Capital Generation - Issues to ConsiderProtecting Your Interests in the Conservation Easement Agreement
The purpose of a conservation easement is to assure the buyer of the easement, usually a private or publicly owned land trust, that your land will be conserved for maximum environmental benefit through present and future ownership. Generally this means that current agricultural and residential uses may remain in practice but that further residential or commercial development may not occur.
Selling a conservation easement is like any transaction: you have the right to protect your interests through the advice of counsel and information from sources such as Remuda Financial. As a private agreement, the scope is entirely controlled by the parties’ intentions as determined from the language included in the easement contract.
(Note: Remuda Financial is not a broker or fiduciary party to conservation easement contracts. We view them as a potential vehicle to establish your Captive Bank.)
Some issues requiring understanding in the easement contract include:
- Definitions are always the first thing to look at when considering the fairness of an easement: as an example what are the “conservation values” in question?
- Limitation of uses: may the land be converted to different agricultural uses or expanded down the road (“agricultural use” needs to be defined)?
- Your ability to sell or bequeath the land and what that means to your heirs.
- Your right to construct or install additional homes, buildings or agricultural facilities. Needs to be well-thought out in advance.
- How will the easement affect the value of the land for taxation purposes? What will the new tax rate be based on?
- What rights do either party have to change the scope after the agreement is signed?
These are just a few of the potential issues that must be addressed in the interests of both parties. Contact us for information about conservation easements in your state and whether or not you consider them a viable option to fund your captive bank.
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