Q. How much money should a land trust have reserved in its legal defense fund? Our land trust is small and currently holds a limited amount of conservation easements. We have been building up our legal defense fund as we are able, from our own funds and from contributions from landowners who have donated conservation easements. We just recently sold a piece of property and would like to put a good portion of the proceeds from that sale into our legal defense fund. What is a suggested minimum balance to have on hand in a legal defense fund? I’m sure there must be great variation according to state, region, land trust size, etc. Information about number of lawsuits won/lost, cost for lawsuits, etc. is very sensitive information, but is there any way to get a sense of what would be a prudent amount?

Christine Olson,
Administrative Assistant Okanogan Valley Land Council
PO Box 293 Tonasket, WA 98855
(509) 486-2765 or 1-877-486-2765

Response #1 For California, $300,000 would probably be the minimum if you want to go to the mat on a CE - through discovery, hearings, briefs and trial against a well funded, politically connected opponent. Appeals would obviously be additional costs. Personally, I’d shoot for $500,000. LTA may have some information for other areas of the Country, they’ve been looking at collective easement defense and insurance. Also, the Bay Area Open Space Council published a report on collective easement defense, available via their web site I think, that may reference the costs and experiences of land trusts on legal defense.

Bob Neale
Stewardship Director
Sonoma Land Trust
966 Sonoma Avenue Santa Rosa, CA 95404
(707) 526-6930 x 102

Response #2 Christine, you may want to get a copy of the research report we produced last year entitled “Conservation Capacity and Enforcement Capability.” This report is available as a free download to Land Trust Alliance members and partners in the digital library at The Learning Center.

We found a great variance in the costs of easement defense, which run from a few hundred dollars to well into the hundreds of thousands of dollars. Amounts deposited into legal defense funds per easement also vary. As a guideline, we recommend that a land trust have a minimum of $50,000 available to fund an enforcement action or other litigation; if the land trust holds more than 15 easements, it needs an additional $1,500 to $3,000 per easement above that amount.

Two additional research reports to browse are: “Planning for a Successful Future: Stewardship Program Structure and Capacity Planning for Agricultural Land Trusts,” by Chris West, Colorado Cattleman’s Agricultural Land Trust, 2005 “2004 Conservation Easement Violation and Amendment Study,” by Jason van Doren, Land Trust Alliance, 2005.

Both of these reports are available at The Learning Center as well. You might also want to take a look at our Standards and Practice Curriculum course, “Determining Stewardship Costs and Raising and Managing Dedicated Funds.” It’s not available at The Learning Center yet, but members can download a free copy from the publications page at the Alliance website.

Sylvia Bates
Director of Standards and Research
Land Trust Alliance
435 Winona Road New Hampton, NH 03256
Our Mission: To save the places people love by strengthening land conservation across America.

Response #3 There may be formulas out there, but they call for lots of critical assumptions. Theoretically surely the more CEs you have the larger the fund should be. BUT as a practical matter a land trust may have a problem on its first easement!

So perhaps the best answer is “the most you can get in there.” That is not much of a help to a young small land trust, but the reality is that formulas have limited value. (Fortunately, in your case, you have a potential source to get a jump start on funding this vital pot of money.) Even if we KNEW that you would get exactly one case out of 100 CEs every year, and the case would cost exactly $50,000, obviously the most unknowable fact is when – will you get a suit after the first CE, or after the 50th, or not until the 100th CE ?

We are nearing seven figures in our Protection Fund. We have 114 CEs. Most of them involve, among other things, one or more homesites being extinguished. Fortunately we are not spending it often, but a good part of the value is just having it there. I would agree with Bob Neale that $500,000 is a good figure to think of as a minimum—in a region with high property values.

In my view, the amount we (or you) “need” will likely depend on property values and how rapidly they are increasing. In our area, a homesite is often worth over $1 million. So a buyer (who has little appreciation for preserving the land) may look at trying to “break” a CE if he/she thinks he/she can “gain” a homesite or more that were given up in the CE document. We have had a new owner or two (from out of the area) who thought they would hire a lawyer and try to break the easement. They rattled that chain with us. We said we had a really substantial fund to fight these attacks; we had high six figures and we were absolutely prepared to spend it, because we knew we would win and it was very important that we win. It is the “big war-chest” strategy, and it seems to work. And we tell them that also, as far as we knew, no land trust had ever lost an attack like this. The owner backed off and we had no further problem.

In the long run, I personally think defense is one of the biggest threats to our industry. The higher that prices climb, the more potential “profit” there is in an owner trying to break a CE. If we do not have enough money to scare off these suits, and enough to hire top talent to win any cases that are pursued, the CE as a concept will be seriously threatened. It would just take a few cases in which any trust lost---that would open the door for greedy insensitive owners to challenge their CEs. Once we start losing cases, there will be more suits brought, and more will be successful because there will be more “precedents.” And that problem will compound as property values rise—because the potential gain increases and the legal cost to a landowner to break a CE drops if the precedents are there to improve landowner success rates.

I hope this is not too obvious, nor too pessimistic. But writing really well written documents, and building enough defense money to vigorously defend them is truly critical to our movement.

Tom Faragher
Administrative Director
The Land Trust of Napa County
1040 Main Street Suite 203
Napa, Ca 94558
FAX 707-252-1071