The idea that a landowner can convey certain rights on his or her land while retaining other rights – the notion that individual rights in the land could be separated from the "bundle" of rights represented by the ownership of the land – is rooted in hundreds of years of English common law, on which the U.S. legal system is based.
Conservation easements, however, are a more recent creation, and nearly all of the states have enacted laws specifically authorizing the creation of conservation easements as valid interests in land. These laws are generally modeled after the Uniform Conservation Easement Act adopted by the National Conference of Commissioners on Uniform State Laws in 1981.
Tax benefits for gifts of conservation easements were first provided by Congress to promote conservation in the United States in the Tax Reform Act of 1976 and the Tax Reduction and Simplification Act of 1977.
In 1980, when the easement donation provisions in those laws were about to expire, Congress passed the Tax Treatment Extension Act (creating IRC section 170(h)), which made permanent the income tax charitable deduction benefits for gifts of qualified conservation contributions. More recently, in 1997, Congress passed the Taxpayer Relief Act, which created a new estate tax benefit (IRC section 2031(c)) for landowners who donate conservation easements.
The Nature Conservancy played a leading role in the development of the early federal legislation and the administrative regulations implementing those laws. In addition to the federal tax benefits, some 12 states have enacted laws providing for state income tax credits for gifts of conservation easements or exempting the sale of conservation easements from state income tax. Finally, other countries, notably Australia and Canada, have enacted laws to create tax benefits for conservation easements.
Over the years, as conservation easements have been constructed and tested, much has been learned about how best to structure them and their legal language. Conservation easements created today reflect decades of experience gained by legal and conservation practitioners and the courts.
Still, easements are increasingly complex, and many are designed to affect a wide range of land uses. As a result, care must be taken to ensure easements are properly structured to reflect the intent of the landowner and to put in place protections that meet specific land conservation purposes and are of benefit to the public.
March 01, 2011