A conservation easement is an agreement between a landowner and a qualified land trust, conservation group or government agency regarding the future uses of private property.
An appraiser will perform an analysis of the market value of the property based on the “highest and best use” of the land and what similar properties in the area are selling for without the encumbrance of an easement. The appraiser compiles recent comparable sales of lands in the area to determine the approximate market price of the property. This is known as the “Before” value—i.e., the value before an easement is placed on the property.
The appraiser will then determine the value of the property with the easement restrictions in place. Most of the time this means that the appraiser will look at properties that do not have the potential to be developed beyond what the easement allows on the property he/she is appraising for the easement. This is referred to as the “After” value—the market price after the easement is placed on the property. The difference between these “Before” and “After” prices is the value of the easement.
The value of a conservation easement is based on both the extent of the restrictions a rancher spells out in the easement and the market for land in a given region. The more development rights a landowner gives up, the more the easement is worth.
The market for properties with development potential as well as conservation properties varies greatly from region to region. Typically, most ranchers who give or sell easements only reserve the right to build a limited number of new residences to accommodate family members so that they can live on the ranch and help with its operation. As a general rule in these cases, the easement value will run from 35% to 65% of the market value of the property without the easement. However, there are many variables. We have seen the range of easement values span from 20% all the way to 90% in some rare cases.
In fact, a lawsuit over endangered species violations or habitat destruction can be filed whether or not a property has a conservation easement. Because an easement is a recorded document, it is true that any member of the public can have access to the easement document and find out what restrictions are placed on the property. Lawsuits are uncommon and generally can occur only if the easement holder fails to monitor and enforce compliance with the easement conditions.
The Rangeland Trust works hard with ranchers to make sure that each easement anticipates their long-term needs for the future and that they are comfortable with all terms and conditions of the easement. In addition, the Rangeland Trust has a process in place to ensure that if a ranch is ever sold, the new owners are made aware of the easement and the Rangeland Trust’s role as an easement holder. All these steps help minimize the potential of a legal action from a third party.
It has been the experience of land trusts in California and other states that, rather than making a property more vulnerable to outside attacks over restrictions, ranches with easements are generally the last to be scrutinized for violations. This is because outside groups and government agencies tend to realize that ranchers who have easements are supportive of conservation and are good stewards of the land, and that having a land trust as a “conservation partner” ensures sound management of all environmental resources on the land.