Initial Query:

We understand that if a grantee of a conservation easement gains full title to that protected property, a merger of interest occurs and the conservation easement technically is extinguished. This could leave the grantee free to sell the property outright and unencumbered (or violate the intent of the original agreement in some way.) One solution suggested for this is to create a separate legal entity for the grantee to hold title. Are there other examples of standard conservation easement terms to address this issue? I have not found this in the Conservation Easement Handbook yet.

Would easement terms stipulating the following be effective? "If grantee has the interest and ability to gain full title to the Protected Property, the grantee shall assign the conservation easement to a separate holder before acquiring title of the Protect Property. In addition, in the event grantee obtains fee title, grantee shall maintain the property for conservation purposes."

Is there a way to state that the conservation easement would not be extinguished if full title is gained by grantee? It seems real estate law would contradict any such statement.

Thank you,

Ellen Huntley
Dubé Land Conservation Outreach Director
Conservation Trust for Florida, Inc. (CTF)
PO Box 134 Micanopy, FL 32667
CTF Office Phone/Fax: 352-466-1178
Direct Phone/Fax: 352-372-6568
www.conserveflorida.org
ellen@conserveflorida.org

Response #1

The Forest Society has experienced fee acquisition in lands we hold an easement interest in. Whether or not the easement is merged with the fee interest and therefore extinguished or remained a legal document has depended on the circumstances.

In a couple cases, there is a letter of intent from the donor that indicates that if the property is given to the Forest Society the easement CANNOT merge with the fee interest. In these cases, the Forest Society has transferred our Grantee interest to another organization.

We also have a situation where there is an executory interest behind our grantee interest in a conservation easement. Again, in this circumstance the easement CANNOT be merged with the fee title because there is another legal interest in the conservation easement.

Another consideration is the actual land description of the property. We hold a life estate on the whole of a tract of land, but the easement only covers the non-residential portion of the property. Again, this complicates whether or not a merger can happen. In a couple cases, we currently hold Grantee interest in an easement as well as the fee interest and have maintained the separation because we intend to sell the fee interest subject to our easement.

If we intend to keep the land and there is nothing preventing us from merging the interests, we do. We are comfortable with this because as a land trust, we are obligated to manage the land according to our organizations mission and policies, which are presented to the landowner. We are also obligated to ensure the intent of their charitable gift.

Sara Callaghan
Easement Steward
The Society for the Protection of NH Forests
54 Portsmouth St
Concord, NH 03301
(603) 224-9945
scallaghan@forestsociety.org

Response #2

This is complicated, yet simple. The problem is a basic tenet of contract law: one cannot have a binding contract with one's self. So one can write into the contract (easement) that if the land trust acquires the land, it will continue to honor the restrictions enforced by the land trust -- it just is not enforceable as a contract, in a court of law, and I would question whether it continues to follow the land, should land trust sell the land (of course they could place a new easement on it to take effect at the closing).  

Now, of course, writing a clause in an easement saying the land trust will continue to honor the easement if it acquires title certainly has at least a moral force, and perhaps is enforceable by a state attorney general as a charitable trust (but let's not get into that!).

It may be simpler to set up (or find) a separate legal entity to hold either the fee title or the easements. Several land trusts have created supporting organizations to do this.

Or, the organization can make clear to its donors (particularly any that have funded the acquisition) and/or the public its commitments to the land. That can result in giving a clear commitment to the public and our donors. That's not a legal document on file with the county land records -- but it can be a very strong commitment, nonetheless.

Russell Shay
Director of Public Policy
Land Trust Alliance
1660 L Street, NW Suite 1100
Washington, DC 20036
202-638-4725 x 305
rshay@lta.org

Response #3

I would certainly agree that measures should be taken to reasonably avoid even the prospect of merger should a land trust later acquire the fee in a property on which it earlier took a conservation easement. In Maine we have a law that specifically prevents that from happening (which is the best type of assurance).  

That said, woe be to the land trust that acquires the fee in property upon which it earlier was given a conservation easement, and then purports to sell it free and clear of the easement or itself violates the terms of the easement because some lawyer abstractly argues that a common law legal theory could be read to enable it to do so. The charitable trust doctrine will very likely be called into play in such a case, and the land trust would in any event suffer greatly in terms of reputation as well as facing potential legal and financial repercussions.

