Standard 9: Ensuring Sound Transactions
The land trust works diligently to see that every land and conservation agreement transaction is legally, ethically and technically sound.
Background
A land trust usually intends to protect the property it conserves in perpetuity. To help secure the perpetual conservation of land, its transactions must hold up over time and withstand challenges. Sound transactions rely on the land trust performing “due diligence” in its transaction steps. Land trust representatives need not be lawyers, but they must have good legal advice, and they should familiarize themselves with basic principles of real estate and tax law. The land trust should draw a landowner’s attention to issues that must be addressed as the transaction proceeds. However, a land trust should not represent itself as giving specific legal or financial advice; a landowner’s own advisors should do that. A land trust may have to call on other financial and technical experts in order to complete the transaction. Carefully documenting the steps a land trust takes in performing its due diligence can help secure the perpetual conservation of the property.
Relevant Law
- Property Law Act, RSBC 1996, c. 377, s. 35.
- Land Title Act, RSBC 1996, c. 250, s. 218-223.
- Canada Revenue Agency policy interpretation of Income Tax Act, SC 1985, c. I; see:
- Environmental Management Act, SBC 2003, c. 53, s. 40
- Contaminated Sites Regulation, BC Reg. 375/96, as am., s. 3.
- Land Title Act, RSBC 1996, c. 250, Parts 10 and 10.1
- Canada Revenue Agency policy interpretation of Income Tax Act, SC 1985, c. I;
see Income Tax Technical News No. 26 at:
- Taxation (Rural Area) Act, RSBC 1996, c. 447.
- School Act, RSBC 1996, c. 412.
- Police Act, RSBC 1996, c. 367.
- Property Transfer Tax Act, RSBC 1996, c. 378.
- Social Service Tax Act, RSBC 1996, c. 431.
PRACTICE
L. Transfers and Exchanges of Land
If the land trust transfers or exchanges conservation land or conservation agreements, the land trust considers whether the new holder can fulfill the long-term stewardship and enforcement responsibilities, ensures that the transaction does not result in a net loss of important conservation values and, for donated properties, ensures that the transfer is in keeping with the donor's intent. If transferring to a party other than another non-profit organization or public agency, the consideration is based on a qualified independent appraisal (or short narrative when the property has a very low economic value)in order to prevent impermissible private benefit. Lands held under the Ecological Gifts Program require special permission from Environment Canada prior to any changes in status.
Background
Land trusts may “reacquire” land or a conservation agreement for public agencies by acquiring it from a landowner, then transferring it to the agency for permanent conservation management. Land trusts’ ability to act quickly in the private market and maintain flexible working relationships makes them ideal partners in assisting and supporting public land acquisition programs. A land trust may also find that it wishes to divest of a conservation property to a public agency or another land trust, or to exchange conservation properties with other partners. This practice specifies that the land trust’s sale or transfer of the property is consistent with the landowner’s intent and preserves the important conservation values of the land. It also recommends that the land trust carefully consider the stewardship capabilities of the organization or agency receiving the property. For transfers to or exchanges with a private party, the land trust needs to secure an appraisal (or, in limited circumstances, a short narrative) to make sure that the transaction does not result in excess undue benefit. For Ecological Gifts, Environment Canada must authorize disposition in order for the recipient to avoid penalty provisions as per section 207.31 of the Income Tax Act.
Assessment Questions
BC Assessment Questions
- Is the transfer of land consistent with the donor’s intent for the property and with the land trust’s intent at the time of acquisition?
- If land is transferred to a private individual, does the land trust commission an independent appraisal to ensure no private benefit ensues?
- If the property being transferred is an Ecological Gift, has the land trust obtained permission from the Canadian Wildlife Service prior to initiating the transfer?
- Has the land trust assessed the capacity of the recipient organization to manage and protect the conservation values of the property?
- Does the land trust use a conservation covenant to ensure the long term protection of properties that are transferred?
CLTA Assessment Questions
- Does the land trust consider the stewardship capabilities of the entity receiving the property?
- If the land trust transfers or exchanges land with a private party, does the land trust obtain a qualified independent appraisal?
