Baseline Authentication and Admissibility
Ann Taylor Schwing
Standards and Practices Practice 11B—Baseline Documentation Report—provides in part, with added emphasis:
For every easement
, the land trust has a baseline documentation report (that includes a baseline map) prepared prior to closing and signed by the landowner at closing
. The report documents the important conservation values protected by the easement and the relevant conditions of the property as necessary to monitor and enforce the easement.
The federal regulations governing deductions for donated easements, 26 C.F.R. §1.170A-14(g)(5), provide, with added emphasis:
Protection of conservation purpose where taxpayer reserves certain rights—
(i) Documentation. In the case of a donation made after February 13, 1986, of any qualified real property interest when the donor reserves rights the exercise of which may impair the conservation interests associated with the property, for a deduction to be allowable under this section the donor must make available to the donee, prior to the time the donation is made
, documentation sufficient to establish the condition of the property at the time of the gift. Such documentation is designed to protect the conservation interests associated with the property, which although protected in perpetuity by the easement, could be adversely affected by the exercise of the reserved rights. . . . The documentation
, including the maps and photographs, must be accompanied by a statement signed by the donor and a representative of the donee clearly referencing the documentation and in substance saying “This natural resources inventory is an accurate representation of [the protected property] at the time of the transfer.”
If these requirements are satisfied, this form of authentication is sufficient for the donor to obtain a tax deduction but not enough to protect the land trust. The land trust needs to ensure that the baseline documentation (and subsequent updates) will be admissible in court if there is an enforcement action. That lawsuit may occur years later, when everyone involved in the original donation and preparation of the baseline is dead or has disappeared.
Baseline Reports Are Inadmissible Hearsay.
From a court’s perspective, the baseline documentation is a form of hearsay. In legal terms, hearsay is an out-of-court statement offered in evidence to prove the truth of the matter stated. Fed.R.Evid. 801(c).
A “statement” can be written or oral. Fed.R.Evid. 801(a). Hearsay is not admissible unless there is an exception from the hearsay rule. Fed.R.Evid. 802. The baseline would primarily be offered to prove the condition of the property at a specific time—to prove the truth of the facts set out in the baseline, so the baseline is inadmissible unless there is an adequate showing of facts to support an exception from the hearsay rule of inadmissibility. There are three possible exceptions to hearsay that might be available in most States.
One exception is an admission of a party opponent
or an opposing party’s statement,
which is not hearsay at all because of its probative value and the presence of the party who can refute or explain the statement. If the land trust sues the original donor who signed the baseline as required by the regulations, then the baseline will be an admission by the defendant donor. Fed.R.Evid. 801(d). The Treasury Regulations require the donor to make a written admission that the baseline is accurate in depicting the property.
This exception is not especially valuable because few land trusts have reason to sue the original donor of a conservation easement. In some States, a court might admit a baseline in an action against a subsequent owner, especially if there were proof that the subsequent owner knew about the baseline and CE and saw the baseline before acquiring the land and is reasonably bound by its contents, but no one should count on such generosity. The usual requirement when the statement was not made by the opposing party is that it must be one that opposing party manifested an adoption of the statement or a belief that it was true. Proof that a person bought land and saw the baseline at the time of purchase does not prove that the person manifested adoption of the baseline or believed its contents were true. The person would have constructive and perhaps actual knowledge of a baseline recorded with the deed of conservation easement, but knowledge of its existence or even of its contents does not constitute an admission of the truth of the contents. Even if an attorney believed this factual difficulty could be overcome, no case so holds, so a land trust would face the risk and the expense of attempting to make new law. As the one offering the evidence, the land trust would have the burden of proof.
Another exception is a present sense impression
. A statement describing or explaining an event or condition made while the speaker was perceiving the event or condition or immediately thereafter. Fed.R.Evid. 803(1). If the baseline or other evidence revealed that it was prepared while visiting the property and within a very short time after, a court might accept at least part of the baseline under this exception, but the chances are very slim. Most or all courts require some degree of spontaneity. Years after a baseline is prepared, land trusts are not likely to have proof of the timing and other information sufficient to establish admissibility of the baseline on this theory, even if it could be used.
The principal exception that land trusts will need to use is commonly called the business records exception
or, more generally, the exception for records of regularly conducted activity
. Fed.R.Evid. 803(6). The technical description of this exception is somewhat long and dense, but each element is important. Under this exception, a memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business (or nonprofit) activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness or by proper certification, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.
