Tuesday, April 8, 2014

McLaughlin on Perpetual Conservation Easements in the 21st Century

Nancy McLaughlin (Utah) has posted Perpetual Conservation Easements in the 21st Century: What Have We Learned and Where Should We Go from Here?, 2013 Utah L. Rev. 687.  Here's the abstract:

The public is investing billions of dollars in conservation easements, which now protect an estimated 40 million acres throughout the United States. But all is not well. Uncertainties in the law and abusive practices threaten to undermine public confidence in and the effectiveness of conservation easements as a land protection tool. This short article is part of a series of articles published in the law review discussing conservation easements, with a focus on what we have learned thus far and where we should go from here. This article sets the stage by describing the dramatic growth in the use of conservation easements, the various laws that impact easement creation and administration, a timeline of important legal and policy developments, and the recent surprising lack of certainty and consensus regarding what it means to protect land “in perpetuity” or “forever” with a conservation easement. The article concludes by discussing how the perpetuity issue might be productively resolved.
 
Jim K.

April 8, 2014 in Agriculture, Conservation Easements, Environmental Law, Environmentalism, Federal Government, Historic Preservation, Scholarship, Servitudes | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 2, 2014

Will the generous tax deductions for conservation easements stick around?

Potential tax deductions are one of the driving forces behind creation of conservation easements. The exact contours of the tax deduction (how much can you deduct and over how many years can you stretch your donation) has varied over the years. For the past several years, the deductions have been particularly generous.

Under standard law, individuals can deduct the value of the donated property up to 30 percent of their adjusted gross income, and any excess value can be carried forward for 5 years. But in 2006, Congress passed the enhanced landowner incentive. It allows deductions up 50 percent of donors’ adjusted gross income and over a 15-year carry-forward period. That incentive ended this past December. The consistent support of this tax deduction by Congress led many to people the enhanced version would be extended without struggle.

Perhaps not. The most recent tax-extension proposal from the Senate Finance Committee does not extend the enhanced tax deduction for conservation easements. Russ Shay at the Land Trust Alliance has hypothesized that the bill drafters may want to change the nature of the deduction, but are still likely to keep the enhanced deduction available to some extent. In particular, this might appear an attractive opportunity to remove deductions for conservation easements over golf courses, something both parties (and the IRS) have indicated their support for. Others suggest that a better approach would be to craft legislation making the enhanced deduction permanent so it does not require periodic extensions.

April 2, 2014 in Conservation Easements, Federal Government, Historic Preservation, Land Trust, Servitudes | Permalink | Comments (1) | TrackBack (0)

The Glass Case Saga

Some conservation easements in Michigan have been the subject of dispute for over 20 years. In 1992 and 1993, the Glasses donated conservation easements to the Little Traverse Conversancy to protect the shore of Lake Michigan. Charles and Susan Glass then sought a tax deduction for these donations. The IRS was skeptical. These were two conservation easements over a 10-acre parcel and the real conservation value of them seemed seems questionable.

The IRS challenged the Glass’ contention that the conservation easements should qualify for a deduction under § 170(h)(1). Specifically, the IRS felt that the conservation easements did not meet the requirement of being “exclusively for conservation purposes.” The Tax Court disagreed with the IRS holding that the conservation easements qualified because they protected a relatively natural habitat or plant or wildlife (§ 170(h)(4)(A)(ii)) and because the Conservancy had to hold the conservation easements exclusively for conservation purposes (§ 170(h)(5). [Yes there are days when I wish I had taken Tax.] The 6th Circuit upheld the tax court's ruling.

Despite these rulings of the Tax Court and the 6th Circuit, the conservation easements in this case appear to be of questionable value. One of the conservation easements (from 1990) is for a greenbelt along a state scenic highway. The other two conservation easements prohibit development along the lakefront. The parcels they encumber are small, the area would be hard to develop, and development would likely be undesirable. These are plots with vacation homes along the shore of Lake Michigan that are bordered by a bluff. Some parcels in the area however have larger homes and the Conservancy saw a need to seek out and protect shoreline parcels. The proceedings regarding the conservation value of these conservation easements illuminated some inconsistencies in the deeds and questionable appraisals of the value of the conservation easements. The litigation described above indicated that the appraised value of the conservation easements ($340,800) was too high, but it didn't resolve what the value should have been set at.

The Glasses ultimately acknowledged that the value had been assessed incorrectly and that therefore the Glasses had underpaid their federal income taxes. This left the Glasses with substantial tax debt and they looked for a way to make some money. Thus, the Glasses sought to sell the southern portion of their property to their neighbors (the Van Lokerens). Once the neighbors saw an accurate survey detailing the property lines and any servitudes, they decided they were no longer interested in purchasing just the southern portion but indicated that they might consider buying the entire 10 acres. The Glasses then listed just the southern parcel for sale.

The Van Lokerens then reached out to the Conservancy to complain that the proposed sale of just the southern parcel appeared to violate the conservation easements in place. The Glasses were then forced to withdraw the listing. Next, the Glasses developed a plan to subdivide the parcel into condos but keep the conservation easement areas in place to serve as common area. Again, the Van Lokerens complained to the Conservancy (notably Mary Ann Van Lokeren was a member of the Conservancy's Board). After attempts at amicable settlement with the Glasses, the Conservancy ended up suing the Glasses and seek reform of the conservation easements based on the theory that there had been a mutual mistake in the earlier conservation easement description. The Glasses counterclaimed arguing that the Conservancy (and the Van Lokerens) had engaged in some shady practices including “threatening meritless litigation.”

