A Conservation Restriction (CR) is a legal agreement between a landowner and a land trust, such as the Williamstown Rural Lands Foundation in which the landowner gives up varying uses of his/her property, such as residential subdivision and commercial activities, and the land trust monitors future compliance. The landowner retains rights and title to use the property in ways that do not jeopardize the conservation values of the property. An example would be restrictions that allow farming or forestry to continue, while prohibiting subdivision, or clearcutting.

In Massachusetts, the Selectmen or City Councilmen of the town in which the potential restricted property lies, and the Commonwealth's Secretary of Environmental Affairs must agree that conservation of the property has a significant degree of public benefit. Strong documentation to support this public benefit and conservation value is also required by the IRS. Scenic open space, prime agricultural land, and significant ecological land are examples of properties on which Conservation Restrictions are supported. In some Massachusetts towns, restricted lands may be eligible for a property tax reduction to reflect the loss of certain property rights.

Other financial benefits can include:

• Income tax: The donation of a conservation restriction constitutes a charitable gift which may be deductible for federal income tax purposes. A qualified appraisal determines the value of the gift as the difference between the fair market value of the property before and after the restriction is donated. This amount is deductible, and can be used in the year of the gift or carried forward as a deduction for five years.
• Estate taxes: State and federal inheritance taxes on unrestricted land are often so high that the heirs are forced to sell some or all of the property just to pay these taxes. A conservation restriction
  reduces the market value of the property, and therefore reduces the amount of inheritance tax.
• Gift taxes: When a landowner gives land to a family member, gifts over $10,000 are subject to federal gift tax. Lowering the value of land through a conservation restriction can help with the
  conveyance of gifts of land.

On the average, a conservation restriction takes over a year to complete. The land trust can draft the restriction with the property owners, saving substantial legal costs. Land trusts may request that a cash endowment be given at the time of donation of a conservation restriction or land gift, to help support the costs of restriction monitoring in the future. Contributions to help offset the costs of drafting and monitoring the restriction, or in preparing required baseline documentation of the property may also be requested.

Following are the basic steps involved in the restriction process:

1. The land trust and property owner visit the property to determine its conservation values and to discuss the landowners ideas and desires for the land. If the owner and land trust agree on the merits of the restriction as a conservation project, the land trust will begin to draft a restriction document.
2. The land trust and property owner meet to discuss the restriction and make
   changes. Sometimes a restriction may be held by more than one non-profit
   organization. If this is the case, the document would now be forwarded
   for its review.
3. The document is sent to the state office of Conservation Services for preliminary approval. Any changes recommended will be reviewed by the land trust and the property owner, who should now begin working with an attorney familiar with such transactions.
4. A final draft restriction is prepared and reviewed by the land trust board and its attorney.
5. The proposed restriction will be presented to the Conservation Commission for their recommendation to the City Council or Board of Selectmen. The land trust will present the completed document to the City Council or Selectmen for approval signing
6. The land trust takes the original finalized document to the Secretary of Environmental Affairs for his approval signing. The conservation restriction is then recorded in the Registry of Deeds where it becomes part of the property's deed information.
7. The property owner hires an appraiser to determine the value of the charitable gift for purposes of an income tax deduction. A baseline documentation report will be prepared by the land trust to satisfy IRS requirements.

For more information about conservation restrictions and your property, contact the WRLF and we will be happy to discuss various options with you.

Thanks to the Sheffield Land Trust for its help in compiling this document.