Jeff Pidot

Response #4

Jeff, I completely agree, both to the potential legal issues and to the damage to reputation that would occur.  The legal concerns would not be limited to the charitable trust doctrine.  The land trust could face loss of its tax status by its failure to protect the conservation easement in perpetuity.  Claims of fraudulent solicitation could be asserted against the land trust based on its representations in soliciting the easement or the fee.  Land trusts that solicit donations of easements or fee are deemed to be fiduciaries of the donors in many states (California so provides by Bus. & Prof. Code , so a lawsuit for breach of fiduciary duty would be a significant danger.

Ann Taylor Schwing
Land Trust Accreditation Commissioner (www.landtrustaccreditation.org; www.lta.org)
Past President, The Land Trust of Napa County (www.napalandtrust.org)
Trustee, American Inns of Court Foundation (www.innsofcourt.org)
Of counsel, McDonough Holland & Allen PC (www.mhalaw.com)
Author, Open Meeting Laws 2d (www.openmeetinglaws.com)

Response #5

Two thoughts. 

1.  I think the more practical lesson is that a land trust -- if given the gift of land previously conserved by itself -- and land trust wants to convey the land away -- should not assume everyone else in the world will consider the old easement restrictions in effect.  Despite “no merger” language in the old easement, despite charitable trust doctrines and ethics and everything else, some crafty successor landowner will still argue the restrictions were extinguished due to merger anyway and be able to make a good case for it (as Ellen suspects). 

So, in any land trust deed re-conveying the land away, the deed should either clearly incorporate the old easement anew, or – my preference -- reserve similar complete conservation restrictions all over again.  The latter presents a good opportunity to update outdated easement language (if you do it carefully and don’t loosen the old restrictions).

2.  I have heard of land trusts forming supporting organizations, but smaller land trusts might find this a jump from the frying pan to the fire.  Isn’t it already challenging for our small but primary land trust organizations to find active board members and long-term volunteers, adhere to standard & practice policies, keep good records, maintain liability in$urance, and on and on?  If a land trust decides to keep owning the property, I would hope that the land trust’s obligation to its mission (as Sara wrote) is sufficient.

Annette Lorraine, attorney at law (VT) / Annette Lorraine, PLC, consulting (all states)
L A N D    A S    L E G A C Y
PO Box 1466, Montpelier, VT  05601-1466
www.landaslegacy.blogspot.com   
Fax:  (802) 223-4305    rainlaw@sover.net
Toll Free: (800) 293-2978    
Tel:  (802) 262-6400

Response #6

The answer will also depend on state law and will differ from state to state.  For example, Connecticut has a statute that states that any interest in real property gifted for a particular purpose must be held for that charitable purpose forever.  Therefore, if a conservation organization later acquires full ownership of land subject to a Conservation Easement that was gifted, it would still be bound by the charitable purpose defined in the Conservation Easement.  One can also strengthen that with specific language in the Conservation Easement.

No Extinguishment Through Merger.  Grantor and Grantee agree that, should Grantee come to own all or a portion of the fee interest in the Protected Property, (i) Grantee, as successor in title to Grantor, shall observe and be bound by the charitable conservation purpose imposed upon the Protected Property by this Conservation Easement, and (ii) this Conservation Easement shall not be extinguished through the doctrine of merger, in whole or in part.  Any instrument of assignment of this Conservation Easement or the rights conveyed herein shall refer to the provisions of this paragraph, and shall contain language suitable to confirm and re-impose the charitable conservation purpose of this Conservation Easement to the extent, if any, necessary to continue it in full force and effect.

Frederick B. Gahagan Waller,
Smith & Palmer, PC
P.O. Box 88
52 Eugene O’Neill Drive
New London, CT 06320
860-442-0367

Response #7

Dear List Serve:

As a solution to my own question below we have addressed the merger issue in our organization extinguishment policy.

"Merger:  Before CTF becomes the owner of the restricted property that it also holds a conservament on, CTF will work with another land trust or agency to co-hold the easement or to transfer the easement while CTF accepts the fee interest." 

Thanks for your attention and resource as a list serve,

Ellen Huntley
Dubé Land Conservation Director
Conservation Trust for Florida, Inc. (CTF)
PO Box 134 Micanopy, FL 32667
CTF Office Phone/Fax:  352-466-1178
Direct Phone/Fax:  352-372-6568
www.conserveflorida.org
ellen@conserveflorida.org