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Conservation Easements

Owning land is similar to owning a bundle of rights. With a conservation easement, the landowner chooses to give away some of the rights, such as the right to subdivide, to cut down trees, or to build on the property, in order to protect the natural aspects of the land.
A conservation easement enables the landowner to protect the land in perpetuity while retaining ownership. If you place an easement on your land, you may continue to use the land just as you have in the past as long as the use does not conflict with the terms of the easement. In addition, you can also sell, lease, or convey the land subject to the explicit terms of the easement. The responsibilities and rewards of ownership continue, and unless you specify otherwise, you still retain full control over public access.

A conservation easement is created to suit your needs – to protect the land as you wish and to allow the activities that you want on your land. Easements are often written to encourage good agricultural and forestry practices and prohibit or limit development or commercial use of the land that would disturb the natural qualities of the property. The conservation easement does not have to protect the entire property but may include only the portion that you choose to protect. The easement can cover a few acres or several thousand acres.

Landowners grant conservation easements primarily to protect land that they value and that will be important for its natural attributes in the future. However, the financial benefits of granting a conservation easement in perpetuity can be significant.

A conservation easement donated to a qualified agency is not tax deductible unless its purpose is to protect land for conservation. To the IRS, conservation means the land under easement is protected for the public good – for the preservation of significant wildlife habitat, open space, farmland, or watershed.

An easement usually decreases the market value of the land as it limits the potential development and use of the property. This reduction in market value can reduce estate and inheritance taxes. Frequently, heirs who have inherited the family lands must sell all or a portion of the property to pay the estate or inheritance taxes. However, if, due to a conservation easement, the market value of the land has been reduced prior to the time of death, the estate taxes will also be reduced. Granting a conservation easement can be important for your heirs as well as for the future of the land.

During your lifetime, a conservation easement donated to a charitable organization can be claimed as a deduction on your income taxes. In contrast, if the easement is sold, the amount you receive as payment would be taxed by the IRS. In either case, there may also be a property tax benefit. Easements will affect the fair market value of the land.

Mutual Covenants

Instead of involving a conservation agency, a mutual covenant involves only the nearby or adjacent landowners who are interested in protecting their land. The landowners would enter into an agreement controlling the future use of their land through restrictions agreed upon by all the participating landowners. Such agreements are permanent and could be enforced by any of the landowners or future landowners of the involved properties.

Mutual covenants differ from conservation easements in a couple of ways. First, it would be a person or a group of people rather than a conservation agency or organization enforcing the restrictions. Knowing that all their neighbors are aware of what can or cannot be done on their property is usually enough to keep landowners from breaking the terms of the agreement.

Also, there are the financial considerations: mutual covenants can reduce property taxes and estate taxes. The local assessor may use them, and the appraiser may take them into account when determining the value of an estate at time of death. However, the loss in market value from mutual covenants cannot be claimed as a charitable deduction on income tax returns.


Leases are rental agreements. They provide an alternative if you do not wish to transfer your land to a conservation agency or organization but want to see it used or protected by such a group for a period of years. A land management agency pays rent to you for the temporary control of your property – a lease allows unrestricted and exclusive use of the land by the agency for a given number of years. Certain use restrictions can also be incorporated within the lease. Moreover, you can include provisions that terminate the lease if the conservation group does not use the property as directed.

Even if rental payments are not received for the use of the land, there may be other financial incentives that accompany the leasing of land. Although it is not possible to take a charitable deduction for the value of a lease that is donated, any impact of the lease on the value of the land would be taken into account when estate taxes are calculated.

Management Agreements

A management agreement is a legal contract between you and a conservation organization requiring you to manage the property in a specific way for a determined amount of time. A management agreement is good for landowners who have already been managing their land for conservation purposes. Frequently, management agreements are voluntarily granted by landowners and are designed to suit both parties.