An agricultural conservation easement is a legal tool that restricts residential, commercial, and industrial development of land to maintain its agricultural production capability. The purpose of these easements is to ensure the land remains in agricultural, horticultural, or forestry production. The conservation easement is recorded in the records of the Register of Deeds office in the county in which the property is located. The conservation easement “runs with the land,” meaning the terms and conditions stay with the land as it is transferred to buyers or heirs of the landowner. The easement is “held” by the applicant organization, which can be a local nonprofit conservation organization or a county government, to ensure compliance with its terms and conditions. Authority for these conservation easements is found in N.C.G.S. 106-744.
The ADFP Trust Fund provides grants to remove the development rights from the property and for other costs associated with the recording of the conservation easement. If you are considering placing your farm or forest under a conservation easement with the ADFP Trust Fund, you need to apply to our program with an eligible entity. Landowners do not directly apply to our program. Eligible entities include county governments, such as your county’s Soil and Water Conservation District, or a nonprofit conservation organization that can legally hold a conservation easement, such as a land trust. If you need assistance finding an eligible applicant entity, click here to submit a Landowner Inquiry Form, and a staff member will contact you directly about preserving your farm or forest.
The property must be privately-owned, located within the borders of the State of North Carolina, and in working lands use (agriculture, horticulture, forestry). Minimum acreage requirements should follow the present-use value guidelines: Five acres for horticulture, 10 acres for agriculture (row crops or pasture), 20 acres for forestry, or a combination of working lands use. If there are existing easements that have removed the development rights from the property, those easement areas will be ineligible for our program.
The property that is subject to a conservation easement in our program remains in private ownership. You continue to own your farmland when it is subject to a conservation easement. The property may be sold or bequeathed after the conservation easement is recorded with your county. If the property is sold or inherited, the terms and conditions of the conservation easement move along with the land to the new owner. The new owner is then obligated to follow the terms and conditions of the conservation easement. It is essential to know that once the conservation easement is recorded, you will not be able to subdivide the property.
A conservation easement simply removes the development rights from the land parcel. The removal of the development rights limits the non-agricultural uses of the property. There are additional restrictions with the conservation easement. Prohibited and restricted activities include subdivision of the property, mining, dumping and trash, commercial signage, and industrial and commercial uses outside of agricultural and customary rural enterprises. Conservation easements that are of military importance will restrict the owner from building tall structures, upward-facing lights, and other developments that hinder military training.
No. Conservation easements in our program do not grant public access. The easement holder and the ADFP Trust Fund do have the right to access the property to ensure the terms of the conservation easement are upheld but those entities must give “reasonable advance notice” and receive “verbal consent” from the landowner.
Since these conservation easements do not grant public access, the landowner has a right to privacy and may exclude the public from trespassing. Other rights, such as water rights, hunting rights, farming rights, mineral rights, and timber rights, remain with the property.
The majority of landowners in our program place their farm under a perpetual or permanent conservation easement. That enables the land to be protected forever and allows future generations to continue using that land to produce food and fiber. The ADFP Trust Fund offers term-limited conservation easements. These term conservation easements have the same set of restrictions but expire after a set number of years. The development rights will be valued at different rates depending on the length of the term conservation easement.
No. You can choose to place all or only a portion of your farmland under easement. This option allows you to have areas for future home sites or other future objectives for your property. Our Field Specialist and the eligible entity you choose to work with will help you determine your best options for the land you include in your easement.
No. There is no fee to apply to our program.
The application guidelines allow for up to 50% of the easement purchase value (i.e., the cost of purchasing the development rights) to be paid by the ADFP Trust Fund. The remaining 50% must come from another source, which we call a “matching” source. Most commonly, the landowner will donate a portion, if not all, of the easement purchase value as a way to provide the match. This donation is not cash but rather the value of the easement. Our program can also provide funds to at least partially cover certain transaction costs associated with recording a conservation easement, such as closing and legal fees, hiring a surveyor, and conducting a baseline documentation report of the property. Our program does not give funding for an appraisal to be conducted. You will work with the eligible entity applying on your behalf to decide who will cover the cost of an appraisal. Many landowners give money to the applying entity through what is called a “stewardship endowment.” The stewardship endowment helps the entity cover the costs of monitoring your property once the easement is recorded. Monitoring is a requirement of our program and ensures compliance with the terms of the easement. You will discuss the stewardship endowment directly with your applying entity. You will not pay the State of North Carolina or the ADFP Trust Fund any money to place your farmland under a conservation easement in our program. However, you most likely will be responsible for covering a portion of the transaction costs or for contributing to the applying entity’s stewardship endowment. Those are details you will work out directly with your applying entity.
If awarded a grant in which the application requests funds for the easement purchase value, you will be compensated for the purchase of the development rights. However, you will not receive money directly from the State of North Carolina or the ADFP Trust Fund. Our program will only provide reimbursement to the applying entity. Any amount of money you may receive for your easement purchase value (i.e., selling the development rights of your farmland) will be determined by appraised values of the property and funds in the contract budget. The applying entity will then disburse funds for the purchase of the development rights to the landowner after the conservation easement is recorded on the deed, and all reporting requirements are met.