In unpublished decision, the Michigan Appellate Court found against the Glasses, explaining that the Conservancy was not out of line in seeking to ensure its conservation easement was complied with.

As the Glasses were foreclosed on and the parcel is now in other hands, it seems likely possible that we have reached the end of this saga.

 

April 2, 2014 in Beaches, Caselaw, Conservation Easements, Land Trust, Servitudes | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 28, 2014

Takings and Conservation Easements

Like many nerds tech-savvy people, I have an alert set up with WestLaw to send me any new law review article or case that even mentions the phrase "conservation easement." It sends me a lot of fluff, but every now and then I find a gem that seems to have eluded the 5,000 SSRN lists I get. When I saw an article entitled "Environmental Preservation and the Fifth Amendment: The Use and Limits of Conservation Easements by Regulatory Takings and Eminent Domain," I just couldn't resist dropping everything and reading it immediately.

I was surprised that I didn't know the author (Beckett Cantley of Atlanta's John Marshall Law School) because well the conservation easement crew is a small one. Turns out that Cantley is an interesting combination of a tax law prof who also teaches property. As the title suggests, the article focus on standard 5th Amendment  takings analysis. Unsurprisingly, this involves a large focus on exacted conservation easements. As I am sure all none of you know, my 2005 dissertation was entitled Exacted Conservation Easements, and I have a small obsession with the phenomenon.

Cantley has an interesting take on the issue.

First, he asks whether there is a market for conservation easements. He contends that a landowner's ability to voluntarily sell a conservation easement constitutes an "economic use for regulated land that could help avoid a regulatory taking by lessening the economic impact of environmental and land use regulations." I assume the argument goes this way: The government entity enacts a land-use law that restricts development. The landowner argues that this violates the 5th amendment under a Lucas-style total deprivation of value argument. The government entity says no we haven't totally deprived you of value because you could still donate or sell a conservation easement on your land. Of course, it would be pretty tricky to find a willing buyer for such a conservation easement but probably not impossible to find someone willing to accept the donation (depending on the features of that parcel). But what would be the value of the donation? Would it be zero? Well the current regulations do not allow development, but conservation easements can extend regulations (making them more stringent, giving them certainty, extending the restriction in perpetuity). So the value of the conservation easement while low, is probably  not zero. Cantley suggests that such a conservation easement market would be so speculative that it would not be enough to defeat a Lucas-style takings claim.

Second, Cantley analyzes the ability of a government agency to create a conservation easement with eminent domain. This is a tricky issue. As a threshold, it would only work where the government entity had eminent domain power. Some states prohibit creation of CEs via eminent domain explicitly. In other places, it is just politically sensitive (not to mention potentially hard to calculate). The best example of this phenomenon was when the Highway Commission in Wisconsin exercised eminent domain over holdouts for scenic easements along the Great River Road. One of the confusing points for me here has to do with the fact that when a parcel encumbered by CE is condemned, most jurisdictions acknowledge the CE is compensable and they pay the CE holder for their lost property interest when they pay the underlying landowner just compensation for her property interest. Do such payment policies mean that the jurisdictions recognize CEs as something one could take via eminent domain without taking the fee title? Just an interesting way to do parcel by parcel regulation? Spot zoning with compensation? Something several folks have speculated about but few governments seem interested in pursuing just to amuse us academics.

Now, on the exacted CE front, Cantley notes that generally Nollan and Dolan analysis apply but in some places there is a bit of trickiness with what constitutes an "exaction" meriting Nollan/Dolan analysis (i.e., nexus + rough proportionality) versus just a regulatory act with the less demanding Penn Central balancing test. I have written about this weirdness before in New York where the case of Smith v. Town of Mendon held that conservation easements are not actually "exactions" even where they are er... exacted. As I speculated in a recent piece for the Environmental Section of the New York Bar Association, I think the broad definition of exaction in Koontz overrules Smith v. Town of Mendon and makes it pretty hard to argue that you can't exact conservation easements. One bone I have to pick with Cantley is his description of exacted conservation easements as being required donations. I think we really need to remove the donation language from our talk about such CEs. Landowners are sometime surprised that they can't (or well at least they shouldn't) get tax benefits from these exactions because they associate all CEs with tax breaks. It also looks to me like Cantley must have written his article pre-Koontz (unsurprising considering the pace of law review publication). I think that case may change his assessment that failed exactions are not cognizable takings... or maybe it depends on how/when we assess failure.

Interesting stuff! The artcle doesn't appear to be available for free on SSRN or elsewhere, but those of you with access to various legal databases can find it at

Beckett G. Cantley, Environmental Preservation and the Fifth Amendment: The Use and Limits of Conservation Easmeents by Regulatory Taking and Eminent Domain, 20 Hastings W.-N.W. J. Envtl. L. & Pol'y 215 (2014).

 

January 28, 2014 in Caselaw, Conservation Easements, Eminent Domain, New York, Scholarship, Servitudes, Supreme Court, Takings | Permalink | Comments (1) | TrackBack (0)

Thursday, January 23, 2014

Is a Right-of-Way an Easement?