A baseline is certainly a memorandum, report, record, or data compilation of events, conditions and opinions. The other requirements are
- made at or near the time,
- by, or from information transmitted by, a person with knowledge,
- kept in the course of a regularly conducted business (or nonprofit) activity,
- when it was the regular practice of that business (or nonprofit) activity to make the memorandum, report, record, or data compilation,
- as shown by the testimony of the custodian or other qualified witness, or by certification, and
- the source of information or the method or circumstances of preparation do not indicate lack of trustworthiness.
of these are satisfied, the baseline is admissible to prove the truth of both the affirmative statements it contains (endangered plant X is located in identified vernal pools on the property) and the absence of facts on which the baseline is silent when it plainly would have revealed those facts had they been discovered at the property. In other words, the baseline and other land trust documents that satisfy the business records requirement can be admitted to prove the nonoccurrence or nonexistence of the fact, if the fact was the kind of which a memorandum, report, record, or data compilation was regularly made and preserved, unless the sources of information or other circumstances indicate lack of trustworthiness. Thus, admission at trial of a well-prepared baseline will provide evidence that there was no second residence on the property, no road or no orchard.
In a perfect world, the baseline authentication itself should address the critical elements of the business records exception and provide factual support as to
- the timing of its creation in relation to the time the information was gathered,
- the identity of the person(s) who created it and/or supplied the information,
- the knowledge and qualifications of the person(s) to collect the information and prepare the report,
- the land trust’s regular practice to prepare baselines, and
- the land trust’s regularly conducted course of activity to keep and preserve the baselines.
Additional evidence on these points can be supplied by the custodian at the time of trial, and the custodian will be the one to establish that the land trust retained and preserved the baseline from the date of its preparation to the date of trial. For example, if the baseline authentication shows that Tom Jones prepared it and used information he collected as well as information Mary Smith collected, the custodian may be able to fill in the gaps with testimony that Tom had a college degree in botany and six years experience in land stewardship and other qualifications and that Mary was a surveyor’s assistant with training in map making. Of course, if Tom and Mary were summer interns or long departed employees, and there are no records of what they knew or what experience and training they had, then admissibility becomes more difficult. Some courts would admit the baseline and discount its credibility while others would exclude it. The same would be true for problems with proof of the other points required for admission of the baseline. The weaker the showing on any point or overall, the less hope of admissibility.
The less detailed the baseline and the more time that has elapsed, the greater the problems the land trust will face in offering the baseline. Proof of the timing may be assisted if photographs have dates or if records can be located showing visits to the property (expense reimbursement records with explanatory notes may help, but these may have been discarded). If employee records have been discarded, it may be impossible to identify the scribbled initials and establish the preparer’s qualifications. As staff turns over with time, it may be impossible to prove the land trust’s course of activity in earlier years. The issue is not just having a good baseline but also being able to establish that it is good and why. Even if the entire baseline is inadmissible, the photographs may be admissible if someone familiar with the land can be located to identify and authenticate the photographs.
Verification/Notarization of the Baseline Authentication.
The IRS regulations do not require a “swearing” to the truth of the authentication. Nevertheless, the presence of a swearing is likely to enhance the admissibility and credibility of the baseline. The gold standard for swearing out of court is an affidavit—with a notary attesting to the identity of the signer and the fact that the signer swore to the truth of the statements. If the land trust does not have a notary on staff, and the donor is in another location, getting notarized signatures can be such a burden that no signatures at all are obtained. A declaration under penalty of perjury is a near equivalent to an affidavit in many states and does not have the nuisance of a notary. E.g., 17 U.S.C. §1746; Alaska Stat. §09.63.020; Ariz. R. Civ. P. 80(i); Cal. Code Civ. Proc. §2015.5; Fla. Stat. §92.525; Haw. R. Circuit Cts. Rule 7(g); Ill. Comp. Stat. ch. 735, §5/1-109; Ind. R. Trial P. 11; Iowa Code §622.1; Kan. Stat. §53-601; Mass. Laws ch. 268, §1A; Minn. Stat. §524.1-310; Nev. Stat. §53.045; N.J. Court Rules 1:4-4; Okla. Stat. tit. 12, §426; Or. R. Civ. Proc. 1(E); Pa. R. Civ. P. 76; Tenn. R. Ct. 72; Utah Code §78B-5-705; Va. Code Ann. §8.01-4.3; Wash. Code §9A.72.085; W. Va. Code §39-1-10a; see Uniform Unsworn Foreign Declarations Act, http://www.uniformlaws.org/Act.aspx?title=Unsworn Foreign Declarations Act (2008)
. Less weight is given to a simple signature, without the “under penalty of perjury” language that puts the signer at modest risk of criminal charges for perjury.
Current Status of Authentication in the Land Trust Community.
Examples on The Alliance Learning Center, modified to conceal the identity of land trusts and signatories, can be ranked roughly from worst to best. These examples reveal that some do not satisfy even Practice 11B and the IRS requirements. Virtually none begin to satisfy the requirements for admissibility under the business records exception to the hearsay rule.
This report was prepared by (volunteer’s name or names and the name of the staff Project Manager), for the Lost Land Trust, and is an accurate description to the best of (his/her/their) knowledge.