There are two considerations for the amount paid for the purchase of development rights. First, the application must reflect an evidence-based estimate for your property. These estimates can be made by reviewing values on the property tax card or through a state-certified appraisal of the property. If awarded a grant, the values listed in the budget are the ones considered for the grant contract. Finally, the appraisal conducted before the recording of the conservation easement will be the final determination of the value of the property with the conservation easement. Easement purchase values will be based on this appraisal. If the appraised value is higher than the budgeted funds in the contract, the ADFP Trust Fund will not disburse funds above the contracted amount. An appraisal will not be required when the grant applicant is only awarded funds for transactional costs. All appraisals must be up-to-date within 90 days of the easement closing.
Yes. While we cannot give tax or legal advice, generally funds received for the purchase of development rights will be subject to capital gains taxes. It is the same as if you sold real estate property during a typical real estate transaction. There are generally two ways you may reduce your tax liability. You may acquire like-kind real estate property using Internal Revenue Code Section 1031, and you may not be required to recognize a gain or loss. Click here to read more about the IRS 1031 Exchange. If a landowner donates easement purchase values with a perpetual conservation easement, you may be able to offset some tax liability by using the federal conservation easement tax incentive. Click here to read more about the federal conservation easement tax incentive.
It depends on your choices. Before the conservation easement is recorded, you must decide if you want to include areas around existing (homestead) or future structures within the easement boundaries. If you do not want those structures included in the easement, they can be excluded (and therefore will not be held to the terms of the easement). If they are excluded, right of way access connecting them to a public road must be designated. If you do want the areas around existing or future structures included in the easement, then those areas must be designated ahead of time and included on the survey. These areas are called “residential building envelopes.” Once the easement is recorded, you can only build appropriate structures inside of the building envelopes, and the building envelopes cannot change location within the easement boundaries. Before building anything, you must get permission from the entity that holds the easement. The entity will make sure that the type of planned building is allowed by the terms of the easement, does not exceed impervious surface thresholds, and is located within a building envelope. Our Field Specialist and the eligible entity you are working with can help you think through the best locations for your building envelopes and if they should be included or excluded from the easement.
Yes. Agricultural business or support structures, such as barns or sheds, can be built inside a farm structure building envelope (farmstead). It is your choice to include or exclude from the conservation easement. If included, the location must be defined on the survey when the conservation easement is recorded. Only supporting agricultural structures are allowed within the farm structure building envelope. No residential structures are allowed within this dedicated area.
Yes. The conservation easement needs legal access to a public road. If the property is not located on a public road, the landowner must provide ingress and egress to the property, or the legal ability to enter and leave the property. Legal access must be established before a conservation easement is recorded. Additionally, if there are areas on the property that are excluded from the conservation easements but are not accessible to a public road, right of way access must be established and defined on the survey.
Yes. Since the conservation easement remains in private ownership, the property may be sold or transferred like other real estate. It is important to note that the conservation easement is legally binding for the duration of the term. Therefore, the conservation easement will move along with the ownership of the property. Most conservation easements are perpetual in length, and the property will be subject to the terms of conservation easement forever.
Once the conservation easement is recorded, you cannot repurchase the development rights for the property. The property remains in private ownership, and you retain all other rights that exist on the property, subject to the terms and restrictions of the conservation easement.
As a general rule, once a conservation easement is recorded, it cannot be amended or revised. The exceptions to this are few, and almost all requests to do so are denied. Amending or changing the conservation easement requires a vote from the North Carolina Council of State. The North Carolina Department of Agriculture and Consumer Services does not want to set a precedent of modifying existing conservation easements because it undermines the purpose of the program, and it may weaken conservation easements as a whole.
Yes. These legal structures are privately-held, and therefore are eligible to participate in the program.
There is no standard length for recording a conservation easement. The road to a conservation easement is a multi-year process. Click here to view the 16 Steps to Conservation Easement Acquisition. After a grant contract is awarded, most conservation easements are recorded within two years. In some cases, the process from application to recording a conservation easement can take up to four years.
Yes. The land with a conservation easement still has sellable asset value due to the retention of property rights such as water rights, hunting rights, farming rights, mineral rights, and timber rights that remain with the property. These rights have financial value and, therefore, may be used as collateral for a loan.
One requirement of the conservation easement is a forestry management plan for properties with 20 or more acres of forestland. You may continue to engage in practices that are following the property’s forestry management plan and regulatory requirements.
Yes. The property may change its operation as long as the property remains in agricultural, horticultural, or forestry uses, is managed per approved conservation or forestry management plans, remains in compliance with the other terms of the conservation easement, and meets regulatory requirements. The primary purpose of the agricultural conservation easement is the protection of the land resources for the sustainable production of food and fiber.
Conservation plans and forestry management plans improve and maintain soil, water, and air quality, including preventing on and off-farm impacts to natural resources. These documents include a soil map and soil descriptions, a list of best management practices for the property, the location and schedule for applying practices, information sheets explaining how to carry out the practices, and a plan for operation and maintenance of those practices. When conservation practices are enacted, they will aid in controlling soil erosion, managing animal waste, enhancing wildlife habitat, improving irrigation water management, creating stream bank protections, and complying with environmental regulatory requirements.
Yes. It does not have to be the same plans as the previous owners, however, it must match the use of the land for the sustainable production of food and fiber.