Turning old railroad lines into parks and bike paths seems like a great idea. When it results in things like NYC's Highline Park who can complain, but not everyone is happy about these rail to trail projects. In fact, it is the subject of a case currently pending before the Supreme Court. (This is not a case under the Rails-to-Trails Act but implicated perhaps thousands of miles of trails that came from rails).

Marvin Brandt is upset about the bike trail built by the Forest Service on an abandoned railway through his land. Brandt argues that the when the railroad abandoned the government-issued right-of-way, the feds did not have the right to create a new right-of-way in the form of the trail.

The tricky issue here is determining what exactly a railroad right-of-way is. When I hear the term ROW, I envision an easement. But as we all know there are some things out there that sound like easements but aren’t actually easements. The government argues here that these railroad ROWs were not easements in the traditional sense. However, nor were they fee simple strips of land given to the railroad. Instead they are some third category of property law that no one can quite figure out how to define. A surface defeasible fee subject to a reverter perhaps? Let’s break it down.

If it’s an easement: The federal government gives the railroad an easement through public land. The common law rules of easements apply. This means that when the railroad abandons the track in the 1980s (or whenever it was), the easement is extinguished and full unencumbered fee simple title goes back to the underlying landowner. This particular parcel is no longer federal land because the Forest Service swapped it with the Brandt family. Traditional run of the mill easement law tells us that the Brandt family (owner of the servient estate) should have this land with no dominant easement holder left around to bug them (or ride bikes through their property). This is what Brandt’s attorney argues. Not argued, but hinted at by Justice Sotomayor is that the easement holder was really the US and it temporarily transferred its easement rights to the railroad. Now that the railroad is done, it can keep using the easement for similar (transportation) uses through the Forest Service bike trail.

If it was a patent (i.e., fee simple absolute): The federal government gave the railroad a strip of land and the railroad owned that strip (or spaghetti noodle as the court seemed to like envisioning it). This would mean that the railroad owns the land for any purpose and once it stops using the railroad tracks for trains, it could use them for something else or it could sell them to the underlying landowner (or lose ownership via adverse possession if it stands by and does nothing while the forest service or underlying landowner makes use of the land). No one actually argues that the railroad had an unrestricted fee simple though. Instead, it might be that they had a type of defeasible fee (starting to give you flashbacks of your 1L property class yet?). That’s right, the railroad had a fee interest subject to the possibility of reverter. That is, the federal government had a reversionary interest and would get the land back if the railroad stopped using it for railroad purposes.

Now of course, it is not as simple as just reading over the grant to the railroad and figuring out what it said. Instead, we have several wrinkles. For example, there is an 1922 Act (postdating the grant to the railroad) explaining that when the railroad stops using the land for railroad purposes and it reverts to the feds, the feds should first use the land for roads and streets, then consider giving to municipalities, and if that doesn’t pan out give the land to neighboring landowners. There is a more recent statute adjusting that order of priority, but these statutes sure make it sound like the US had a reversionary interest. Of course, Justice Scalia pointed out that he doesn’t care very much about how a subsequent Congress interpreted the railroad’s property right. He is only interest in looking at the 1875 Act enabling grants of ROWs the railroad to try and figure out the property right.

There are some cases muddying the water including a 1942 case interpreting the 1875 Act, concluding that the railroad in question there had not gotten subsurface rights and instead had gotten something akin to an easement.  

There is also the tricky part of the land conveyance to the Brandts. The Forest Service swapped some land with Brandt’s father back in 1976. While the land conveyance noted the railroad’s ROW, it did not mention any reversionary interest. Leading the Brandts (quite reasonably) to believe that the ROW was just a standard run of the mill easement. Can an underlying federal law be in trouble where the forest service neglected to mention it in a land conveyance? Perhaps Brandt’s property lawyer should have researched more and tried to determine what was really going on…

The oral argument in this case is fun for land geeks, especially those of us who teach or study property and/or federal lands. The Court seemed particularly interested in figuring out how much lands the feds own and how much has been converted to other uses -- and what the implications of allowing such reversions would be. Several justices pushed the parties to try and explain how many acres or how many landowners were at stake. No one dared to put forth an estimate. I actually laughed out loud when the justices were shocked that the federal government didn’t keep good track of its land holdings and dispersals. They are so cute sometimes.

 

January 23, 2014 in Caselaw, Constitutional Law, Federal Government, Property, Servitudes, Supreme Court, Takings | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 21, 2013

Conservation Covenants in England and Wales

This summer, many of us conservation easement research types received emails from the Law Commission for England and Wales. The Law Commission is similar to the Uniform Law Commission here in the US in mission (researches potential legal reform and presents suggested statutory texts), but the British version is a body established by Parliament and the US version is a non-profit organization.

When considering changes to the law, the COmmission staff assemble consultation papers. The papers present research on the legal topic at issue, suggest statutory parameters and language, and solicit comments from "consultees." Anyone who visits the website and submits the form can comment, but the Commission also contacts specific people and organizations to solicit their views. There is even a form with specific questions on the issue to complete. I thought this was a very informative and interesting approach.

