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Land Sale or Exchange

Outright sale of land to a government body or a conservation organization is well known way of conserving land. With this option, full price is paid for the property and the buyer takes possession of the property upon completion of the deal.

This gives the purchaser the most flexibility in implementing a conservation plan. Such plans might include habitat restoration or enhancement and provisions for public access. However, many landowners don’t wish to sell their land or to take it out of forestry or agricultural production. In addition, it is often challenging for government agencies or conservation organizations to  obtain funds for direct acquisition.

Variations on land sales provide some alternatives. Sale and exchange options include: bargain sale, full market value, installment, option to buy, reserved life estate, right of first refusal, and self finance.

Land exchanges are another option that provides the landowner full compensation for transfer. They involve swapping of “like kind” properties with an interested party such as a government agency or conservation organization. The exchange may be for equal values or may be equalized by cash payment.


Definitions

 Bargain sale: The landowner agrees to sell the land to a conservation organization or government agency at a price below the full market value; the difference between the full market price and the selling price becomes a donation. >back

 Full market value sale: The landowner receives full market value for the land. >back

 Installment sale: An outright sale of property where all or part of the purchasing price is deferred and paid in successive years. There are two types of installment sales: In one, a price is agreed on, title to the entire property is transferred, and payment is received in installments. In the other, a price for the entire property is agreed on, but the property is physically divided to transfer title in stages with payment. >back

 Option to buy: A contract between the owner and a potential buyer that states the buyer may purchase the property at an agreed upon price within a certain period of time, often ninety days to a year. The buyer makes a payment for this option that if not exercised, is forfeited. >back

 Reserved life estate: The landowner sells the property to an agency or conservation organization with the agreement that the owner, and/or specified heirs, may continue to use the land during their lifetimes. >back

 Right of first refusal: This is a legally binding agreement which takes effect once the property is placed on the market. It specifies that a particular conservation organization or agency is given the right to match a bona fide purchase offer made by another buyer within a given period of time. >back

 Self finance: Where the owner is in a position to do so, they may choose to assist the purchasing organization or agency finance all or part of the sale. Two approaches used are the balloon note and interest only financing. >back

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