Conservation Easement Due Diligence: Navigating IRS Approval, Appraisals, Phase 1 Assessments and More

A conservation easement is a legally enforceable perpetual land preservation agreement between a landowner and either a government agency or a qualified land protection organization (such as a land trust) for the purposes of conservation of the land and its resources.

To identify and manage environmental risks, due diligence is a critical component of transactions. Site assessments are key to identifying potential risks/liabilities.

Title review is necessary to show that no mortgages are senior to the conservation easement; otherwise, the mortgage needs to be subordinated to the easement. Donors must also consider choosing a conservation partner carefully. Counsel must ensure the easement meets IRS approval for grantors of the easements where there is a donation.

Listen as our authoritative panel of environmental attorneys discusses preparation for due diligence for conservation easements, the scope of due diligence, the relationship between the grantee organization and the grantor, potential risks presented, and available protections.

1. Choosing a conservation partner (easement holder)
2. IRS approval requirements if grantor donates easement
3. Due diligence
   1. Survey
   2. Baseline Data
   3. Appraisals and a Land Use Analysis
   4. Title Searches and Subordination Issues
   5. Environmental assessments
4. Easement Monitoring and Stewardship
5. Easement Modification, Interpretation and Amendments

The panel will review these and other key issues:

• What should easement grantors consider when choosing a conservation partner?
• What factors help determine the scope of due diligence sufficient for real estate transactions?
• What are the best practices for evaluating and managing environmental risks in conservation easement transactions?
• What should easement grantors consider in order to minimize audit risks associated with donated conservation easements?