As you should have already gleaned from the title of this approach, the Law Commission is examining the case for introducing "conservation covenants" into the law of England and Wales. Now, while I read the consultation paper carefully and made lots of notes (several exclamation marks in the margins of this one), I just couldn't get my act together to submit comments  by the June 21st deadline. While this is just a proposal and not yet even a proposed bill, there are lots of interesting things going on in this british version of conservation easements. I thought I would highlight a few of them for you here:

(1) Specific choice not to use the word easement.

(2) No tax breaks associated with donating conservation covenants.

(3) All transactions must be voluntary, so presumably that means no exactions or eminent domain-like creations. However, the Commission contemplates widespread use for offsetting schemes.

(4) Conservation covenants are much easier to terminate or modify. With holders having power to unilaterally discharge obligations. Also suggests a judicial proceeding with specific factors that the tribunal should consider in modifying or terminating the covenants

(5) leaseholders with long leases can enter into conservation covenants for the term of their lease

Plus oh so much more.The differences between the proposed law and the US laws is significant.

I'd be really interested to hear both what consultees said in response to this paper and what you would change here in the US if we were to rewrite our conservation easement laws. (I have my own little wishlist of course).

- Jessica Owley

 

August 21, 2013 in Conservation Easements, Historic Preservation, Judicial Review, Property, Property Rights, Servitudes | Permalink | Comments (0) | TrackBack (0)

Thursday, April 18, 2013

Rose on the History of Racially Restrictive Covenants

Carol Rose (Yale & Arizona) has posted Property Law and the Rise, Life, and Demise of Racially Restrictive Covenants, which is available in the 2013 edition of Powell on Real Property.  Here's the abstract:

This article was given as the 6th Annual Wolf Family Lecture on the American Law of Real Property, University of Florida Levin College of Law (2013). It draws on property law discussions in Richard R.W. Brooks and Carol M. Rose, Saving the Neighborhood: Racially Restrictive Covenants, Law, and Social Norms (Harvard Univ. Press 2013). The article outlines the ways in which constitutional law and property law engaged in a dialog about white-only racial covenants from their early twentieth-century origins to the middle of the twentieth century and beyond. After a shaky beginning, both constitutional law and property law became relatively permissive about racial covenants by the 1920s. But proponents of racial covenants had to work around property law doctrines — including seemingly arcane doctrines like the Rule Against Perpetuities, disfavor to restraints on alienation, "horizontal privity," and "touch and concern." Moreover, property law weaknesses gave leverage to civil rights opponents of covenants, long before Shelley v. Kraemer (1948), the major constitutional case that made these covenants unenforceable in courts. Even after Shelley's constitutional decision, property law continued to be a contested area for racial covenants, with echoes even today.

Jim K.

April 18, 2013 in Constitutional Law, Property, Race, Scholarship, Servitudes, Supreme Court | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 17, 2013

Fennell on Crowdsourcing Land Use

Lee Fennell (Chicago) has posted Crowdsourcing Land Use, 78 Brook. L. Rev. ___ (forthcoming 2013).  In it she looks ahead to the possibilities for emerging information technology to provide platforms for sharing data about land use impacts and preferences as well as landowner intentions.  The last of these involves a proposal for the creation of publicly facilitated options markets in land use rights, an idea she previously outlined in her 2011 piece Property and Precaution (Journal of Tort Law, 2011).  Here's the abstract for the Crowdsourcing article:

Land use conflicts arise from information shortfalls, and avoiding them requires obtaining and using information. Yet traditional forms of land use control operate in relative ignorance about landowner intentions, about preferences for patterns of land use that do not presently exist, and, more fundamentally, about land use impacts as they are experienced on the ground. Because information is expensive to gather and use, this ignorance may be rational. New technological and theoretical advances, however, offer powerful ways to harness and deploy information that lies dispersed in the hands of the public. In this symposium essay, I assess the prospects for an increased role for crowdsourcing in managing land use, as well as the limits on this approach. Governments must do more than elicit, aggregate, coordinate, and channel the preferences, intentions, and experiences of current and potential land users; they must also set normative side constraints, manage agendas, and construct appropriately scaled platforms for compiling and using information.

Jim K.

April 17, 2013 in Community Design, Comprehensive Plans, Nuisance, Planning, Property, Property Rights, Property Theory, Scholarship, Servitudes, Zoning | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 9, 2012

The True Value of Conservation Easements

As regular readers know, I am obsessed with fascinated by conservation easements. Lately, I have been particularly intrigued by valuation concerns. Where a landowner donates a conservation easement on her property, she can receive some favorable tax benefits at the local, state, and federal levels. On federal taxes, landowners can deduct the value of the conservation easement from their taxes in the same way they make deductions for other charitable contributions. This, of course, leads to valuation problems. Without an active conservation easement market, it is hard to figure out what their worth should be. Landowners want high appraisals because it increases the tax deductions. The IRS, however, has been increasingly skeptical of these deductions (especially following some 2003 Washington Post exposes about The Nature Conservancy).

This issue seems particularly salient where conservation easements (including historic facade easement) appear simply to replicate existing land use laws. In such cases, there is a strong argument that the value of the conservation easement should be zero and the landowner should not receive a tax break. Indeed, the landowner does not seem to have lost anything in the transaction. She does not change her behavior and property sales may not even be affected. The Tax Court seemed to agree with this reasoning in the recent Foster Case, where the IRS denied a tax deduction for a historic facade easement. The Tax Court upheld the IRS' finding because, inter alia, the restrictions on the property mirrored those already embodied in local law.

