Overview Our Conservation Easement Process

This overview describes the primary steps involved with placing land into a conservation easement with the New Mexico Land Conservancy.

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1. Initial contact and conversation between the Landowner(s) and the New Mexico Land Conservancy (NMLC). Landowner describes in general terms the conservation values and goals of his/her property, and NMLC explains how a conservation easement (CE) and the related process work. Landowner and NMLC decide whether to proceed to the next step. NMLC staff obtains preliminary approval to proceed from NMLC Board of Directors.

2. NMLC representatives visit Landowner and the property. Landowner receives additional information about CEs, and about issues they will need to address in order to complete a CE. NMLC obtains more detailed information about the property, its conservation values, and what rights Landowner may want to reserve (e.g., building sites and land divisions). In addition, any potentially complex issues (such as assessing commercial mineral potential if the mineral rights have been severed from Landowner’s ownership) are identified and discussed.

3. NMLC informs the landowner of the costs associated with completing the CE. NMLC calculates and requests two levels of contribution from landowners to cover its costs for completing and holding the CE. The Commitment Contribution is used to defray some of NMLC’s operating costs associated with completing the CE. The Stewardship Contribution is used to cover the costs of holding the CE, specifically the long-term CE monitoring, enforcement and legal defense costs. NMLC clarifies for Landowner that NMLC does not provide legal, tax, or financial advice for the CE and that Landowner must seek their own counsel on these matters. When the Landowner is ready to move forward with the process, Landowner donates the Commitment Contribution to NMLC.

4. NMLC begins to draft the CE, obtain an updated title report, gather other necessary and relevant documents, etc. NMLC contracts with any professionals who may be needed, which may include a surveyor, a geologist to assess the commercial mineral potential and/or a biologist/ecologist to evaluate significant natural/wildlife habitat values. In cooperation with the Landowner, NMLC also completes the Baseline Documentation Report (BDR), which is required under Internal Revenue Service regulations. The BDR is an inventory of the property at the time the Landowner grants the conservation easement, and is used in the future as a baseline to monitor and compare any changes in the property. The BDR generally includes a description of the natural characteristics, the current improvements on and uses of the property; maps of the property; and photographs that thoroughly document the current condition of the property.

5. Landowner and NMLC discuss the CE draft, making adjustments until both parties are content with the document. This can take a few weeks to several months, depending on how many issues the Landowner may need to think through and decide how difficult it usually is for multiple Landowners to communicate, and how fast each party can turn around drafts of the CE. It is possible to do this fairly quickly if circumstances require. Landowner should be aware that while NMLC cannot and does not guarantee that any CE can be completed in any specific calendar year because of the many issues over which NMLC has not control, NMLC will do its very best to meet Landowner’s preferences for completion dates. However, toward the end of the year, there is a point at which NMLC will no longer be able to complete a new CE, so Landowner is advised to begin the process as early in the year as possible.

6. Once the terms of the CE are generally agreed upon, Landowner and NMLC each send it to their own legal counsel for review, along with any specific questions that remain unresolved or in flux and need legal input. Once the CE language is completed and legally reviewed, NMLC completes supporting documentation and exhibits to accompany the CE. These can include certain items that the Landowner must provide in finished form such as warranty deeds, a legal description or survey, geology and/or biology reports, etc. If there are any existing mortgages/liens associated, the Landowner will need to arrange with the mortgage/lien holders to have these subordinated to the CE. NMLC can provide the necessary mortgage subordination forms.

7. At some point after the CE is completed, Landowner commissions an appraiser if they intend to take a charitable deduction for the value of the CE. NMLC can provide a list of qualified CE appraisers upon request. Landowner should be aware that the IRS stipulates that the appraisal cannot be completed any sooner than 60 days prior to the signing of the CE, and no later than the date the Landowner files his or her income tax return for the year in which the CE was donated. Notwithstanding the foregoing, NMLC requires its own review of the completed appraisal at least 30 days prior to the income tax filing deadline.

8. NMLC representatives present the final CE to the NMLC Board of Directors for their approval and accompanying Resolution. Please note that the official, final acceptance by NMLC of any conservation easement occurs only when the NMLC Board of Directors passes a specific Resolution to that effect.

9. Landowner and NMLC sign the CE and the BDR. By signing the CE, Landowner is committing to notify and/or seek approval from NMLC on items required by the CE, and of course, to comply with all the other terms of the CE -- including sending copies of required information to NMLC as described in CE regarding any changes in ownership (including changes in percentage ownerships among existing owners). At this time, NMLC will also discuss to what extent Landowner may or may not want the CE publicized (e.g. in NMLC press releases, newsletters and website; relevant newspapers; etc.).

10. Landowner donates the Stewardship Contribution to NMLC. NMLC records the CE with the relevant county clerk and sends copies of the recorded CE, the BDR, and any other associated materials to Landowner and, if so desired, the Landowner’s representative(s).

11. When Landowner receives the final appraisal of the donated CE, Landowner or his or her representative sends a completed copy of Form 8283 (which acknowledges the donation and specifies its appraised value for Landowner’s income tax return) to NMLC for NMLC’s signature along with a copy of the final appraisal for NMLC’s review. NMLC must receive the final appraisal and the completed Form 8283 at least 30 business days prior to the due date for Landowner's tax return. Landowner should be aware that if the appraised value does not appear to be properly justified, NMLC reserves the right to postpone or decline signing the Form 8283.

12. Following NMLC’s acceptance of the CE, each year thereafter, and/or whenever it deems appropriate, NMLC will contact Landowner regarding NMLC’s monitoring of the CE. This involves an annual visit to the property by NMLC, ideally in conjunction with the Landowner.

If you have any questions after reviewing this information please contact us.