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The Voices of Land blog

Get insight on current land trends and issues from experts across the land real estate industry.


Conservation Easements: What A Broker Needs to Know to Best Represent their Buyers and Sellers

By Ariel Steele, RLI Member and Conservation Easement Tax expert

Conservation easements are much talked about but not always understood. A clear understanding is necessary to provide the best advice to clients who may be listing a property with a conservation easement (“CE”), considering an offer on a property with a CE, or buying a property and placing a CE on it after purchase. 

Refresher – what is a conservation easement? A CE is a legal agreement filed in the county records that permanently restricts how a landowner can use their land. It typically prohibits or at least limits subdivision and how many buildings can be built on the property. It could restrict other uses like hunting, agriculture, mining, etc.

Representing a Seller with a CE on their Property

The most challenging situation with a seller who has a conservation easement could be determining a list price for the property. While the terms of the conservation easement typically reduce the value of the land and the seller may have received significant tax benefits for placing the conservation easement on their property, some landowners forget that their value should be lower than similar property without a conservation easement.

Valuing a Property with a CE

In general, a property with a conservation easement will sell for less than its counterpart without a CE because there are fewer buyers who would want to purchase it. A developer would not purchase a property with a CE to build a new subdivision if it’s not allowed to be subdivided. However, a recreational buyer might love a property with a conservation easement because their intention is to preserve it anyway. It never hurts to talk to an experienced CE appraiser about what they think the value would be with the conservation easement in place to get a second opinion.

Do your homework early and learn everything you can about the terms of the conservation easement.

  • Is any subdivision allowed?
  • How many buildings can be built and is there a square footage limitation?
  • Where are the building envelopes and are they in a desirable location?
  • Are there any restrictions on hunting, fishing, grazing, crops, separating water rights from the land?

All of this can be learned by reading the deed of conservation easement carefully. Have the deed handy to share with buyers’ brokers so they can see exactly what is allowed. 

Talk to a Land Conservation Organization

It is also wise to talk to the land conservation organization that holds the CE. You will want to ask them if there are any violations of the CE, do they have any maps that might be handy to share with potential buyers and do they know of any conservation buyers who might be interested in purchasing the property? This is the time to clarify any parts of the CE deed that might be confusing. See who on their team any buyers’ brokers should reach out to with questions. This homework will help you to decide who your ideal buyer is and then you can describe the CE in terms that are appealing to them and advertise the listing where they will be looking. With the right homework and some creative thinking, you just might be able to turn what some people would see as a liability into an asset!

Representing a Buyer Who is Making an Offer on a Property with a CE

Don’t take the listing agent’s word for what the CE allows. Do your own homework and ask questions. These can be complex documents and you want to see the actual recorded deed of CE to read and share with your buyer. Focus especially on what is allowed and prohibited. Talk to your buyer about their goals for the property. Will they be able to do what they want to do on the property with the restrictions in place? Price is also a consideration as the value should have gone down compared to a similar property without a CE. Again, the terms will dictate how much the value should be reduced. Talk to an experienced CE appraiser before deciding on an offer price.  

Next, talk to the land conservation organization and ask similar questions. Inform them of how your client plans to use the property to understand what concerns might arise. This will also give you a chance to see what the mission and style of the conservation organization is and whether it will be a good fit for your buyer. Finally, you want to be sure your client really understands what the terms of the deed of CE mean and, where possible, have their attorney read it as well.

Representing a Buyer Who is Considering Granting a CE after Purchase

You may be dealing with a property that has not been conserved by a CE, but you have a client who wants to explore the idea. Your knowledge of the tax benefits could be a huge asset in helping your client to make the best decision and to see how their purchase price can essentially be lowered by granting a CE and getting the tax benefits.

Know the Tax Benefits

First you will want to be sure your client knows what tax benefits are available in their area. For everyone in the US, there could be a federal income tax deduction based on the value given up by granting the conservation easement. There are also estate tax benefits as the value of the land is reduced after a CE which lowers the value of the estate. In some states there are also property tax benefits and potentially state income tax credits. In five states there are even state income tax credits that can be sold to other taxpayers. Find out if these tax benefits are helpful to them – what federal tax bracket are they in? Do they plan to pass the land on to heirs one day? Can they use or sell any other tax benefits?

Assuming they can use the tax benefits, you might want to get a ballpark idea of how much they will provide to your buyer. Knowing this could help your buyer to get comfortable with making an offer that might be a bit higher than they were originally budgeting but might work nicely with the benefits that will be coming after the deed of CE is granted. Again, an experienced CE appraiser can be your friend!

Find the Right Fit in a Land Conservation Organization

Another consideration is whether your client’s plans fit with the goals of the land conservation organization. Talking to the land conservation organization early is a great idea. They can tell you whether they would likely accept a donation of a conservation easement on the property or maybe they even think it could score competitively for a grant of cash for the CE. Learning what the costs are likely to be to grant a CE are helpful. In our state of Colorado where we have very generous state income tax credits, our transaction costs can tip the scales at $75-100K. They may not be as high in your state, but they are not typically free to do.  

You don’t have to be an expert on CEs to represent your clients well. With a little knowledge and the right questions, you can stand above your peers in providing the best service to your sellers and buyers. If you know who the source of the knowledge in your area is, your clients will appreciate you looking out for them and getting them to the people who can get them the answers. That help position you as the trusted advisor in your area for anything related to conservation easements!

Steele_HeadshotAriel Steele works with farmers and ranchers in Colorado to get money for conserving their land with conservation easements. Her company Tax Credit Connection, Inc. is the leader in Colorado transferable income tax credits.  She loves working with ranch brokers to help their clients understand how conservation easements are an opportunity to save them money.

About the Author


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