February 22, 2012
Changed Circumstances and Conservation Easements in New Jersey
Conservation easements are an important tool in the conservationist’s toolkit—created by state legislation and supported by substantial federal and local tax benefits to encourage private lands to be used for conservation purposes in perpetuity. Nevertheless, developers have asked courts to release conservation easement based on various legal principles including that of changed circumstances. These perpetual easements have been conveyed voluntarily and the benefits of the conveyance have accrued to the donor, and any successors in interest, which include expansive federal and state tax benefits as well as potential vested zoning rights.
Developers are asking courts to ignore the independent enforceability of the contractual agreement that established these conservation easements. These easements are contractually created enforceable property rights, independent of any additional consideration. See e.g. N.J.S.A. 18:B-3. Conservation easements are supported by valid consideration, entirely separate from more traditional municipal grants of development rights. In exchange for donating the conservation easement to a municipality or charitable land trust, the landowners receive above mentioned substantial tax benefits from both the federal and state governments. A changed circumstances claim is insufficient to nullify this independently created contract obligation.
In New Jersey the legislature created the statutory backstop for conservation easements in 1979 via the Conservation Restriction and Historic Preservation Restriction Act. Prior to this legislative enactment conservation easements were of dubious enforceability given the common law’s hostility to perpetual negative easements in gross (a.k.a. conservation easements). See Restatement (Third) of Property (Servitudes) § 1.6. The New Jersey statute established a framework for enactment as well as removal of such encumberments. N.J.S.A. 13:8B-1 et seq. These removal procedures are clearly set forth in the Act; the release of a conservation easement may only be accomplished (1) under the statute; (2) with a public hearing; (3) after providing notice by publication; (4) with the Commissioner of New Jersey Department of Environmental Protection’s approval; (5) if it is in the public interest; and (6) recognizing the negotiated terms of the conservation easement itself.
Despite the independent enforceability of individual conservation easement contracts and various state statutory frameworks, developers are asking courts to be released from these easements—resulting in an economic windfall for the developer. These developers actively entered into, or purchased the land subject to, conservation easement and its limited provisions for extinguishment. They have also benefitted from generous local and federal tax deductions. Conservation easements—and the proper channels for their release—must be upheld as tools of conservation as intended by legislatures and traditional contract law and not used as an economic subsidy for developers when circumstances change.
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Are you arguing that the doctrine of changed conditions should never apply to any conservation easements? Is it because the conservation easement statute establishes another route of termination or because you think some of these common law doctrines related to other servitudes shouldn't be extended to conservation easements?
Would it be okay to release the conservation easement through the statutory process? Perhaps we can determine ways to avoid windfalls to developers by requiring payment of the difference in value to the conservation easement holder.
Posted by: Jessie Owley | Feb 22, 2012 1:32:39 PM