Friday, August 9, 2013

Agricultural Conservation Easements and Charitable Trusts

An interesting case from Maryland this summer chimed on a debate going on in the conservation easement literature about the extent to to which charitable trust law applies to conservation easements. The authority on this, Nancy McLaughlin, asserts that conservation easements are a form of a charitable trust and therefore courts should use the cy pres doctrine when dealing with arguments to terminate or amend them. If this is all greek to you, check out some of Nancy's writing on the topic: here and here. While I am willing to accept the argument that donated conservation easements form a charitable trust, I find it harder to swallow with those created by sales, exactions, or other methods.

But back to Maryland. Under Maryland law,"interested persons" who are not a party to a charitable trust (neither trustee nor beneficiary) have standing to enforce the provisions of the trust. In Long Green Valy Ass'n v. Bellevale Farms, 68 A.3d 843 (Md. Ct. App. 2013), the court held the agricultural conservation easement at issue was not a charitable trust and non-parties could not enforce the agreement.

The dispute centers on a 199-acre organic dairy farm. Back in 1997, the owners sold an agricultural preservation easement to the Maryland Agricultural Land Preservation Foundation, a state agency. Notice that this is not a donated conservation easements and the case does not involve a land trust. In 2007, the farmers approached the agency seeking an amendment to the agreement to allow them to construct a creamery on their property. The agency approved the proposal over protestations from a community association and adjacent landowners, who then filed a Complaint seeking a declaration that the creamery would violate the conservation easement.

Setting aside the fact that the creamery doesn't actually appear to violate the easement or local land use laws, the case turned on standing.The association (and neighbor) claimed standing to enforce a charitable trust as as aggrieved or interested parties. The trial court didn't buy their argument, stating that there was no charitable trust and the court of appeals agreed. This agricultural preservation easement was the result of a state-funded farmland preservation program. Nothing in the law regarding the state program or the language of the conservation easement convinced the courts that this should be considered a charitable trust. There court did not read the agreement as having an intent to create a fiduciary relationship nor was the property associated with any charitable purpose.

The case does not foreclose the possibility of conservation easements being charitable trusts in Maryland, but demonstrates that courts will examine deed language and other evidence carefully to see whether it meets the qualifications: the assessment will occur on an easement-by-easement basis.

Jessie Owley

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