Preparer’s signature Date
Omission of the donor’s signature would create IRS problems if this was a donated CE, and the omission triggers a violation of the Practice. The signature of the preparer may be illegible so that the person’s identity may be lost over time. There is no indication of qualifications of the preparer, and the closing “to the best of (his/her/their) knowledge” significantly diminishes the credibility of the statement that the baseline is an accurate description. E.g., America’s Best Inns, Inc. v. Best Inns of Abilene, L.P.
, 980 F.2d 1072, 1074 (7th Cir.1992); Dellacava v. Painters Pension Fund of Westchester & Putnam Counties
, 851 F.2d 22, 27 (2d Cir.1988); Katelaris v. County of Orange
, 92 Cal.App.4th 1211, 1215 (2001); Roberts v. Davis
, 160 S.W.3d 256, 262-63 & n.1 (Tex. App.-Texarkana 2005). If the baseline itself was beautifully prepared in detail, and if the information was available in land trust records and the memories of those called to testify to fill in the gaps, the court might admit the baseline or portions of it. Admissibility would be enhanced if there was evidence that the defendant owner had a copy of it. Once the property changes hands once or twice, it may be very difficult or impossible to prove that the subsequent owners had a copy of the baseline.
In compliance with Section 1.170A-14(g)(5) of the federal tax regulations, this natural resources inventory is an accurate representation of the property at the time of the conservation easement donation.
Donor, _____[typed name]__________
Donee, _____[typed name]________
for the Wandering Land Trust
This example satisfies the IRS regulation and binds the donor as agreeing that the baseline is an accurate representation at the time of the donation. The baseline would definitely be admissible in a lawsuit against the donor. It might be admissible against a subsequent purchaser, but the land trust would have to put on additional evidence that might be unavailable if enough time has passed, such as the subsequent owner’s knowledge and acceptance of the baseline, the timing of its creation in relation to the time the information was gathered, the identity of those who created it and their knowledge and qualifications. Almost all of the business records requirements would have to be proved independently.
In compliance with Section 1:170A-14(g) (5) of the federal tax regulations this baseline documentation report is an accurate representation of the property, including its physical features and current uses, at the time of the conservation easement execution.
Document should always be formatted so this statement appears above the signaturesGrantor:
(Type in name of grantor
COUNTY OF ,ss.
On this day of , 200__
, before me the undersigned officer, personally appeared ________________________
known to me (or satisfactorily proven) to be the person(s) described in the foregoing instrument, and acknowledged that she/he/they executed the same for the purposes therein contained. In witness whereof I set my hand and seal.
This form is modestly better as to the grantor, and the acknowledgement creates a presumption that the signature isn’t forged. The form would be greatly improved with the addition at the end of the third line: “I declare under penalty of perjury under the laws of ___State
___ that the foregoing is true and correct.” Without that language, there is no swearing to the truth of the contents. There is no information about the preparer’s identity or qualifications or the other information noted above as required for business records, however, and no signature block for the land trust as required by the Treasury Regulations. Those omissions enhance the problem of admissibility against subsequent owners.
have signed this Baseline Documentation Report with the understanding and agreement that this Report will be used for, but not limited to, monitoring the property depicted and described in this Report for compliance with the Grant of Development Rights and Conservation Restrictions dated today and signed by me. I have read this Report and understand it. I agree that this Report including the maps and photographs accurately describes and depicts the physical features, relevant site conditions, and current structures and land uses on our property conserved by the Grant. I affirm that there are no activities ongoing on my property that are inconsistent with the Grant.
Witness SUSAN WILLING
STATE OF MISTAKE
At , this day of , 2001, ________________ and ___________________
, personally appeared and they acknowledged this instrument, by them sealed and subscribed, to be their free act and deed.
Before me, ________________________________
My Commission Expires: 2/10/2003
This form is fine for the land trust’s use against the donor for monitoring, but the owner may object to its use in enforcement because of the limiting language. There is no signature for the land trust, in violation of the Treasury Regulations, and the IRS might quibble about the language. Problems of admissibility against subsequent owners are still present. Again, no information is available as to the preparer’s identity and qualifications. This information may appear elsewhere in the document, but it would be a real advantage to have the preparer sign such a declaration as to accuracy and the other information required. The notary establishes the identity of the signer, but the form of acknowledgement does not attest to the truth or accuracy of the contents.
(Alliance Curriculum: Conservation Easement Drafting and Documentation at 245-46)
. The name of the project, date of its completion, names of the parties to the easement and name of the baseline preparer should be clear.
Table of Contents
. A listing of all attachments, maps and lists.
