National Conservation Buzz Topic: Can a mortgage violate your conservation easement?

Curious about how a mortgage or deed of trust could impact your conservation easement? Imagine you need to borrow money at some point, and use your conservation easement property as collateral for the loan. A mortgage typically is not prohibited by a conservation easement.

But consider this: conservation easements limit, and many outright prohibit, dividing the property into smaller parcels. A violation could arise if a mortgage is placed on only a portion of a conservation property (rather than the whole conservation property).

Why? If a lender ever had to foreclose on the mortgage and take title to the portion of the property with the lien, that foreclosure would divide ownership of the property. The lender would own one part of the property and the landowner the rest. As noted above, many conservation easements don’t allow such divided ownership. And, in some states, the act of simply taking out the mortgage on a portion of the property can constitute a legal division.

When considering a mortgage on an existing conservation easement, please consult with your attorney and SAHC staff before you close the loan to ensure no impermissible divisions could occur.