Safe-harbor language issued for amending conservation easement deeds

By Martha Waggoner

The IRS on Monday issued Notice 2023-30, which provides safe-harbor language for extinguishment and boundary line adjustment clauses in conservation easement deeds, as required by Section 605(d)(1) of the SECURE 2.0 Act, which was enacted as part of the Consolidated Appropriations Act, 2023, P.L. 117-328. Under Section 605(d)(2) of the Act, donors are allowed, but not required, to amend their deeds to include this language. Donors wanting to make the change must do so by July 24, 2023.

The safe-harbor notice issued Monday addresses only corrections to extinguishment and/or boundary line adjustment clauses in accordance with the SECURE 2.0 Act, the IRS said in a news release, adding that the notice does not address any other deed amendments. It applies only if the amendment is effective as of the date of the recording of the original easement deed.

If a donor substitutes the safe-harbor deed language for the corresponding language in the original eligible easement deed, and the amended deed is signed by the donor and donee and recorded on or before July 24, 2023, the amended eligible easement deed will be treated as effective for purposes of Sec. 170, Section 605(d)(2) of the SECURE 2.0 Act, and Notice 2023-30, as of the date the eligible easement deed was originally recorded, regardless of whether the amended eligible easement deed is effective retroactively under relevant state law.

The safe-harbor deed language for extinguishment clauses is:

Pursuant to Notice 2023-30, Donor and Donee agree that, if a subsequent unexpected change in the conditions surrounding the property that is the subject of a donation of the perpetual conservation restriction renders impossible or impractical the continued use of the property for conservation purposes, the conservation purpose can nonetheless be treated as protected in perpetuity if (1) the restrictions are extinguished by judicial proceeding and (2) all of Donee's portion of the proceeds (as determined below) from a subsequent sale or exchange of the property are used by the Donee in a manner consistent with the conservation purposes of the original contribution.

Determination of Proceeds. Donor and Donee agree that the donation of the perpetual conservation restriction gives rise to a property right, immediately vested in Donee, with a fair market value that is at least equal to the proportionate value that the perpetual conservation restriction, at the time of the gift, bears to the fair market value of the property as a whole at that time. The proportionate value of Donee's property rights remains constant such that if a subsequent sale, exchange, or involuntary conversion of the subject property occurs, Donee is entitled to a portion of the proceeds at least equal to that proportionate value of the perpetual conservation restriction, unless state law provides that the donor is entitled to the full proceeds from the conversion without regard to the terms of the prior perpetual conservation restriction.

The safe-harbor boundary line adjustment clause is:

Pursuant to Notice 2023-30, Donor and Donee agree that boundary line adjustments to the real property subject to the restrictions may be made only pursuant to a judicial proceeding to resolve a bona fide dispute regarding a boundary line's location.

The donor can use these precise terms or words that have the same meaning, the IRS said. For example, if "grantor" and "grantee" are in the original deed, then the amended deed can use that language instead of "donor" and "donee."

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at

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