"Perpetual" means 99 years.
FALSE. Perpetual is forever. There is precedent for breaking an easement through eminent domain when a strong public need is found, but two rural water systems in North Dakota were denied access to easement property and were forced to reroute their trenching. This cost all users of the system time and money. What happens when new telephone or electrical lines are needed?
When I sell a conservation easement on my property, I retain full title to the land.
FALSE. The title becomes split between the landowner and the holder of the easement. Many easements allow sale or transfer of the easement title to other organizations or agencies, so you may find yourself or your heirs with an entirely different partner than the one to whom you sold
A conservation easement will preserve my property just as it is, forever.
FALSE. Land changes. Each season brings change to the land. Some changes are major and others minor but, over time, even with no intrusion or help from man, land will change.
I can't trust my heirs to manage the land properly, so a conservation easement is the only way I can make sure the land is managed according to my intent.
FALSE. While a conservation easement may be an option, there are other options open to you. One of those options might be to sell the land to a private owner who views management as you do. Such a sale might be a contract for deed or living trust situation so your property retains value which can be handed down through your estate and the property remains in private ownership and the title free of impediments. (This is another reason to consult an attorney and accountant with experience in estate planning, taxes, property transactions and easements
before signing an easement.) Remember that, while the easement might allow for "normal management practices," the definition of that term may change over time and in ways you can not imagine now. Selling an easement to be managed in conjunction with an organization or agency does not guarantee a particular management practice for years to come.
The purchasing agent seems like a nice person so I don't need anyone else to review the easement contract before I sign.
FALSE. The purchasing agent wants something that you have - your property. It is in that person's best interest to be pleasant and agreeable. The purchasing agent works for someone else - not you. In any type of land transaction, you need professionals (an accountant and attorney) with experience in easements, tax, estate planning and property transactions to
represent you and your best interests. If you are dealing with a perpetual easement, you want to double and triple check the contract.
Most land sales deal only with the property until it is sold, but a perpetual easement is forever.
Keep in mind that, however pleasant the purchasing agent is, that will likely not be the person with whom you will deal on easement management issues and will certainly not be the person to manage the easement during its lifetime. Many easement contracts allow the easement to be sold, so your heirs or future owners of the property may end up dealing with an entirely
different organization or agency holding the easement. That's why you need professional assistance to look at all of the options before you sign a contract.
Easements on agricultural property in North Dakota are limited to 33 years.
TRUE AND FALSE. North Dakota law allows only certain organizations and agencies to hold easements, and those easements are limited to 33 years. However, Federal agencies are not bound by state law, so organizations may purchase perpetual easements if the title is given to Federal agencies. While this violates the spirit of the law, it is technically legal in the mind of some officials.
If I sell a conservation easement, I can still use my property just as I always have.
FALSE. No, you give up control of all property covered in the easement. Forever, there will be an organization or agency with the power to look over your shoulder and approve or disapprove your management practices. Most easements require you to give access at all times, even during the growing season when access can damage crops. You may have to obtain approval for weed control, grazing or other management practices. Many easements allow "approved" practices, but may not list specific practices. That's a loophole in the contract that allows the easement holder to change the list of approved practices without your consent.
My neighbor sold a conservation easement last year and he hasn't had any trouble, so my heirs and I won't.
FALSE. Perpetual easements generally don't cause problems right away. But wait 20 or more years and see what problems crop up. Thousands of acres of wetland easements were sold in eastern North Dakota during the 1960's and 70's, but most landowners didn't experience problems until the next generation took over the property. Now basic terms seem to have been redefined and boundaries covered by the easement changed. The original maps were "lost" or "are not available." Many of these landowners would love the opportunity to buy back the easement and regain control of their property.
We're developing too much land now. If we keep up at this rate, we're going to be all developed and not have agricultural land.
FALSE. According to the National Conservation and Resource Service's (NRCS) 1997 National Resources Inventory, the rate of development of agricultural land in North Dakota for 1992-97 was approximately half of the rate from 1987-92. Development has slowed and North Dakota is losing population. We are not in danger of running out of agricultural land.
A conservation easement requires you to allow hunting.
TRUE or FALSE, depending on how your lease reads. Many conservation easements currently sold in North Dakota are governed by the National Wildlife Refuge System Administration Act, so you need to read the fine print to see all of the requirements. You may find it interesting to note
that many of the funds and support for purchasing conservation easements come from hunters who believe they will have automatic access to your property, but that isn't always required.
Selling property with a conservation easement will be easy.
FALSE. You are required to inform the buyer a conservation easement exists. This may lessen the value of the property, the number of people willing to share title with an organization or government agency, and the number of banks willing to lend money for a loan to purchase
property with a split title. Some easements require the bank to take a secondary interest in deference to the easement. This can dramatically decrease the willingness of a financial
institution to loan money on the property. Because the holder of the easement already owns part of the title, they may have an interest in purchasing the remainder of the property. If this is a non-profit organization or Federal agency, that may take the property off tax rolls, which increases taxes for surrounding property owners.
I need money right now and a conservation easement will put cash in my pocket.
TRUE or FALSE. If your land is mortgaged, chances are the conservation easement payment will go directly to the lender and may be used for the interest payment instead of reducing the principle. Read the fine print. Regardless, you are responsible for paying income taxes on the
full amount of the easement. Selling an easement may actually harm your cash flow because of the tax complications.
Shorter term (30 years or less) easements are better than perpetual easements.
TRUE. Easements of a shorter duration allow future generations more options and flexibility in managing their property. But short term easements still give up control of your property, so it pays to talk to professionals before you make any decisions.
Conservation easements are the only way to protect native sod.
FALSE. Most of the land suitable for cultivation in our state has already been broken. There is no incentive for breaking more land unless tillage is the only effective means of weed control. Some of the land identified as "native sod" for the purpose of conservation easements was farmed within recent memory. If the characteristics of native sod cannot be distinguished between that which was never plowed and farmland which was planted back to grass, then landowners must be doing a pretty good job managing their prairie. If we need more prairie, we can always convert more farmland to grass. It just takes ingenuity North Dakota landowners already poses.
My easement allows "normal management practices," so anything I normally would do with my property will always be allowed.
FALSE. While the easement might allow for "normal management practices," the definition of that term may change over time and in ways you can not imagine now. Selling an easement to be managed in conjunction with an organization or agency does not guarantee a particular management practice for years to come. Many easement contracts allow the purchasing organization or agency to sell or transfer title to the easement, so it may be an entirely different entity who interprets "normal management practices," for your heirs or future owners of this property.
Conservation easements will save me money in taxes.
FALSE. If you own land valued at $100/acre and sell a conservation easement for $30/acre, you pay income tax on the $30. Since this was a sale of a tangible piece of your property your basis for tax purposes in the property is reduced to $70. When you sell the land if it appreciates the
difference in sale price over the $70 becomes taxable. Hence you pay tax on the $30 during the second sale.