Private landowners hold more than 70 percent of Pennsylvania's forests and woodlots. For many such landowners, especially those without children to leave their land to in their wills, it may seem like they have no other option but to expose their land to the possibility of development when they are gone. However, many options exist to preserve privately owned land in its present state for the foreseeable future. This post intends to serve as a summary of the wide variety of methods open to a landowner looking to do so, and will discuss transfer to a land trust, conservation easements, deed restrictions, and government programs.
Donation or Sale to a Land Trust
Generally, a land trust’s preferred method of acquisition is outright donation by the landowner. Donations can generate substantial tax benefits for the landowner. The donor’s federal income and estate taxes often can be significantly reduced with a properly structured donation. There is also generally a great feeling that comes along with making a donation of such magnitude to a charitable organization. Land that has no specific conservation value may still be donated to a land trust for its monetary value. The land trust can then sell the property to finance other land protection projects or possibly trade the land for conservation property. However, this does not protect the donor’s property. One major benefit is that there are also many varieties of donative transfer from which a donor can choose, such as a transfer via will, remainder interests, or many forms of sale. Consider talking with an attorney about which of the many options would best meet your needs.
Conservation Easement
A landowner may not wish to give up all control over his land, and a land trust may not wish to take full ownership for any number of reasons. In these cases, a landowner can work with a private attorney or reach out to a land trust on their own to secure a conservation easement. A conservation easement is an agreement between a landowner and a conservation organization that limits certain specified uses on all or a portion of a property for conservation purposes while leaving the property in the landowner’s ownership. Easements are almost without exception of perpetual duration. Conservation easements are usually acquired by way of donation, and the easement’s terms are binding on all future owners of the eased parcel.
Every conservation easement is unique. The terms of the easement can be tailored to the particular property and to the particular needs and goals of the landowner and conservation organization. Conservation easements qualify as a charitable donation of a partial interest in real estate (under §170(f)(3)(B)(iii) of the Internal Revenue Code) to a qualified organization, which could lead to substantial tax benefits. The difference in the value of the property with the easement to the value pre-easement equates to the value of the easement. The landowner could also have the property re-assessed, which could reduce the amount of property taxes paid on it. Furthermore, the amount of estate tax paid at transfer upon the landowner’s death would be reduced given the reduced value of the property.
A conservation easement also adds a level of certainty in its enforcement over a generic deed restriction. As will be discussed below, a deed restriction generally requires someone with standing to enforce it, and Pennsylvania courts strictly interpret deed restrictions to limit who can enforce them. A conservation easement, on the other hand, is enforceable by whoever holds it and many other potential parties. By granting a conservation easement to a land trust, a landowner can almost guarantee that a third party will be around to enforce the restriction against any subsequent owner of the property. Since conservation easements are generally granted “in perpetuity,” the protection of the easement lasts far into the future.
Deed Restriction
A deed restriction, or a restrictive covenant “running with the land,” is quite similar to a conservation easement in this context. Given the close similarities, consider discussing which would suit your needs best by consulting an attorney. A restrictive covenant is “a restriction in an instrument relating to real estate by which the parties pledge that something will not be done." Doylestown Twp. v. Teeling, 635 A.2d 657, 661 (Pa. Cmwlth. 1993). Deed restrictions share many of the benefits and limitations of conservation easements. A change in land ownership does not change the restriction. Deed restrictions can also be difficult to change, requiring the consent of not only the landowner and those with standing to enforce the restriction, but a change may also require consent of every single heir of the person who imposed the original covenant.
One of the biggest weaknesses of a deed restriction is that it can only be enforced in court by a party with standing, such as a neighboring property owner or a specifically named third party. A party must show that they were an intended beneficiary of the restriction, and this can be a hard bar to meet. N. Chestnut Hill Neighbors, Inc. v. Chestnut Hill College, Inc., 29 Pa. D. & C.5th 179, 191 (Pa. C.P. 2013). In Pennsylvania, deed restrictions are disfavored in the law. One implication of this is that all doubts are resolved against the application of the restriction. See, e.g., Kessler v. School Dist., 30 A.2d 117, 118 (Pa. 1943). The easiest way to confront these issues is to carefully draft the restriction to grant standing to third party land trusts and other interested beneficiaries who can step in to enforce the restriction. Deed restrictions must also be clear in their language to avoid ambiguity that would be resolved against application of the restriction.
Government Conservation Programs
Many government conservation programs tend to protect only agricultural farmland or exist to provide funding to land trusts for conservation initiatives. However, the Clean and Green Program creates the opportunity for landowners to have their property re-assessed at a lower value if the land meets certain criteria, such as spanning more than ten acres of forestland. Details of other federal programs are available at http://www.landtrustalliance.org/topics/federal-programs. As with any dealings with government, an attorney can help to simplify the process.
For more information, visit the Pennsylvania Land Trust Association’s fantastic comprehensive guide on land conservation, Conservation 101 or contact a local attorney.
By Adam Cetra – Adam is a rising 3L at the University of Pittsburgh School of Law and a Legal Intern with Fair Shake Environmental Legal Services for Summer 2016. He has a strong interest in a broad range of environmental issues, including land conservation, clean water and air, and animal welfare.