Managing Conservation Easements in Perpetuity - Environmental ...

Legal Reasons
Internal Revenue Service Treasury Regulations Section 1.170A-14
requires that qualified conservation easements (easements that qualify
for federal tax benefits) must be granted exclusively for conservation
purposes. To be eligible for a federal income tax deduction, the
conservation organization must protect the purposes of the conservation
easement forever. This requirement means that your land trust
must address every violation; however, how to address those violations
is left to the land trust’s best judgment and discretion. Your land trust’s
conservation easement violation policy and procedures will articulate
that best judgment and provide uniform steps to apply it on a caseby-case
basis for each individual conservation easement and owner of
conserved land.
The IRS is now scrutinizing land trusts to ensure adherence to these
regulations. In December 2008, the IRS finalized a new Form 990 and
instructions (see http://www.irs.gov/charities/article/0,,id=185561,00
.html). These forms and instructions are required to be used for filing
in 2009 for reporting on tax year 2008. These documents ask land
trusts to demonstrate that they are committed to, capable of and do,
in fact, uphold their conservation easements. To maintain your land
trust’s tax exempt status, your land trust needs to demonstrate that
it keeps adequate records, amends conservation easements only in
an appropriate manner and appropriately enforces all conservation
easements.
In addition to helping the land trust meet federal law, a good violations
policy helps in the event of legal action. Having a policy that
addresses every violation appropriately ensures that your land trust
maintains its right to enforce its conservation easements because you
have created a pattern of consistent responses to every violation situation.
Being able to demonstrate such consistency is essential if your
land trust ever winds up in court defending or enforcing an easement.
Courts may determine that your land trust “waived” its enforcement
rights by being casual or capricious in addressing previous violations.
Also, note that your land trust may forfeit its right to pursue a judicial
remedy if you wait too long after discovering a violation. Having a
policy and following it in every case will help your land trust act effectively
in the case of a violation.
Violation Resolution and Easement Defense 265