It is not uncommon for conservation easements to replicate or even to conflict with local zoning and land use laws. Proponents of conservation easements point out that conservation easements protect against future actions -- futures where land use codes or other laws could change but the restrictions would still remain in place. While I see there point, something still rubs me the wrong way when we pay people to do things they were going to do anyway. How can we figure out the best way to quantify the public benefit here?

- Jessie Owley

 

October 9, 2012 in Conservation Easements, Historic Preservation, Land Trust, Servitudes | Permalink | Comments (0) | TrackBack (0)

Thursday, August 9, 2012

Strahilevitz on Absolute and Relative Preferences in Property Law

Lior Strahilevitz (Chicago) has posted Absolute Preferences and Relative Preferences in Property Law, 160 University of Pennsylvania Law Review (2012).  The abstract:

This article suggests that the population is roughly divided between individuals primarily oriented toward absolute gains and losses, and those oriented toward relative gains and losses. That is, some people consistently care more about the absolute size of the pie slice they are eating, and others care more about how their percentage of the pie stacks up against their peers’ portions. This article examines how property law deals with that heterogeneity in relative and absolute preferences. It focuses initially on inheritance law, particularly cases in which a decedent with living children has adopted her grandchild or someone else within the bloodstream, engendering results that might be acceptable to an heir with absolute preferences but unacceptable to an heir with relative preferences. The article then shows how similar controversies play out in takings law and the law of easements. In many of these cases vehement disagreements between majority opinions and dissents can be understood as clashes between jurists who are focused on absolute resources and those who are focused on relative resources. The article then hypothesizes that some relatively low-stakes disputes explode into contentious lawsuits precisely because a landowner oriented towards absolute gains and losses is incapable of understanding a conflict from the perspective of his neighbor, for whom relative preferences are decisive. The article concludes by referencing examples from takings law and the law of waste, in which divergent assumptions about the prevalence of relative and absolute preferences render property doctrines ambiguous, tenuous, or incoherent.

In addition to being an important piece on property theory generally, Prof. Strahilevitz specifically examines the land use topics of takings and easements.  I think this analysis could also be extended to the debate over housing and urban form.  A must-read.

Matt Festa

August 9, 2012 in Property Theory, Scholarship, Servitudes, Takings | Permalink | Comments (0) | TrackBack (0)

Thursday, June 21, 2012

In the Conservation Easement versus Mortgage Battle...

the mortgage wins. Because I am a conservation easement nerd savvy academic, I have Westlaw alert me every time a case mentions the term "conservation easement." For years, this yielded very few cases and I only received alerts once a month or so. Lately, I have been getting them daily. Many of these cases come from the tax court and have to do with valuation issues, one line of cases however explores mortgage subordination.

Conservation easements are nonpossessory interests in land that restrict a landowner's use of her property with a goal of yielding a conservation benefit. Many landowners donate conservation easements (i.e. voluntarily restrict the use of their property). Such donations can yield significant federal tax deductions. For a conservation easement (or historic preservation easement) to qualify for a charitable tax break, the restriction must be perpetual. The IRS, Tax Court, and others have acknowledged that it is well nigh impossible to ensure perpetuity of these things. Instead, the IRS has explained that it will consider a restriction to be perpetual if when the restriction is terminated, the beneficiary gets the proceeds. Basically, when a conservation easement is terminated (for any variety of reasons/methods), the holder of the conservation easement will get cash for its porportionate value. Ideally, the holder then uses that money to protect other lands. If your conservation easement doesn't have a provision detailing this procedure, the IRS (in theory) will disallow your deduction. To ensure that the holder will be able to get the proceeds from a land sale, the conservation easement holder must have primary rights to the proceeds. That is, other restrictions on the land must be subordinated (everyone else gets in line behind the conservation easement holder when proceeds from the sale are passed out). This is why the IRS requires any mortgages on the land to be subordinate to the conservation easement.

There have been a few cases from the tax court exploring this issue and most of them seem to involve historic facade easements. In Kaufman v. Commissioner (134 T.C. 182 Apr. 2010), the Tax Court concluded that a facade easement did not qualify for a tax deduction because it wasn't really perpetual because there was a non-subordinated mortgage encumbering the property. The landowners argued that the lack of subordination did not necessarily mean that the holder would not get its proceeds, but the court didn't care. There was a possibility that the facade easement holder would  not be able to receive the proportionate share.

Last week in Wall v. Commissioner (T.C. Memo. 2012-169, June 2012), the Tax Court reached a similar result even though the conservation easement (again a facade preservation easement) declared that it all exisiting mortgages were subordinate. The court did not take the conservation easement at its word and instead looked at the text of the mortgage subordination. The two banks involved executed documents appearing to subordinate the mortgages (based on the title and opening provisions of the documents), but a closer reading revealed that the banks still were claiming that they had "prior claims" in the event of any foreclosures or eminent domain proceedings. The presumption that the mortgages get first dibs at the moola stems mostly from the fact that they encumbered the land prior to the facade easement.

