February 21, 2014 How to Create a Preservation Restriction: A Primer
|HBI holds Preservation Easements on the Hurd House in
Charlestown, which was a property that HBI stabilized
and did exterior restoration work on in the 1980’s
- Why do you want to give a Preservation Restriction? Do you want to protect a building you have carefully preserved or that may have been in your family for a long period? Are you working on a community development project in which historic preservation plays an important role?
- Is the charitable tax deduction that may arise from the donation an important financial consideration?
- Is there a specific threat from which you want to protect the property? For example, is your building small in an area where it would be more profitable to demolish and re-develop the property?
- From your perspective, what architectural elements are essential to protecting the character of the building? While artistically unique finishes are important to protect, be open to the idea that some of the more ordinary spaces from the past may have historic value since they are among the first to disappear to changing living standards and technology. For example, intact storefronts from the early nineteenth century, unaltered pantries from the eighteenth century and old theater interiors are architecturally rarer than elaborately decorated parlors.
|In 1983 HBI first acquired a Preservation Restriction Agreement on the
Spooner-Lambert House in Roxbury. In 1992 HBI purchased the building,
and in 2000, we rehabilitated the building into four condos
- Preservation Restrictions necessarily limit the future development value of a property; attorneys have a duty to protect their clients from unknowingly giving up rights they may want in the future. As a client, you will need to be clear with your attorney regarding the extent to which you intend to reduce the development potential of your property. Property value that may be lost as a result of a Preservation Restriction can be claimed as a charitable deduction against income, but it must be carefully documented through an appraisal that cites specific comparable properties – it cannot be a guess or fixed percentage of overall property value.
- In addition to describing protected features, Preservation Restrictions contain numerous other clauses that are required by statute or by common practice. The wording of many of these clauses is largely standard, although it may seem confusing to a donor. Each clause has its own logic and reason for being. For example, Preservation Restriction Agreements customarily require the property owner to maintain replacement insurance on the protected portions of the property and to provide annual proof of insurance from a company of solid financial standing. Such a provision is necessary to assure that the building can be repaired in case of partial damage. In extreme cases, it helps to eliminate any incentive toward arson as a way of clearing a site of an unwanted building. If you find these clauses puzzling or cumbersome, insist on explanations that allow you to understand the full scope of the agreement.
|Historic Boston holds preservation easements on the
Cushing-Endicott House in the Back Bay. This famous Back Bay
residence was recently rehabilitated into condos.
- One party to the agreement (usually the recipient) will prepare documentation of the property?s current appearance and condition. This documentation should include current photographs of all protected features, architectural drawings (if available) marking protected areas and any other information that provides an unambiguous record of the property?s condition.
- If there are existing mortgages or easements over the property, they will need to be subordinated, that is to say the holder of those rights must agree to allow the Preservation Agreement to have first priority on the property title. If these prior rights are not subordinated, foreclosure on an existing mortgage could void the Preservation Restriction.
- In Massachusetts, both the Massachusetts Historical Commission and the local governing body (Board of Selectmen or City Council) must review and approve the agreement. Once these approvals have been obtained, the agreement and its supporting documentation are recorded at the local registry of deeds and the agreement becomes binding.
Just as good fences make good neighbors, good legal agreements make good partners by defining each participant?s role and mutual responsibilities, thereby allow the participants to proceed in partnership with their shared goal of preserving a place of value for the public benefit.