estate taxes if this clause takes effect.
Before agreeing to a conservation easement, the grantor should review all clauses involving affirmative duties or potential penalties imposed on the grantor and consider whether any should be subject to renegotiation.
• Changes in Ranching Needs
Conservation easements can be lengthy documents that attempt to
set up inflexible ranch management plans into the indefinite future.
But new needs may arise and improvements be desired. For instance,
it might be beneficial for previously uncultivated pasture to
be cultivated to enhance the ranch’s productivity and viability.
It might be critical to ranch operations to change water distribution
and storage, such as by diverting water to a pond or stock tank.
• Foiling Third Party Enforcers
Landowners may be vulnerable to third party enforcements in unexpected
ways. For instance, some conservation easements with the stated
primary goal to protect commercial forestry values also contain
a clause that allows natural resource values to be paramount.
The very broad wording in the “primary purpose” in the
Vermont conservation easement cited earlier, “to conserve
and protect biological diversity, wildlife habitat, natural communities,
and native flora and fauna,” could be construed in the future
to argue for closing all access roads because they are routes
for infestation of “natural communities, and native flora
and fauna” by what preservationists decry as “invasive
species.”
As non-profit legal activist groups who back “The Wildlands Project” activate their litigation potential as third party enforcers of conservation easements, or as legal activists under state or federal environmental law, it would not be surprising that broad clauses giving them jurisdiction to protect natural resources become their legal lynch-pins.
At this point, however, if a renegotiation clause exists, it could be activated as a defense by either of the two parties to the agreement, the grantor or the grantee. The offending clause could be renegotiated out of the conservation easement. This defense might make the point of the litigation moot.
The uncertainty about enforcement of the conservation easement in the future should be a great incentive to negotiate more protections for the original landowner into the conservation easement.
Additional Preparation
In addition, conservation easements have many other troublesome
features that argue for special protections for the landowner.
Although the land trust may provide much of the terminology when
the landowner grants a conservation easement, the land trust becomes
the dominant party in the split title. The easement is legally
considered a restrictive covenant. The landowner becomes the “residual”
owner, whose rights are defined by the remainder left after the
easement holder owns what is defined for itself.
Common law may have protected the landowner from the enforceability of broad, distant negative encumbrances on land of the nature of those in today’s conservation easements. However, the Uniform Conservation Easement Act contains an important set of provisions with the purpose of nullifying common law protections for the integrity of title to land. This situation argues even more that the landowner who is selling a conservation easement needs to be protected from the uncertainties of the future.
Although various conservation easements have been the genesis of litigation in recent years, information available to PRFA does not present any evidence that these elaborate, lengthy modern conservation easements that restrict large tracts have been tested in court.(4)
Informed consent should be also attempted through a checklist of areas of interest to the landowner. Although such a checklist is only partial protection, it is a step toward giving the landowner a better footing during negotiations. Even though PRFA disapproves of conservation easements in principle, we have published a short checklist(5) giving some critical ideas for the landowner to consider in addition to the ideas for renegotiation contained in this article.
Finally, advocacy groups such as those representing ranching,
forestry, and farming, should promote legislative remedies, perhaps
incrementally, beginning with the repeal of provisions for third
party enforcement. Such associations should monitor the state
legislature for activity related to the Uniform Conservation Easement
Act where it has not yet been enacted.
Notes:
Notes:
(1) Terms of renegotiation provisions should comply with IRS law
and other applicable statutes.
(2) “Study Committee on West Mountain Wildlife Management
Area Leaseholds,” January 2002, Vt. Leg. 144376.2, Attachment
C: Champion - State Lands-Grant of Development Rights, Conservation
Restrictions, Public Access Easement and Right of Entry, Para.
l. A. 1.
(3) Because this idea is untried, however, expert written commentary
is invited from others. Keep in mind that the concept is, that
to protect the property owner from litigation, any broad natural
resource protection clause and other economically critical clauses
would have to be renegotiable.
(4) Information about experience in any state with litigation
related to elaborate modern conservation easements would be welcomed.
(5) “Informed Consent,”
Positions an Property Vol. 5 No. 1, p.11, PRFA July. 2000.
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