Drafting Easements to Avoid Disputes

You may have heard that the U.S. Tax Court issued a series of recent opinions that directly address the specific language and necessary elements of a proceeds clause for conservation easements to qualify as charitable contributions. In response, the Land Trust Alliance updated its guidance concerning drafting provisions in conservation easements concerning extinguishment and proceeds -- Pointers for Drafting the Proceeds Clause in Conservation Easements. Your attorney may want to review your template to help avoid additional disputes with landowners. Terrafirma is seeing an uptick in claims where the landowner refuses to comply with the percentage payment in any clause.

The Alliance also has these additional helpful pointers on easement drafting to avoid disputes:

  1. Pointers For Balancing Risk When Permitting Structures On Deductible Conservation Easements
  2. Pointers for Balancing Risk on Conservation Easement Modification Eight Elements to Consider Following the Full Tax Court Decision
  3. What you need to know from tax cases shorn of nuances
  4. Pointers for Balancing IRS Audit Risk When Permitting Commercial Forestry on Tax-Deductible Conservation Easements

Have questions? Please let us know. You can email us directly or call 802-262-6051 for Leslie, or 202-800-2248 for myself.

 
 

Stewardship during COVID-19

The pandemic presents unprecedented challenges for monitoring and enforcement. Terrafirma takes these special circumstances into account so that you can focus on staying safe. Please document any deviations from standard procedures and anything that might affect your eligibility requirements for Terrafirma this year.

 

We highly recommend that you read Conservation Stewardship in the Time of COVID-19 on the Land Trust Alliance Learning Center for tips on proceeding with essential work while managing risk.

 

Most importantly for your Terrafirma coverage, remember to file a claim for any issues discovered during the 2019 policy period (March 1, 2019 to March 1, 2020) by April 30, 2020. The grace period end date of April 30 never changes, so you can add a recurring calendar item for each year so you don’t forget!

 

Have questions? Please let us know. You can email us directly or call 802-262-6051 for Leslie, or 202-800-2248 for myself.


Thanks,
Hannah

Conservation Defense Coordinator
ALLIANCE RISK MANAGEMENT SERVICES LLC
(202) 800-2248  |  

 

Have your cake and eat it too

People who love land also tend to be optimists who see the best in people. We believe in settling disputes through courtesy, perseverance, and rational thought – keeping interactions sweet, not salty.

You can work through issues together and file a claim with Terrafirma immediately, at the very first hint of a disagreement or problem. Filing a claim with your conservation defense liability insurance might feel like an aggressive last resort, but it should be one of your first moves. Terrafirma does not notify the other party that a claim was filed, and you can keep the claim on hold while you try to reach an amicable resolution. This way, if you need assistance later on, you don’t need to worry about a claim not qualifying for coverage because it was filed too late.

You can have your cake and eat it too! Hold your place in line by filing a Terrafirma claim, then move ahead confidently knowing that you have a backup plan in place. Wondering when sweet as sugar language needs some salt? See our newly revised When to Shift Gears.

Lastly, please remember that the grace period for the 2019 Terrafirma policy period ends on April 30. File any claims for lingering issues that were first discovered between March 1, 2019 and March 1, 2020 by that day.

Have questions? Please let us know. You can email us directly or call 802-262-6051 for Leslie, or 202-800-2248 for myself.

 

Look Again!

When was the last time your organization reviewed your stewardship policy? If it was pre-Terrafirma, it may be time to take another look.

Your policy likely describes how stewardship reserves are set, and it may advise landowners that the funds will be segregated and used only for monitoring and enforcement, not for daily operations of the land trust.

If you have Terrafirma coverage, you might consider adding language that makes it clear if:

  • Reserves may include a contribution of premium for the Terrafirma policy as part of the initial funding
  • Some of the stewardship funds will be used to pay for Terrafirma policies covering not only easements, but the land trust’s own fee properties

 

Have questions about policy drafting or anything else? Please let us know. You can email us directly or call 802-262-6051 for Leslie, or 202-800-2248 for myself.

 

Good things come in pairs!

We are excited to announce a pair of new features that should make life a little easier for Terrafirma member-owners – two steps at a time.

  1. There is a new quick and easy way to update claims on the Terrafirma website. After you submit a claim we ask that you send us updates every three months, up until now via e-mail. You can now just click the handy blue “Add Update” bottom at the bottom of each claim instead. This will make past updates easier to track, so you can see at a glance what you last wrote and when.
  2. There is a new payment option! In addition to the ACH transfer option that we announced in November, you can pay via online bill pay. See details here: https://terrafirma.org/payments

Please remember that Terrafirma applications and payments are due February 3, 2020. Land trusts awaiting a February Accreditation decision receive an automatic extension to February 24.

Have questions? Please let us know. You can email us directly or call 802-262-6051 for Leslie, or 202-800-2248 for myself.

Thanks,
Hannah

Conservation Defense Coordinator
ALLIANCE RISK MANAGEMENT SERVICES LLC
(202) 800-2248  |  

 

 
P.S. As we start the new year, you might want to sit down with your attorney to review your easement template. They should understand what it takes to implement stewardship, and your on the ground feedback is invaluable.

