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Selling a Conservation Easement

(An excerpt from 69 Ways To Make Money In Real Estate)

By - 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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Houses Under Fifty Thousand | Selling a Conservation Easement