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Nature Conservancy Easement

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airphoto

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Pennsylvania
Totally new one on me .. had heard about such things, and just ran full-force into one this week. Far as I'm concerned, the appraisal ended right there. From what I understand, this covenant relinquishes part of the bundle of rights, thus the 'owner' now becomes a virtual tenant upon his land. I have no known basis for breaking out the value of the partial interest. Anybody got any words of wisdon?
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
Yeah! I did one about a month ago. I had to appraise the value of part of a recreational conservation parcel to be sold to give a residential lot owner public road access to his property. Piece of cake.
 

Stone

Elite Member
Joined
Feb 1, 2002
Professional Status
Certified General Appraiser
State
Wisconsin
It depends on what the easement is for. I assume you are talking about rural property. If the easement limits any future development rights, you have to look for other properties with similar limitations. You are essentially developing an "after value" for the property (assuming I understand what you are describing). This can be done in more than one way. You can find other properties that have similar deed restrictions, or you can find properties that are physically limited. If you are talking about vacant land, look for properties that are unbuildable due to zoning or physical limitations. If you cannot find any, look for properties that have a highest and best use that is outdoor recreation or agriculture. Those kind of properties typically have a higher value, but can be helpful in solving your problem.

If the property is improved, what are the restrictions for re-building on the site. If there aren't any, would the typical buyer place any further structures on the property? If the answer is no, they would not, you should be able to compare it to other improved properties. If the typical buyer would place outbuildings on a similar property, then you may need to find properties that are prohibited from further development through zoning or other restrictions. The same would likely be true if any current structures could not be re-built. Of course, properties with similar deed-restrictions are still the best comparables, but unless it is in a subdivision with many similar tracts, they can be difficult to find.

I do rural properties with these kinds of restrictions, and finding sales is sometimes very difficult. Charge accordingly.
 

airphoto

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Pennsylvania
Thanks, Michael and Austin ..

Unfortunately .. it just became impossible. Nearest sales are over ten miles .. next three are 18-32 miles .. and none are appropriate comparables, other than 'older 2-story within 80% of GLA.' No MLS .. only way to search out would be to review every deed, and unlikely to find similar easement. I'm lobbying lender to 'fageddaboutit.'
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
airphoto:
Check your private messasges for reply:
Austin
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
Just a short post. Repost or Email me later if you have more questions.

I have done a few of these over the past 5 years and have reviewed 8 or 10.

You must review the easement documents--the restrictions imposed can be very limited, with little effect on the fee simple interest, or quite restrictive; and anywhere in between.

To gather data, the best way is to find someone in the "area", and that can necessitate a heavily expanded search (the conservancy will have an appraiser list). Not an easy assignment.

My fees are generally considerably greater than a complex commercial building assignement.

There is alot of work right now--I'd pass.

Highest and Best Fee.
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
When appraising land for a conservancy easement, you use unbuildable land as comps to determine the loss of value of the right to split and build.

In appraising a property that is on or part of which has had a conservancy easement placed on it, I look for similar properties located on similar size parcels and basically ignore the easement. Since most lands that will have an easement are higher quality houses, the easement is primarily to protect the privacy and buffer the property from outside forces regardless of what the owner says their motives were. Other properties with non-conservancy acreage are purchased for the same reason and not for development. Though the conservancy easement does reduce the owners bundle of rights, it does not appear to inhibit normal marketability and therefore, you are justified in using non-conservancy properties as comps.

The last one I did had a total of 20 acres with 2 one-acre parcels fronting a golf course and 18 acres with a conservancy easement. They were contiguous. There were no similar sales in the entire northern Michigan market that I could find so we went with similar houses on similar value properties: golf courses, water, etc.

You have to work with what you have in these cases and sometimes it is not much.
 

Stone

Elite Member
Joined
Feb 1, 2002
Professional Status
Certified General Appraiser
State
Wisconsin
I wasn't sure exactly what type of property you were discussing. I agree with Richard, with one exception. If the property is large enough that it could be split off in the future and the local zoning has minimum size restrictions. If this is the case, an easement could take away a future building site, and any lands covered by the easement could go from being a buildable second parcel to excess land that is limited in use. This is common in this area where many counties have fairly restrictive zoning. In the areas where the zoning is less restrictive, any loss in value is minimal.

Further, if you don't lose a building site, you can even argue that the easement is a positive, because the subject owner knows that there will be no development next to his/her house, and the views will be maintained. The earlier advice to inquire about appraisers who do the easement work in your area is sound. This is one of the things that we do a fair amount of, and we sometimes get calls from other appraisers looking for comps or info. I know we are always happy to help, and I imagine that anyone who does this type of work in your area would also be happy to give you info.
 

John Hassler

Senior Member
Joined
Jul 23, 2002
Professional Status
Certified Residential Appraiser
State
California
Bill

If you take on this assignment, read through the deed restrictions carefully. It may or may not be a deal killer. I looked at a property which had an easement for a "Monarch Butterfly Preserve". Really just a grove of eucalyptus you couldn't build near nor could you cut. Sounded like a negative to me but it was one of the reasons the buyers bought the property. Nature lovers with money apparently do exist (it was $5-700k 10-years ago).

Do your homework. Charge accordingly!


John Hassler
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
The typical conservation easement call I get goes
something like this:

"I want to give a conservation easement to the
Land Conservency and I need a appraisal so I
can take a tax deduction. I own 20 acres of
wetland [swamp]. What's an acre of wetland
going for these days?"

I say, "Why would anybody want to buy it [swamp]?"

They say, "I dunno, but the Land Conservency said I
could get a big tax deduction cause everyone else does."

I say, "You probably need one of them experts who
specializes in appraising wetlands [swamps] for a lot of money."

My two cents: I resent having to pay the taxes that
I would otherwise not pay because of do-gooders who
get big tax deduction by giving conservation easements
based on some bizare inflated value for a piece of
ground that was probably worthless to begin with.

elliott
 
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