However, I think the main lesson here is that there is almost a presumption against the restrictions being perpetual and any possibility that the proportionate proceeds won't get paid to the conservation easement holder mean no tax deduction.

Jessica Owley

June 21, 2012 in Caselaw, Conservation Easements, Historic Preservation, Land Trust, Mortgages, Property, Real Estate Transactions, Servitudes | Permalink | Comments (0) | TrackBack (0)

Monday, May 7, 2012

New Article on Green CC&Rs

Robert J. Aalberts and Darren A. Prum have posted an interesting new article on the use of CC&Rs to promote sustainable development.  Their article, Our Own Private Sustainable Community, features case studies of specific communities in Oregon and Maine that have written aggressive green building and other sustainability-focused provisions into their CC&Rs.  The last major section of the article describes some of the benefits and potential challenges of such an approach.  Here's the abstract:

Residential and commercial property owners have sought for centuries to develop and enrich their physical environment through private land use planning. In more recent decades, residential owners residing in community interest communities (CICs) have been particularly active in crafting an evolving array of deed restrictions contained in Covenants, Conditions and Restrictions (CC&Rs). CC&Rs, which are generally created by the CIC developer, are mutually binding and enforceable against all those who live or conduct business in self-selected residential subdivisions or commercial developments. Importantly, CC&Rs are monitored sometimes quite forcefully, under the watchful eye of an empowered planned development association.

Although the typical post World War II CC&Rs were often mundane, governing setbacks, parking and vehicular restrictions, architectural requirements, non-household animals, sight and smell nuisances, trash containment and landscaping and plants, more recent CC&Rs are venturing into new and generally uncharted waters by promoting environmental sustainability. More specifically, a growing number of CICs are establishing green building goals, such as those certified by the United States Green Building Council’s (USGBC) which maintains its now familiar Leadership in Energy and Environmental Design or LEED rating system. Initial attempts at promoting environmental sustainability ratings, even while opposed by some, have placed an emphasis on improved water usage and environmentally compatible landscaping, but are now expanding in ever greater directions, including architectural design requirements. This article evaluates some of the potential problems green developments likely will face in this emerging approach to private regulation through an extensive discussion of our two case studies.

The use of CC&Rs as a tool for promoting sustainable development is likely to continue to evolve in the coming years, so this article makes for a timely and thought-provoking read.

Troy Rule

May 7, 2012 in Common Interest Communities, Environmentalism, Green Building, Servitudes, Smart Growth, Sustainability | Permalink | Comments (1) | TrackBack (0)

Friday, March 16, 2012

Rule on Airspace and the Takings Clause

Troy A. Rule has a very interesting article up: Airspace and the Takings Clause, forthcoming in the Washington University Law Review.  The abstract:

This Article argues that the U.S. Supreme Court’s takings jurisprudence fails to account for instances when public entities restrict private airspace solely to keep it open for their own use. Many landowners rely on open space above adjacent land to preserve scenic views for their properties, to provide sunlight access for their rooftop solar panels, or to serve other uses that require no physical invasion of the neighboring space. Private citizens typically must purchase easements or covenants to prevent their neighbors from erecting trees or buildings that would interfere with these non-physical airspace uses. In contrast, public entities can often secure their non-physical uses of neighboring airspace without having to compensate neighbors by simply imposing height restrictions or other regulations on the space. The Supreme Court’s existing regulatory takings rules, which focus heavily on whether a challenged government action involves physical invasion of the claimant’s property or destroys all economically beneficial use of the property, fail to protect private landowners against these uncompensated takings of negative airspace easements. In recent years, regulations aimed at keeping private airspace open for specific government uses have threatened wind energy developments throughout the country and have even halted major construction projects near the Las Vegas Strip. This Article highlights several situations in which governments can impose height restrictions or other regulations as a way to effectively take negative airspace easements for their own benefit. The Article describes why current regulatory takings rules fail to adequately protect citizens against these situations and advocates a new rule capable of filling this gap in takings law. The new rule would clarify the Supreme Court’s takings jurisprudence as it relates to airspace and would promote more fair and efficient allocations of airspace rights between governments and private citizens.

Troy, our excellent guest blogger, has written before about sun, wind, and air, so this article is coming from one of the emerging experts in property rights above the dirt. 

Matt Festa

March 16, 2012 in Clean Energy, Constitutional Law, Property Rights, Scholarship, Servitudes, Supreme Court, Takings, Wind Energy | Permalink | Comments (0) | TrackBack (0)

Thursday, March 15, 2012

Smith on Property as the Law of Things

Henry E. Smith (Harvard) has posted what looks to be a very important property theory piece, Property as the Law of Things, forthcoming in the Harvard Law Review.  The abstract:

The New Private Law takes seriously the need for baselines in general and the traditional ones furnished by the law in particular. One such baseline is the “things” of property. The bundle of rights picture popularized by the Legal Realists downplayed things and promoted the expectation that features of property are detachable and tailorable without limit. The bundle picture captures too much to be a theory. By contrast, the information cost, or architectural, theory proposed here captures how the features of property work together to achieve property’s purposes. Drawing on Herbert Simon’s notions of nearly decomposable systems and modularity, the article shows how property employs a thing-based exclusion-governance architecture to manage complexity of the interactions between legal actors. Modular property first breaks this system of interactions into components, and this begins with defining the modular things of property. Property then specifies the interface between the modular components of property through governance strategies that make more direct reference to uses and purposes, as in the law of nuisance, covenants, and zoning. In contrast to the bundle of rights picture, the modular theory captures how a great number of features of property – ranging from in-rem-ness, the right to exclude, and the residual claim, through alienability, persistence, and compatibility, and beyond to deep aspects like recursiveness, scalability, and resilience – follow from the modular architecture. The Article then shows how the information cost theory helps explain some puzzling phenomena such as the pedis possessio in mining law, fencing in and fencing out, the unit rule in eminent domain, and the intersection of state action and the enforcement of covenants. The Article concludes with some implications of property as a law of modular things for the architecture of private law.

