The Easement Donation Process: Step by Step
Below is a simplified outline of the steps in a conservation easement donation and the ways in which Conservation Partners, LLC (“Conservation Partners”) can work with you, your easement holder, and your professional advisors to facilitate the process.
If you are interested in having Conservation Partners work with you and your professional advisors in connection with your easement donation, land preservation tax credit application, and the marketing and sale of your tax credit, please call our office at 540-464-1899 or emailing us
We will meet with you by telephone or in person to talk about your land and your easement donation plans. In most situations, we are able to visit the land you plan to protect.
If you don’t already have professional advisors, we can help you find an experienced attorney, appraiser, tax advisor, and any other advisor you need. In our decade of experience working with hundreds of easement donors throughout Virginia, we have found that the single most important factor determining the success of an easement donation is the quality of the professionals hired by the donor. We have worked extensively with conservation professionals in Virginia and across the country, and we have developed a list of experienced attorneys, appraisers, tax advisors, and other advisors we have worked with. Please contact Conservation Partners to discuss the professional advisors who might be right for your situation. We also can provide a copy of our Professional Advisors booklet that includes our list of professionals and discusses in more detail the importance of working with expert professional advisors who have significant experience in the land conservation field
Certain government agencies as well as private non-profit organizations known as “land trusts” accept easement donations. Conservation Partners can consult with you and your attorney to help you decide which easement holder(s) you should approach with your donation; depending upon the nature and location of your property, you may be able to choose among several potential local, regional, and national easement holders. Each easement holder will have its own process for reviewing and accepting new easement donations, which will always include a discussion of the terms of your easement. The holder’s process is an important component of the overall easement donation process. For example, the Virginia Outdoors Foundation provides a detailed description of their process on their website (virginiaoutdoorsfoundation.org). Representatives from the easement holder will want to visit with you and tour your property early in the donation process.
Once you have settled on an easement holder, the holder’s staff will work with you and your attorney to produce a draft easement. Conservation Partners is available to consult with your attorney during the drafting process.
One of the first steps will be for your attorney to obtain a title report or title insurance commitment so that any title issues—such as any mortgages on your property—can be addressed early in the process.[
The most common title issue is the existence of mortgage liens (deeds of trust) on the property to be protected. Any such existing liens must be released or properly subordinated prior to a conservation easement donation, and negotiation with lenders can be time-consuming.
Conservation Partners has extensive experience helping to resolve lien subordination issues. To avoid potentially catastrophic last-minute delays, we recommend contacting lenders early in the donation process to discuss subordination.
If your land is held in a trust, partnership, corporation, limited liability company, or other entity, additional documentation addressing the entity’s power and authority to make the donation and enter into contracts must be provided.
In order for you to claim tax incentives for your donation, you must have the donation appraised by a qualified appraiser. It is important to involve an appraiser early in the process, as his or her input during the planning and drafting stages can be invaluable.
Conservation Partners typically consults with our customers’ appraisers as needed, and we have access to national easement appraisal experts to help out with thorny appraisal problems. Many appraisers are willing to provide landowners with preliminary estimates of easement valuations, usually for a fee that is credited against the appraiser’s final fee.
The easement holder’s staff generally will produce the required “baseline documentation report,” including maps, reports, photographs, and other materials to establish the condition of the property at the time the easement is donated. Conservation Partners works with the holder to help ensure the baseline report is completed prior to recording the easement.
Formal review and verification by the Department of Conservation and Recreation (“DCR”) is required by law with respect to donations that generate a credit claim of $1 million or more (note that past credit claims related to the same parcel may have to be combined with the current claim for purposes of the $1 million threshold).
If the preliminary appraisal indicates your donation will be subject to DCR review, Conservation Partners will work with you and your advisors to submit the deed of easement and all other required materials to DCR for preliminary and final review and approval.
We are one of the few conservation consultants in the state with significant experience with the DCR approval process. Where DCR review will be required, we have found that it is beneficial to involve DCR as early in the donation process as possible.
When the easement deed has been finalized and approved by the holder, it is signed by you and the holder and recorded in the Clerk’s Office of the Circuit Court of the jurisdiction where the protected property is located. Conservation Partners will make sure a copy of the recorded easement deed is provided to the appraiser who will then finalize the appraisal report and deliver copies to you and to Conservation Partners.
Once your easement is recorded and your appraisal completed, you will be eligible to file your land preservation tax credit application with the Virginia Department of Taxation (“Tax Department”). Conservation Partners will work with you and your advisors in the preparation, collection, and filing of the necessary documentation.
The Tax Department will process your application and issue a registration number for your tax credit; depending on the time of year, the Tax Department’s process can take several weeks or longer.
If you intend to sell some or all of your tax credit, you will sign contracts that address the marketing process and give Conservation Partners authorization to sell your credit once we locate buyers. As soon as Conservation Partners has your signed contracts and Tax Department credit registration number in hand, your credit will be placed in our queue of credits to be actively marketed and sold.
At the closing of each individual sale of a portion of your tax credit, you will enter into a formal agreement with the purchaser. To reduce transaction costs, you will formally authorize certain Conservation Partners personnel to sign these standardized agreements on your behalf.
Under each agreement, you commit to stand behind the validity of your credit and reimburse the purchaser in the unlikely event your credit is disallowed by the Tax Department. Our one-of-a-kind transfer system allows us to manage a high volume of tax credit purchases quickly and securely, meaning you receive your credit sales proceeds sooner.
Conservation Partners will automatically advance the mandatory 5% Tax Department fee charged on credit transfers. The transfer fee will then be deducted from the proceeds of the credit sales through the Conservation Escrow Services, LLC settlement process.
Conservation Partners works with our wholly-owned subsidiary, Conservation Escrow Services, LLC, to streamline and simplify the settlement process. This settlement program facilitates quicker payment of net proceeds to sellers, and significantly simplifies sellers’ accounting for tax and other purposes.
Conservation Escrow Services, LLC receives the various buyers’ checks for each credit sale and periodically issues payments to you after Conservation Partners’ fee and the transfer fee paid to the Virginia Department of Taxation have been deducted. Any costs advanced on your behalf through the Advance Funding Program also will be deducted prior to issuing your check.
Please contact us for additional information regarding the post-recordation process.