 

We made a list; please check it twice!

Santa isn’t the only one with a list. On the Terrafirma website you’ll find a list of the 13 eligibility requirements that must be fulfilled before your organization can join Terrafirma. These answers routinely come up when examining claims, so you want to be sure that you can give a confident yes to all 13.

If you are already a Terrafirma member and you are updating your application, you may be used to checking off "yes" to all of these without reading through carefully. This year, remember to revisit these eligibility requirements and make sure that you still satisfy all of them.

Please also remember:

  • If you are awaiting your February accreditation decision, whether first time or renewing, don't hit that submit button just yet! Please fill out your application and then hit "submit" once your decision is received. There is an $11/parcel accreditation discount that we don't want you to miss.
  • Check in with your bank to see how to send your payment via ACH transfer.

Have questions? Please let us know. You can email us directly or call 802-262-6051 for Leslie, or 202-800-2248 for myself.

 
 

Terrafirma payments are now online!

You can now use Automated Clearing House (ACH) transfers to pay your Terrafirma premium. The ACH is a secure network that is all digital. Terrafirma is all online: invoices, notices, applications, policies and payments. Starting with the 2020 application period – opening on Dec. 1, 2019 and closing on Feb. 3, 2020 – ACH transfers will be the preferred method of payment.

Terrafirma’s land trust members have increased to the point that payment processing is significantly more expensive. ACH transfers are better not just for the planet, but for keeping your premium payments lower. ACH transfers are also less risky than sending paper checks through the mail, with fewer opportunities for human error and oversight. Additionally, this new system will offer easier payment tracking!

Please note that an ACH transfer is not the same as a wire transfer. Terrafirma does not accept wire transfers. While ACH is free, wire transfers incur a fee both for Terrafirma and for the land trust. Terrafirma charges a $30 processing fee for any wire transfers received.

Terrafirma cannot accept credit cards, due to the expense of both processing and administration, as well as the price of having the appropriate controls in place to address the high security risk. These costs would be passed on to you, the policyholders.

You may be able to set up ACH transfers online with your bank by creating a transfer to an external account using Terrafirma’s account information. Alternatively, you can take this information to your bank manager to set up an ACH account to pay the premium annually.

We’re excited to bring you this new payment method. Have questions about ACH transfers? Visit our FAQ page or please let us know. You can e-mail us directly or call 202-800-2248.

 
 

Clear Thinking Replaces Confusion

You may be under the impression that you have to “think like a lawyer” when confronting legal challenges. But according to Michael Dorf, Professor of Law at Cornell University, there is no such thing – only “clear thinking and confusion.” That said, lawyers do have training to recognize three general types of legal questions:
 
Easy questions: These have straightforward, simple answers that you can look up in a book or on a website.
Complicated questions: These may have determinate answers, but to arrive at them one must first navigate considerable complexity, possibly from various sources of law.
Indeterminate questions: These questions – whether abstract or applied to a specific situation – have no one right answer, but a range of possibilities.
 
There is overlap between the categories, with some issues being partially indeterminate, and your question may not have a right answer. That does not mean, however, that there are no clearly wrong answers – because there are some very wrong answers. You can find a range of possibilities within legal materials, but correct answers must be within that range.
 
Adapted from Michael Dorf’s article, “Distinguishing Among Easy, Complicated, and Indeterminate Legal Questions”
 
 
September 23, 2019 | Tags:

All Together Now

Last month we wrote about common problem areas relating to division, and how no-division clauses can help. Here is why avoiding division is crucial not just for the easement’s habitat, scenic values and wildlife, but for your organization:

  • More owners means more chance of management related conflicts.
  • Property divisions within a conservation easement increase costs and burdens of extra monitoring and enforcement, including more paperwork. 
  • Subdivisions increase the number of landowners the land trust is responsible for maintaining relationships with; if a land trust is not able to devote enough resources towards landowner relationships and communications, violation risk increases.
  • Studies show that more landowners means more risk of violations generally. This is why Terrafirma will always count parcels with different owners separately.

Have questions about easement division violations or anything else? Please let us know. You can e-mail us directly or call 202-800-2248.

Thanks,
Hannah

 

Don't Crack Up

There’s nothing funny about easement division violations. No-division clauses prevent a number of issues including land fragmentation, enforcement complications, damage to the easement’s habitat and scenic values, and barriers to wildlife movement. Proactive monitoring can keep your easements from cracking apart.

Here are some common division problem areas to look out for:

  • Partition of tenancy in common
  • Foreclosure of a mortgage encumbering a part of the easement property
  • Tax foreclosure of part of the easement property comprised of multiple tax parcels
  • Bankruptcy rejection of an executory contract
  • Landowners adjusting the boundaries in violation of the easement

 Have questions? Please let us know. You can e-mail us directly or call 202-800-2248.

Thanks,
Hannah

 
 

Sign Up for TerraBites

Collectively upholding conservation permanence

Tags

Archives