Matt Festa

March 15, 2012 in Eminent Domain, History, Nuisance, Property, Property Theory, Scholarship, Servitudes, Zoning | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 22, 2012

Tear Down This Mansion?

Nc_mansion0221_500kmsnbc_120221_standardA Michigan appellate court has ordered the owner to tear down what looks to be a fairly elaborate and presumably expensive home, because it is only 80 feet from the neighboring property, instead of the 100 feet required in the deed restrictions.  Talk about strict enforcement!  But as the neighbors say in the video, rules are rules. 

The news story is here at msnbc.com.  Might be an interesting clip to show for servitudes, land use, or real estate transactions.  Thanks to Helen Jenkins for the pointer.

Matt Festa

February 22, 2012 in Homeowners Associations, Judicial Review, Property Rights, Real Estate Transactions, Remedies, Servitudes, State Government, Teaching | Permalink | Comments (0) | TrackBack (0)

Thursday, January 26, 2012

Owley on Exacted Conservation Easements and Enforcement Concerns

Jessica Owley (Buffalo) has posted Exacted Conservation Easements: Emerging Concerns with Enforcement, Probate & Property, Vol. 26, No. 1, p. 51, 2012.  The abstract:

Enforceability of exacted conservation easements is uncertain. Legislators, activists, and academics did not contemplate the proliferation of exacted conservation easements when enacting, advocating for, and writing about state conservation easement statutes. Despite this early oversight, exaction has become one of the most common ways that conservation easements come into being. Enforceability of exacted conservation easements is a threshold question of analysis for the continued use of the tool. Assessing the validity, and thus legal enforceability, of the exacted conservation easements involves examining the state’s conservation-easement statutes and state servitude law as well as the underlying permit scheme.

This article presents a roadmap for investigating the enforceability of exacted conservation easements and makes three suggestions for improvement. First, states should address exaction in their state conservation-easement acts. Second, drafters should increase the precision and detail of the agreements, acknowledging and explaining the nature of the exaction and the underlying permitting law. Third, to clarify the elements and uses of exacted conservation easements to both agencies and citizens, government agencies that use exacted conservation easements should promulgate regulations related to their use. Such regulations should include ensuring that permit issuers retain third-party right of enforcements. This will keep the permitting agency involved even if it is not the holder of the exacted conservation easement.

Uncertainty in enforceability of exacted conservation easements calls into question their use as a method of land conservation. Furthermore, the questionable validity of exacted conservation easements indicates that the permits relying upon such exactions could be ill advised and potentially in jeopardy.

 

This accessible piece builds on some of the concerns outlined in her recent Vermont Law Review piece, The Enforceability of Exacted Conservation Easements.

Matt Festa

January 26, 2012 in Conservation Easements, Environmental Law, Scholarship, Servitudes, State Government, Sustainability | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 18, 2012

Nelson Symposium--Digging up some Dirt (Law)

Michael Allan Wolf sends along information about the 11th Robert Nelson Symposium at the University of Florida School of Law: “Digging Up Some Dirt (Law): How Recent Developments in Real Property Law Affect Landowners and Local Governments.”  From the description:

“Digging Up Some Dirt (Law): How Recent Developments in Real Property Law Affect Landowners and Local Governments” will welcome national and state experts to explore the impact on landowners and local governments of recent and proposed changes in the law of adverse possession, eminent domain, easements and mortgages.

Here is a link to the brochure.  You can register at the website.  Looks like a timely and interesting event with an excellent lineup of speakers, including Carol Brown (UNC), Ann Marie Cavazos (FAMU), Alex Johnson (UVA), Jessica Owley (Buffalo), and Professor Wolf (UF).

Matt Festa

January 18, 2012 in Conferences, Conservation Easements, Eminent Domain, Local Government, Mortgages, Scholarship, Servitudes | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 4, 2011

Owley on the Enforceability of Exacted Conservation Easements

Jessica Owley (Buffalo), one of our excellent erstwhile guest bloggers, has posted The Enforceability of Exacted Conservation Easements, forthcoming in 36 Vermont Law Review (2011). The abstract:

The use of exacted conservation easements is widespread. Yet, the study of the implications of their use has been minimal. Conservation easements are nonpossessory interests in land restricting a landowner’s ability to use her land in an otherwise permissible way, with the goal of yielding a conservation benefit. Exacted conservation easements arise in permitting contexts where, in exchange for a government benefit, landowners either create conservation easements on their own property or arrange for conservation easements on other land.

