Conservation Easements– 130 years of experience challenges and trends

Leslie Ratley-Beach Lorri Barrett Director of Conservation Defense Conservation Defense Coordinator Land Trust Alliance Land Trust Alliance Vice President Alliance Risk Management Services LLC Hannah Flake Conservation Defense Associate October 20, 2016 Land Trust Alliance

THANK YOU ONTARIO LAND TRUST ALLIANCE

Agenda Three major challenges in easement perpetuity: 1. drafting from enforcement cases

– interpretation and fee – cost recovery clauses

2. records and relationships 3. risk balancing US experiences

– practical pointers – policy and procedures template

First: open discussion of your problem stories and trends

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Who’s here?

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Who is here?

WHAT HAVE YOU EXPERIENCED?

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Stories and Trends on Challenges

SUPRISE!

Before CE Violation After CE Violation

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Another Surprise

Trespass Surprise

“I’ll sue anyone and everyone who tells me otherwise” • Defamation claims against Boards and Staff

• Wrongful eviction/denial of property right claims against Land Trusts

• Slander of title claims against all

Common Retaliatory

Claims

“I will do everything in my power to harm you.”

The Deed or

Easement was Defective in its

Adoption • Person holding record title didn’t sign document

• Public meeting act requirements weren't met • Legal description didn’t restrict what was

expected • Name incorrect

Mitigation Strategies

• Purchase Title Insurance for Every Project • Use External Eyes of Outside Counsel • Check Problem Points Extra Carefully

– Names – conform with title search and rundown – Legal Descriptions – Conform easement, baseline and map – Purposes consistent with restrictions and

reservations

• Document Document Document

The Restriction Has Been

Wiped Out

• Inconsistencies voiding restriction. • Junior lenders attempting to eliminate all

restrictions. • Landowner’s bankruptcy wipes out all

encumbrances. • Family squabbles over dividing property. • Federal forfeiture action against donor claws back

from land trust.

Mitigation Strategies

• Obtain and record all lien subordinations with conservation easements

• Know your easement grantors • Write strong purpose clauses • Have strong interpretation and catch all

clauses • Draft Defensively

Draft defensively! • Can’t anticipate or define everything. • Articulate intentions of parties to the original

easement to give courts a guide to interpretation. • Avoid jargon, abbreviations, colloquialisms, “terms of

art,” or technical terms. • Beware of court and common law principles that

may result in construction of easement language against conservation purposes of easement.

• Explicit clause on liberal construction and conservation easement enabling act implementation.

Interpretation Clause Drafting Pointer Economic Hardship

Acknowledge in your Easement clause: 1. Possibility prohibited uses may be more economically

valuable than permitted uses, 2. Neighboring properties may be used for prohibited

uses, 3. Intent of Owners and Holder that any such changes not

justify termination or extinguishment, 4. Inability of Owners or successors to engage in any or all

of the uses permitted not impair validity or be grounds for termination or extinguishment

5. Unprofitability of doing so, not impair validity or be grounds for termination or extinguishment

Interpretation Clause Drafting Pointer Waiver of Certain Defenses

Acknowledge in your Easement clause: 1. Failure or delay of Holder, for any reason, 2. To discover a violation, encroachment, deficiency 3. Or initiate an action to enforce 4. NOT a waiver or estoppel 5. Owner waives all defenses of latches, estoppel or

prescription (Canadian equivalents or others) 6. Owner acknowledges and agrees Holder has right to

enforce as it deems consistent with the Purposes.

Interpretation Clause Drafting Pointer Liberal Construction

Acknowledge in your Easement clause: 1. Exception to general rules of deed or contract

construction in common law 2. Liberally (generously or broadly) interpreted to

uphold conservation purposes 3. Any ambiguity interpreted in favor of giving effect

to conservation purposes 4. No ambiguity or interpretation allowed that

invalidates or impairs effect of Easement

Interpretation Clause Drafting Pointer Future Evolution

Acknowledge in your Easement clause: 1. No uses and no activity permitted which is or is

likely to become inconsistent with Purposes 2. Both parties acknowledge perpetual nature of

Grant means uncertainty about future uses, technologies, evolution and other future occurrences affecting the Purposes

3. Holder has sole discretion to determine consistency 4. Holder must approve anything new 5. Easement conveys to Holder ALL rights other than

permitted uses

Interpretation Clause Drafting Pointer Fees and Costs Recovery

Acknowledge in your Easement clause: 1. All reasonable fees, costs, expenses in administration 2. Including, without limitation, 3. Investigation, negotiation, mediation, settlement or

suit and 4. Reasonable attorneys, experts, consultants and other

such fees, and 5. Any fees and costs of restoration 6. Borne by Owner

Interpretation Clause Drafting Pointer Fees and Costs Recovery

BUT if Grantor ultimately prevails in a judicial enforcement action each party shall bear its own costs. Canadian rules about fees, costs and expenses likely to alter this clause US has to draft to avoid “American Rule” of pay your own

Proactive Steps • Education for all of the neighbors. • Survey property lines and share it. • Work with homeowner’s association. • Neighbors watching and reporting. • Excellent baseline documentation. • Annual monitoring. • Written policies and procedures. • Immediate response to problems. • Publicity of responses to problems.

Baseline Pointers • Ensure are consistent with easement or land

management plan • Make sure baseline narrative, photos and

maps are all internally consistent • Ensure that all human construction is

documented • Address intent • Supplement after significant events • Signatures and acknowledgements • Admissibility under business records rule

Records Pointers • Original easement (or land) grantor’s intent • Funder’s intent or requirements (if any) • Land trust’s intent !!! • Original grantor’s

• mental capacity to comprehend • representation by independent legal counsel • advice from a financial expert

• Evidence that land trust dealt with the original grantor in an ethical, honest and open manner

• Land Trust Standards and Practices 2D and 9G

Relationship Pointers • Finesse and diplomacy are your best friends • Treat people well and most will reciprocate • Have a different approach for the 1% who

have hostile or poor motivations • Don’t penalize those who make typical

mistakes • Recognize that mental health issues may need

a different approach • Recognize that age or infirmity may need

accommodation

Relationship Enhancers

• Annually honor an exemplary landowner • Profile an landowner in the organization’s newsletter • Give landowners special gift memberships • Provide free or reduced passes to events • Send special bulletins for easement landowners • Visit new easement owners with a welcome package • Offer special walks or tours of conservation lands • Create landowner recognition opportunities

Risk Balancing Resources

Review enforcement policy and procedures Review of Land Trust Alliance resources to help

Enforcement Policy and Procedures

• Land Trust Alliance Templates • Publicly available Policy with general

statements and guidelines • Internal use only Procedures with details • Practical Pointer –

– All land trusts have benefitted from strong insurance portfolio

– Strong fiscal controls essential

Mitigation Strategies • Conduct organization wide risk balancing • Have an annual review of risk and response • Have adequate insurance including

– General Liability with an Umbrella – Directors & Officers – Crime and Fidelity - Volunteer – Non-Owned Auto - Title – Collective Defense Funding Pool

• Have sensible enforcement policy and procedures • Build strong and wide public support • Use great communication and listening

Great Books

Download Practical Pointers for Land Trusts When Facing a Lawsuit or Other Legal Challenge of Any Size

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Download A Guide to Risk Management for Land Trusts

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Easy Reading Resources Online

• http://tlc.lta.org/courses – Easement and Baseline Drafting – Records and Lasting Conservation – Stewardship – Land Management and Acquisition – Appraisals and Form 8283 – Upholding Conservation Easements

Thank you for your dedication to lasting conservation!

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