Developing a Conservation Easement
with the
Virginia Department of Forestry

Prior to reviewing the following process, it is important to have a good understanding of what a conservation easement entails.  Please refer to VDOF’s Summary of Benefits of a Conservation Easement and Conservation Easement Program Description.

Developing a conservation easement takes many steps and requires the cooperation and coordination of multiple parties over several months. The VDOF will make every effort to complete easements in a timely manner. Landowners interested in conveying an easement should anticipate a minimum of six months to complete the process.

Donating a conservation easement is completely voluntary, and you are under no obligation to grant the easement until it is recorded. You may change your mind at any time up to that point.

This is a general description of the easement development process. Please keep in mind that the procedure will be slightly different for each property.

The Conservation Easement Development Process:

  1. Complete an easement application. If a forest stewardship management plan has already been completed for your property, indicate the year it was completed on the easement application. If not, complete a forest stewardship management plan application also.
  2. The VDOF Forest Conservation Specialist (FCS) will review your easement application to determine if your property meets the VDOF program criteria. If it does, we will provide an easement deed template and if requested, lists of appraisal and legal professionals. VDOF will assist you in developing the conservation easement, but you will be expected to obtain your own professional legal, appraisal, and financial guidance. The VDOF cannot provide legal or financial advice.  If the property does not meet our program criteria, we will help you to identify other potential conservation opportunities.
  3. The FCS will schedule a property visit to discuss potential easement language and terms to protect your land.
  4. You will receive an initial acceptance letter from the VDOF indicating our willingness to work with you to develop and hold the easement.  Once you receive the letter, assemble your easement team, including an appraiser, legal counsel, and financial advisor. All should be knowledgeable of and experienced with conservation easement donations. To qualify for state and/or federal tax benefits, you will have to hire a qualified conservation easement appraiser to establish the value of the donated easement (this step can be the most time consuming part of the process due to the importance of hiring experienced professionals).

    Because of the significant tax implications associated with donated conservation easements, landowners are encouraged to obtain advice from an experienced financial advisor early in the process. One of the benefits associated with donated conservation easements is the potential for obtaining Virginia Land Preservation Tax Credits, which you may sell at a discounted rate. If interested in selling your state tax credits, you may consider hiring a private credit broker to assist you. To ensure that the credits are the result of sound easement agreements, credit brokers prefer to be involved as early in the process as possible. Credit brokers can provide guidance to landowners throughout the easement process.
  5. As required by the Virginia Open-Space Land Act, the FCS will confirm that your conservation easement is consistent with the County’s comprehensive plan and zoning.  In addition, VDOF will determine any potential conflicts with the Virginia Department of Transportation’s (VDOT) 6-year plan and other future public works projects. VDOF will also inquire as to the presence of any rare, threatened, or endangered species on the property.
  6. Begin drafting your easement agreement with your legal counsel based on the VDOF template.  The above tasks will be carried out early in the drafting process.
  7. Obtain a title insurance commitment for your conservation easement, often done with the assistance of your attorney. The title insurance will name VDOF as beneficiary and the policy value will equal 40 percent of the total projected donation value of the easement.  As noted in VDOF’s Title Insurance Guidelines, the source deed (the current deed to the property), and all other deeds referenced in the Exceptions should be provided to VDOF. Copies of the most recent survey or plat would also be helpful.  Unless there is a property line dispute or concern, a new survey is generally not required.
  8. If the property is encumbered by a lien or mortgage, you will need to have the mortgage holder submit in writing that they will subordinate the mortgage to the conservation easement. This may require that the appraisal be completed, and possibly a security agreement.
  9. Once you, your attorney and the FCS agree on the easement language, the draft easement agreement and title insurance commitment will be reviewed by VDOF’s Forestland Conservation Committee.
  10. The FCS will conduct a property assessment for the purpose of developing the Baseline Documentation Report (BDR).  The BDR documents the site conditions at the time of the easement and provides the initial point of reference for subsequent monitoring.  If conditions exist that could impact the conservation values of the property it will be your responsibility to have an environmental assessment conducted to determine if remediation is needed before the easement can be recorded.
  11. After VDOF’s Forestland Conservation Committee review and approval, the draft easement agreement and title insurance commitment will be elevated for final reviews and approvals by the Director for Forestland Conservation, and the Office of the Attorney General (OAG).
  12. Comments and changes to the easement agreement resulting from the final review will be returned to you and your attorney to approve.  The BDR will also be provided to you at this time to review for accuracy and completeness.
  13. The VDOF will prepare the signature copy of the easement agreement and two original copies of the BDR and initiate the signature process.  The order of signatures on the easement agreement is donor > mortgage holder (if necessary) > OAG > State Forester.  The order of signatures on the BDR is donor > State Forester.  At this time, arrange for the final easement appraisal.
  14. The fully executed easement will be returned to the landowner or attorney for recordation in the local Circuit Court, most often done by the title insurance company.

Post-Recordation Process

  • Once recorded, the original signed version of the conservation easement agreement must be returned to the FCS.
  • The FCS will send one original signed copy of the BDR to the landowner and keep the second original copy on file with the easement.
  • To claim Federal Tax benefits, you or your legal or financial advisor will need to complete IRS tax form 8283 Noncash Charitable Contributions, which must be signed first by the appraiser and then the State Forester.
  • To register for Land Preservation Tax Credits, you or your advisor will need to complete the Virginia Tax Form LPC-1, Application for the Land Preservation Tax Credit.  For donations more than 1 million dollars, LPC-1 Schedule B is also required.  This form requires only the signature of the landowner. 
  • The VDOF will provide you with a Gift Acknowledgement Letter, which is required by Federal tax law.
  • VDOF will monitor the property annually to ensure the easement terms developed by you and the VDOF are being adhered to.

Last modified: Thursday, 06-Nov-2014 10:24:39 EST