What is a preservation easement?Updated 02/20/2008
The term “preservation easement” is commonly used to describe a type of conservation easement – a private legal right given by the owner of a property to a qualified nonprofit organization or governmental entity for the purpose of protecting a property’s conservation and preservation values. Conservation easements are used to protect land that has outdoor recreational value, natural environmental value (including natural habitat), open space (including farmland, forest land, and land with scenic value), or land that has historic, architectural, or archaeological significance. Preservation easements are conservation easements whose principal purpose is to protect a property with historic, architectural, or archaeological significance, although the easement may also protect natural land values as part of a property’s historic setting. (Correspondingly, other types of conservation easements held by conservation organizations or land trusts typically are given for the purpose of protecting natural characteristics of a property, but they may also protect historic resources, such as historic farmland or archaeological sites.)
A preservation easement is considered a “partial interest” in real property – the property owner continues to own the property but transfers the specific set of rights represented by the easement to the easement-holding organization. Typically, a preservation easement protects against changes to a property that would be inconsistent with the preservation of the property, such as demolition of historic buildings, inappropriate alterations, or subdivision of land. The easement may also protect against deterioration by imposing affirmative maintenance obligations. The restrictions of the easement are generally incorporated into a recordable preservation easement deed that is part of the property’s title (in legal terms, it “runs with the land”) – and this title interest is binding both on the present owner and future owners.
Preservation easements may be described in some states as “preservation covenants” or “preservation restrictions.” Although the terminology may vary, the interest conveyed is generally the same.
Conservation and preservation easements are created under state law – most states have specific enabling laws that authorize the creation of conservation and preservation easements as discrete interests in real property. The terms (and the requirements) of an easement may vary depending on the laws of a particular state – and, as such, it is important that property owners considering donating an easement, and that organizations considering accepting an easement, work with a lawyer familiar with the laws of the state in which the property in question is located. In some states, for example, state and local approval must be obtained before an easement will be deemed valid under state law.
Even though preservation easements are created under state law, easement donors seeking federal tax incentives will need to meet the requirements of the
The duration of preservation easements may differ. Some easements are for a term of years, with the interests of the preservation organization expiring at the end of the term. A common example is an easement that is imposed as a condition for a grant of financial assistance from a state or governmental authority or a nonprofit organization. Most easements, however, are written to last permanently. Easements that qualify for the federal tax deduction must be perpetual.
Typically, preservation easements address five basic issues: (1) What physical features of the property are covered by the easement; (2) What activities by a property owner that could damage or destroy significant historic or architectural features are absolutely prohibited; (3) What activities are allowed, subject to the approval of the easement-holding organization; (4) What activities are permitted by the owner as a matter of right; and (5) what type of affirmative maintenance obligations are required to be undertaken by the owner. The easement will also address other “boilerplate” issues, such as insurance, public access, amendment, and casualty damage.
There are many kinds of historic properties – and easements are as varied as the properties they protect. Most preservation easements protect, at the very least, the exterior character-defining features of a historic property, but many go beyond this to include interior features, the historic setting of a property, and/or specific landscape features. Most easements restrict the owner’s use of development rights such as subdivision or air rights. Some allow the owner to exercise those rights, but only as approved by the easement-holding organization. Some prohibit additions or construction of secondary structures; others permit them if approved as compatible with the historic character of a building.
The criteria used by preservation organizations in deciding upon the appropriateness of changes proposed by property owners may vary, but many organizations rely on the Secretary of the Interior’s Standards for Rehabilitation or the Secretary of the Interior’s Standards for the Treatment of Historic Properties. Some organizations follow the criteria established by a local historic preservation commission for review of changes to historic properties in a designated historic district under local law.
An easement is a relatively flexible tool. It can be crafted to meet the specific characteristics of the property, the interests of the easement-holding organization, and the property owner’s interest in having a property that will continue to have a viable productive use.
The obligations of an easement run in two directions: the owner of the property has the obligation to comply with the terms of the easement, and the easement-holding organization has the obligation to monitor and enforce the easement. From the standpoint of the easement-holding organization, the substantive benefits of preservation easements can greatly advance its preservation mission. On the other hand, easements may require a significant commitment of staff time and resources into the indefinite future, and they should not be undertaken lightly.