To explore the concern associated with the enforceability of exacted conservation easements in a concrete way, this article examines exacted conservation easements in California, demonstrating that despite their frequent use in the state, their enforceability is uncertain. The three California statutes governing conservation easements limit the ability to exact conservation easements. California caselaw, although thin, indicates that courts may be willing to uphold exacted conservation easements even when they conflict with the state statutes. This examination of the California situation highlights California-specific concerns while providing a framework for examining exacted conservation easements in other states.

This article illustrates not only challenges of enforceability that arise with exacted conservation easements, but uncertainty in their fundamental validity and concerns about public accountability. This exploration illustrates that enforceability is not straightforward. This raises significant concerns about using exacted conservation easements to promote conservation goals, calling into question specifically the use of conservation easements as exactions.

This piece adds to Jessica's series of articles that explore the limits of conservation easements from an environmental perspective.

Matt Festa

October 4, 2011 in Conservation Easements, Environmental Law, Environmentalism, Local Government, Property Rights, Scholarship, Servitudes, State Government, Sustainability | Permalink | Comments (0) | TrackBack (0)

Friday, August 26, 2011

Craig on Defining Riparian Rights as 'Property' through Takings Litigation

Robin Kundis Craig (Florida State) has posted Defining Riparian Rights as 'Property' Through Takings Litigation: Is There a Property Right to Environmental Quality?, forthcoming in Environmental Law. The abstract:

The U.S. Constitution’s prohibitions on governments taking private property without compensation have always operated most clearly in the context of real property. In contrast, arguments that these takings restrictions should apply to water and water rights throw courts for a loop. A fundamental problem for takings decisions in the water rights context is the fact that both the status of water rights as property and the defining elements of any property rights that exist are contested.

This Article argues that takings litigation can become a productive occasion for defining the status and nature of water rights, especially, increasingly, in the riparianism context. It first provides a quick review of basic takings jurisprudence, emphasizing how the constitutional prohibitions on government takings apply to property use rights, such as easements. It then examines the potential for takings litigation to help define the nature of water rights in general, focusing on relatively recent litigation involving water rights connected with cattle grazing. The Article ends by discussing a series of cases involving riparian water rights and claims that those rights entitle the owners to certain basic environmental quality standards, especially with respect to water quality. It concludes that takings jurisprudence in the riparian rights context may yet align private property rights and environmental protection, providing a more focused - and potentially more predictable/less balancing - private cause of action than nuisance for certain kinds of environmental degradation.

Matt Festa

August 26, 2011 in Agriculture, Environmental Law, Property Rights, Scholarship, Servitudes, Sustainability, Takings, Water | Permalink | Comments (1) | TrackBack (0)

Thursday, April 28, 2011

The Beach Rolls to Fort Worth: Severance Panel at Texas Wesleyan

It's Severance-palooza today on the Land Use Prof Blog, with Hannah Wiseman's great summary of the oral arguments at the recent rehearing of the Open Beaches Act case in the Texas Supreme Court, and the contribution in my previous post from Timothy Mulvaney.  Scroll down to the next two posts for that background and analysis.

But wait, there's more!  Prof. Mulvaney, who has done a lot of research on takings, including a piece on last year's Stop the Beach Renourishment, has been following Severance v. Patterson for a long time.  Last month he hosted a lively panel discussion on the case at Texas Wesleyan School of Law (ably sponsored by their Federalist Society and Environmental Law Society).  The participants were David Breemer, the attorney for plaintiff Carol Severance; Ellis Pickett, former chair of the Texas Upper Coast Chapter of the Surfrider Foundation; and yours truly.

Prof. Mulvaney spoke first and gave a helpful introduction to the case and the background of the legal issues.  Mr. Breemer, a principal with the Pacific Legal Foundation, gave his client's view of the case and argued vigorously that the state's interpretation of beach-access easement law is an unconstitutional interference with his client's property rights. 

I spoke a little bit about the Texas Supreme Court's initial opinion from November 2010, and also about the issue I focused on in my amicus curiae brief, which was (my view) that an easement must be proven up for each property through common law doctrines of dedication, prescription, or custom before we can even get to the question of whether it rolls. 

Mr. Pickett, whose Surfrider Foundation also filed an amicus brief (with which a former student of mine assisted in drafting), spoke passionately about the environmental costs of restricting the public interest in the beach.  He had lots of compelling pictures and even passed around the room a giant piece of twisted metal to make his point.  This was followed by a great Q&A session with the well-informed crowd.

What made it even more interesting is that when Prof. Mulvaney organized the panel, it was conceived as an after-action discussion of the November opinion.  It wasn't until just a couple of weeks beforehand that we all learned that the court had taken the unusual step of granting the rehearing.  By the way, you can read all of the briefs, including the amici, at the link from this post

It was a great event, and the other three participants have offered to give me a surfing lesson. The participants have all agreed to contribute to an upcoming issue of the Texas Wesleyan Law Review.

Here's the video!  [requires Real Player].  This video, plus Part 2, are also available at the Texas Weslayan web article on the event.

   

Matt Festa

April 28, 2011 in Beaches, Caselaw, Conferences, Environmentalism, Property Rights, Scholarship, Servitudes, State Government, Texas | Permalink | Comments (0) | TrackBack (0)