Conservation Easement Appraisal Red Flags

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  • deer at streamSales price within past 3 years (required) is substantially lower than appraiser’s before value
  • Highest and best use, HBU, is the same before and after
  • Appraisers used DCF (development approach) for before value.
  • Insufficient market data
    • Absorption Rate
  • Possible Use Vs. Highest and Best Use
    • Comparable Sales
    • Lack of approved development plan
    • Engineering Reports/Estimated
    • Unsupported Discount Rates
  • Floating Building Envelopes/Outparcels
  • Restrictions are not perpetual
    • Land Uses
    • Boundaries
  • Unproven Qualifications of Appraiser and BDR Expert
  • Letter from Land Trust recognizing donation from the tax payer (Contemporaneous Written Acknowledgment)
  • Date of Appraisal
  • Failure to Appraise Larger Parcel
  • Active minerals market but donor does not own the mineral rights
  • The property is mortgaged but the bank has not subordinated the lien
  • Excessive subdivision allowed
  • Retaining “Heart of the Watermelon”
  • “Gray” language in CE document