LANDOWNER STEPS TO COMPLETING AN EASEMENT
Land conservation transactions are required to meet a number of legal and tax code requirement
that must be taken and documented prior to closing. They also may involve “hidden” costs that
can surprise property owners as well as add costs to a project. The purpose of this document is to
assist the property owner in understanding the steps that must be completed to conserve
property and additional costs that are his/her responsibility.
CONSERVATION VALUES
For the Eagle Valley Land Trust to participate in a land conservation transaction, a property must
meet one or more criteria established by the Internal Revenue Service. These include lands that
are valued as scenic open space, lands with historic value, lands with wildlife value, lands with
water and/or riparian value and lands with educational value. For the donation of an easement to
be tax-deductible, the project must meet the requirements of IRC 170(h) and accompanying
Treasury Department regulations, Colorado Revised Statues, and/or any other federal or state
requirements. The Land Trust reviews each transaction for consistency with these requirements.
CONSERVATION EASEMENT/ LEGAL FEES
The Eagle Valley Land Trust has developed a model easement that is available on its website
(EVLT.ORG). This model is a good starting point for the property owner and Trust to begin
drafting a conservation easement. Once there is agreement on the general terms of the easement
in an initial draft format, the Land Trust will refer the document to its legal counsel to review and
finalize on behalf of the Trust. We recommend that property owners similarly retain an attorney
to develop and/or review the easement before the document is signed and recorded. The Eagle
Valley Land Trust works with a number of attorneys specializing in land transactions and can
provide a list of names. The costs for legal services are the property owner’s responsibility. The
Trust will submit to the owner a detailed invoice of its legal costs, which typically range from
$4,000 to $10,000 (depending on the size and complexity of the easement), reimbursement of
which is a voluntary tax-deductible contribution to the Trust.
RECORDING CHARGES
Conservation easement deeds are subject to a Transfer Fee, payable to the Eagle Valley Land
Trust and Recording Fees, payable to Eagle County.
TITLE COMMITMENT
The Land Trust will need a recent copy of a Title Commitment that, at minimum, provides a legal
description of the property, identifies any mortgages or liens on the property, and reports on the
status of mineral rights.
MINERAL/REMOTENESS LETTER
If the Title Commitment reveals that the owner does not own 100% of the mineral rights on or
under the property, the IRS requires that a “mineral remoteness” letter be prepared that indicates
that the probability of extraction or removal of minerals from the property by surface mining by a
third party is “so remote as to be negligible”. This report needs to be prepared by a professional,
certified geologist.
MORTGAGE SUBORDINATION
If the property is mortgaged, the owner will need to obtain a mortgage subordination agreement
from the mortgage holder. This agreement protects the easement in the event of foreclosure.
There may be a fee for preparing, executing, and recording such an agreement.
TITLE INSURANCE
Title Insurance is required at the time of closing.
SURVEY
A survey is required. The cost of the survey is dependent upon such factors as acreage, survey
method, and property terrain. The property owner should request that the surveyor provide an
estimate before the work begins and a statement of how the fees will be charged and what
additional costs might be involved.
ENVIRONMENTAL ASSESSMENT
It may be necessary to complete an Environmental Assessment of the property to determine the
probability that the property has been contaminated with toxic waste or hazardous materials. This
report is required in connection with limiting certain liabilities and needs to be prepared by a
qualified consultant.
APPRAISAL
In general, for a conservation easement to be tax-deductible, the easement must comply with
170(h) of the Internal Revenue Code and associated sections of the Colorado Revised Statutes. If
the property owners wish to claim the deduction, then IRS regulations require that the landowner
retain the appraiser to prepare a qualified appraisal to determine the value of the easement in
order for the conveyance of the easement to qualify as a charitable contribution. The Land Trust
will provide a list of qualified appraisers experienced with conservation easement appraisals and
recognized by Great Outdoors Colorado (GOCO). If the property owner chooses not to use the
services of a GOCO-recognized appraiser, the Trust requires a review of the appraisal conducted
by a GOCO-recognized appraiser. The property owner is responsible for costs of the appraisal.
Should the property owner select an appraiser not on the suggested list of appraisers, the
landowner will also be responsible for the costs of a review appraisal.
BASELINE/PRESENT CONDITONS REPORT
A baseline is a comprehensive report of the condition of the property and it’s identified
conservation values at the time the easement is finalized. This document, which must be
completed prior to closing, is generally prepared by a biologist or other qualified professional.
The report should include, at minimum, and inventory and report of the values that support the
conservation of the property, the characteristics, current use and status of improvements on the
property, and supporting maps and photographs that are identified by exact GPS-identified
photopoints. The report serves two purposes: (1) it is a requirement of the IRS to document the
condition of the property at the time of the conveyance of the easement and (2) it is the
benchmark against which any violations of the terms of the easement are measured. The cost,
which is the owner’s responsibility, generally ranges from $2,800 to $5,000 depending on the
size and complexity of the property.
FORM 8283
If the owner is claiming a federal tax deduction, it will be necessary to file a form 8283 signed by
the appraiser, the owner and the Trust.
STAFF FEES
Staff costs for providing professional services and coordinating the project are $10,000 per
project for donated easements and $15,000 for purchased easements.
STEWARDSHIP AND LEGAL DEFENSE CONTRIBUTIONS
When the Eagle Valley Land Trust accepts a conservation easement from a landowner, it takes on
a perpetual obligation to uphold the terms of the easement. To meet this obligation, the Land
Trust Board of Directors maintains both a Stewardship Fund and a Legal Defense Fund. This
policy also supports IRS regulations which state that the easement holder “must have the
resources to enforce the restrictions" of the easements. It is the Trust's expectation that the
landowner make a one-time, voluntary, tax-deductible contribution to these funds. The Land
Trust will provide the landowner with guidelines for the contribution based on the reserved rights
and long-term likelihood of violation.
OTHER FEES
Some landowners with complex estate and income tax considerations may feel it is necessary to
seek additional professional advice. This is a personal decision and is dependent upon each
property owner’s particular situation.
METHODS OF PAYMENT AND DEDUCTIBILITY
PAYMENTS and DEDUCTIBILITY
The Eagle Valley Land Trust is open to arranging acceptable terms to cover the costs of services
provided. Some options include cash payments, timed payments, donations of land for resale (for
appropriate uses acceptable to the donor), and use of proceeds from Colorado Income Tax Credit.
All costs above, if incurred in conjunction with a charitable donation of land or conservation
restrictions, are deductible for income tax purposes.
THE EAGLE VALLEY LAND TRUST STAFF AND/OR BOARD MEMBERS MAKE NO
REPRESENTATIONS OR ASSURANCES ON LEGAL MATTERS, FINANCIAL
MATTERS INCLUDING TAX ADVICE, AND/OR MATTERS OF REAL ESTATE. WE
ENCOURAGE PROPERTY OWNERS TO OBTAIN INDEPENDENT PROFESSIONAL
ADVICE.
THE EAGLE VALLEY LAND TRUST WILL NOT KNOWINGLY PARTICIPATE IN A
PROJECT WHERE IT HAS SIGNIFICANT CONCERNS ABOUT THE TAX
DEDUCTION.