What is a Preservation Easement?
A preservation easement is a voluntary legal agreement between a property owner and a preservation group or government agency. This agreement places protections on the property to keep its historic character intact. Easements usually last forever, meaning they stay in place even if the property is sold. If you donate a preservation easement, you might also get some nice perks, like federal and state tax incentives, including property tax reductions.
How Can I Get a Preservation Easement for My Building?
So glad you asked! Here’s how you can go about it:
1. Reaching Out and Preliminary Considerations
First things first, get in touch with a historic preservation nonprofit like Rethos, your state’s historical society, or another group that handles preservation easements. They’ll help you figure out if your building qualifies and give you the scoop on costs and the process. They’ll look at things like the building’s age, architectural style, and historical importance. And just so you know, a building only needs to be about 50 years old (or even younger in some cases) to be considered historic.
2. Property Evaluation
Next up, the preservation organization will probably want to visit your property to check out its historical or architectural significance. If you’ve got any historical documents, photos, or architectural plans, it’s a good idea to have those handy. At Rethos, we take the information from this visit to our Easement Committee, which is made up of historic preservation pros who decide if your building is a good fit for our program.
3. Baseline Documentation & Endowment Contribution
Once your building gets the green light, the easement holder will do a baseline evaluation. This just means they’ll gather photos, floor plans, site plans, and other details about your building’s current state, which will be part of the easement agreement. You’ll also need to make an endowment contribution at this stage. This contribution goes into a fund to help run the easement program and cover legal costs if an owner doesn’t follow the easement rules. At Rethos, our endowment contributions range from about $10,000 to $100,000, depending on the property.
4. Drafting the Easement Agreement
With the baseline documentation and endowment contribution squared away, the easement holder will work with you to draft the easement agreement. This document lays out the protections and responsibilities for taking care of your property. We usually recommend putting an easement on just the exterior of the building, which makes it easier for owners to reuse and make changes to the interior down the road.
5. Appraisal and Valuation
You’ll need to get an appraisal to figure out the value of the easement, which is important for tax purposes. This appraisal can help determine the endowment contribution and affect your taxes, so make sure you get an appraisal from a pro who knows their stuff when it comes to historic properties and easements. The easement holder can probably recommend someone.
6. Legal Review and Finalization
It’s always a smart move to have your lawyer look over the easement agreement to make sure everything’s in order and that your interests are protected. Once everything’s good to go, you’ll finalize the agreement with the preservation organization, and both parties will sign it.
7. Recording the Easement
After signing, you’ll need to record the easement agreement with your local government office, like the county recorder’s office. This step makes sure the easement is legally binding and stays with the property, no matter who owns it in the future.
8. Monitoring and Compliance
The easement holder will do regular check-ins to make sure the property is being maintained according to the easement’s terms. As the owner, it’ll be your job to keep the property up to snuff based on what the easement requires.
9. Tax Benefits and Incentives
Donating a preservation easement can impact your taxes, so it’s worth talking to a tax advisor. Also, check out any property tax benefits your state might offer for properties with preservation easements.
Additional Resources
For more help and support throughout this process, reach out to preservation organizations like Rethos. It’s also a good idea to consult with legal and financial advisors who know the ins and outs of historic preservation easements to make sure you’re doing everything right and getting the most out of the deal.
By securing a preservation easement, you’re doing a big favor for future generations by helping preserve the historic buildings that make our communities special. Why not take that first step today?
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