Conservation Easements

By Don Pilotte / Berkshire Hathaway Home Services Montana Properties

Although they’re a common subject of conversation in southwest Montana, conservation easements are often misunderstood.

Essentially, a conservation easement is formed when a landowner voluntarily decides to gift or convey some rights associated with their property, most commonly the right to develop or subdivide. A private organization or a governmental agency agrees to enforce the restrictions included within the easement.

For example, an owner can decide to restrict development or commercial activity, refrain from subdividing or further subdividing a property, or discontinue or prohibit mining. Other terms written into an easement can specify that timber will not be harvested, or place restrictions on certain activities. Many people believe that a conservation easement automatically allows public access to the land, but public access is granted on a case-by-case basis and is often not part of a conservation easement.

A conservation easement should be considered a permanent encumbrance on the land. Sometimes the easement language might be changed a bit, but the overall impact of the easement is binding for all future landowners associated with the encumbered property.

The Crazy Mountains Alpine Ranch is a 4,526+/- acre ranch on the western side of the Crazy Mountains near Clyde Park, Montana. It is listed at $10,750,000 and has one section (574+/- acres) protected by a conservation easement.

If a landowner donates certain rights to an organization or agency, the donation often results in a diminished value for the subject property. This reduced value has to be verified, typically by a certified appraiser who appraises of the land’s value before and after the easement has been placed on the subject property.

These appraisals help the property owner determine the difference in the land’s value before and after the easement is in place. If the property is located in a high-demand area where there’s considerable growth, the diminished value can be quite high. Conversely, if the subject property is in a region of low growth and demand, the percentage of the reduced value can be quite low. For example, in an area of high growth and demand, a property with a conservation easement restricting all development might have a value that’s 80 percent of the property’s value without the easement. That 80 percent can then be applied toward a deduction for tax purposes. Land- owners who are not looking for a deduction for tax purposes might also sell the value of the conservation easement to a sponsoring group.

View of the Crazy Mountains

If the subject property is adjacent to or in an area of other conserved properties, sometimes organizations and agencies may actively court landowners to see if they’re interested in adding to the conserved properties in that specific area.

Sponsoring groups can be local, regional, national or even international in scope, size and interest. For example, The Nature Conservancy, Montana Land Reliance and Gallatin Valley Land Trust are all active in southwest Montana. Montana Fish Wildlife and Parks, Ducks Unlimited, Trout Unlimited, Rocky Mountain Elk Foundation, and many other groups are also active in Montana.

View of the Crazy Mountains from the upper cabin. PHOTO BY DON PILOTTE

For more information on farms and ranches in Montana, contact Don Pilotte at Berkshire Hathaway HomeServices Montana Properties in Big Sky at (406) 580-0155, or email don.pilotte@bhhsmt.com.