Selling a Conservation Easement
(An excerpt from 69
Ways To Make Money In Real Estate)
By Steve Gillman - 2005
Sell a conservation easement, and you get to keep the property
while making money on it. Of course, you may reduce the value
of the property by doing this. But this may not matter if you
have no plan to sell.
These kinds of easements are getting more common every year.
They are a way to guarantee that a piece of private land will
remain undeveloped. Sometimes owners give an easement away, and
get a tax deduction for it. Other times they are paid. Whether
or not this is a taxable event is something you'll have to discuss
with a tax professional.
Who pays? Almost always it is a private environmental organization.
The Nature Conservancy is one of the most active in this area.
A Conservation Easement Example
Suppose you have a home with twenty acres of forest spread
out along a river. Conservancy groups have been wanting to keep
the riverside undeveloped. They are afraid that properties like
yours will be split up so more expensive riverfront lots can
be sold. Even if you have no intention of doing so, the next
owner might. How can this be prevented?
A permanent conservation easement that is attached to the
title of the land can keep it from ever being developed. The
easement may include all of the land except for the acre or so
around the house. This allows you to continue using your property
as you normally would have. You might receive $10,000 for granting
such an easement.
The easement you grant may include the right for members of
the conservation organization to enter the land to do research
or fix erosion problems. It might include your right to still
collect firewood, if you wish. It may even include the right
for the organization to put a small hiking trail across part
of the land. All of these things are negotiable, but permanent
once you sign the contract.
Usually, an easement of any kind reduces the value of a property.
This may be a small reduction in value, or it may even cut the
value in half. It depends on what the land might be used for.
A perfect piece of development land might lose most of its value
if it is no longer possible to develop it. This is why owners
are compensated for these easements.
While there may be a theoretical reduction in value with an
example like the one above, it isn't certain. Perhaps future
buyers are all likely to desire the whole twenty acres with the
house, with no intention of developing or changing any part of
the land except around the house. In this case, a conservation
easement may have a negligible impact on the value.
If you are looking to make an offer on a property, you might
negotiate with a conservation group for the purchase of an easement,
while simultaneously negotiating the purchase of the property.
You could buy the property at a good price, sell an easement,
and then sell the property at the same price or more and so make
a profit. This is unlikely, however. Selling a conservation easement
is a primarily a way to protect land with land you already own
or intend to keep - and hopefully make a little money for doing
so.
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