Conservation easements are a popular tool for preserving and protecting natural resources, biodiversity, and cultural heritage. These legally binding agreements restrict the development and use of a property in perpetuity and ensure that the land remains in its natural state. However, there are times when a conservation easement needs to be subordinated to another lien or mortgage. This is where a conservation easement subordination agreement comes into play.
A conservation easement subordination agreement is a legal document that allows a conservation easement to be prioritized or subordinated to other liens or mortgages on the property. This means that in case of a foreclosure or bankruptcy, the conservation easement holder agrees to give priority to the primary lien holder or mortgage holder. The subordination agreement ensures that the bank or lender can recover its investment in the property, even if it requires the property to be developed or sold.
The need for conservation easement subordination agreements arises when the property owner has multiple interests in the property, including a mortgage or lien. In such cases, the property owner may want to sell the property or transfer ownership, but the presence of a conservation easement can complicate matters. By subordinating the conservation easement to the primary lien or mortgage, the property owner can simplify the process of selling or transferring ownership.
Conservation easement subordination agreements are not a new concept. They have been around for decades and are commonly used in the real estate industry. However, there are some important considerations to keep in mind when drafting and executing a conservation easement subordination agreement.
Firstly, the conservation easement holder needs to be willing to agree to the subordination. The holder may require additional assurances that the terms of the easement will be respected and that the subordination will not compromise its objectives. Furthermore, the easement holder may require that the subordination agreement includes certain provisions, such as a requirement that the property owner obtain the consent of the easement holder before taking any action that would violate the terms of the easement.
Secondly, the subordination agreement must be properly executed and recorded. The agreement should be in writing and signed by all parties involved, including the property owner, the conservation easement holder, and the holder of the primary lien or mortgage. Additionally, the subordination agreement should be recorded in the public records where the property is located. This ensures that any potential buyers or lenders are aware of the presence of the conservation easement and the terms of the subordination agreement.
In conclusion, conservation easement subordination agreements can be a powerful tool for property owners who wish to sell or transfer ownership of their property while still maintaining the protections and benefits of a conservation easement. However, it is important to ensure that all parties involved fully understand the implications of the subordination agreement and that the agreement is properly executed and recorded. By following these guidelines, property owners can ensure that their conservation easement is protected while still allowing for future development or sale of the property.