. This language must satisfy the Treasury Regulations requirements for tax-deductible easements. Sample language you might consider:
This is to certify that I/We _______________________, as Grantors and I _____________, representing ________ Land Trust, the Holder of a conservation easement on land located in _______________ known as _______________, executed by the parties and recorded in the real property records of ____________, are familiar with the condition of the land subject to said conservation easement and do acknowledge and certify that this Baseline Documentation Report, and all of its inclusions, is an accurate representation of the condition of the property as of the date of the conservation easement.
The preparer of the baseline should sign the document.
Some land trusts list all of the inclusions by name before the signature line for the acknowledgment, such as:
1. USGS topographic map _______, 15-minute series, showing approximate location of the protected property
2. Color photographs of the property taken _______, 200___ by Land Trust employee ________
Some land trusts add a notarization block to the signatures when required by state law, when deemed necessary to authenticate the document and preserve its use in future enforcement actions as an exception to the hearsay rule and when the land trust believes it will help focus landowners on the importance of what they sign. This notary block indicates that the acknowledgment is a sworn statement.
This material from the Alliance Curriculum does not inform land trusts of the advantages presented if the land trust can satisfy the hearsay rule business records exception within the baseline documentation. There is no direction to include information on the qualifications of the preparer, nor is there information directly on when the baseline was prepared (other than before it was signed), or on the land trust’s regular practice to make and retain baselines. Although the Curriculum states that the preparer should sign, it does not clearly state that both donor and land trust must sign, although that is implicit. Moreover, the references to execution and recordation of the conservation easement appear to reflect that both occurred before the completion of the baseline, contrary to the Treasury Regulations.
This final example is from the Peninsula Open Space Trust (POST). The Baseline starts with a table of contents and then the following.
Baseline Documentation Team:
Sam Smart, Land Stewardship and Acquisition Specialist
Samantha Solid, Land Stewardship Specialist
Zoe Ground, Ph.D, Soil Scientist
Location of the Original Document
The original signed document is stored in a fireproof cabinet located within the Peninsula Open Space Trust office. This original document was placed in this location on _______________, 2007 by __________________.
I. Declarations of Accuracy
This baseline report (consisting of xx pages of text including the table of contents, 4 appendices, 5 maps and 14 pages of photographs) is prepared to document the current status of the Great Ranch Conservation Property to be held by the Peninsula Open Space Trust, a California 501(c)(3), nonprofit organization.
We declare that, in the preparation of this baseline report, we acted under and fulfilled our duty to gather and record the information contained herein accurately and in the regular course of the business of the Peninsula Open Space Trust. Further, we declare that the information contained herein accurately reflects our personal knowledge gained by our field observations on December 2 through 4, 2006. We declare that the information contained herein was recorded at or near the time that the information was obtained and accurately describes the conditions of the physical features and uses of the Great Ranch Conservation Property.
We declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration was executed on December __, 2006.
___________________ ____________________ ____________________
Sam Smart Samantha Solid Zoe Ground
II. Declaration of Reliance and Certification of Record
Acting as the President of the Peninsula Open Space Trust and as its Custodian of Records, I declare that the Peninsula Open Space Trust adopts, has relied upon, and will rely upon the information contained in this report to describe the condition of the Conservation Property. Further, I certify that the preparation of this document complies with our general procedures for creating and maintaining business records and specifically with our procedures for the creation of baseline reports. This document was created in the regular course of our business for the purpose of managing our conservation easement portfolio.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration was executed on December __, 2006.
President, Peninsula Open Space Trust
III. Declaration of Acceptance
I, George F. Donor, as Trustee of the George Y. Donor Trust, am the current owner of the Great Ranch Conservation Property subject to the conservation easement dated December __, 2006, to be conveyed to the Peninsula Open Space Trust and recorded in the official records of _______ County. I have read and independently reviewed this baseline report and declare that this report accurately describes the status of the physical features and uses of the conservation easement area.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration was executed on December __, 2006.
George F. Donor,
Trustee of the George Y. Donor Trust
This multipart example covers all the elements for the business records exception as well as satisfying Practice 11B and the Treasury Regulations. It is no more difficult to complete than the earlier examples, as the several signing individuals can each sign at different times.
he land trust community is far from the goal of baseline authentication that will support ready admissibility of baselines against second and third generation owners. Possible reasons are that Practice 11B and the Treasury Regulations do not affirmatively mandate as much of the hearsay authentication as they might and because there has been so little litigation that the issues of admissibility of evidence have not risen to the forefront in appellate decisions.
Practice 11B requires:
For every easement
, the land trust has a baseline documentation report (that includes a baseline map) prepared prior to closing
and signed by the landowner
at closing. The report documents the important conservation values
protected by the easement and the relevant conditions of the property
as necessary to monitor and enforce the easement.
The reference to documenting conservation values sufficiently to enforce the easement is normally taken to refer to the quality of the baseline information on the conservation values far more than to the admissibility for enforcement purposes.
Bare minimum requirements for baseline authentication:
A statement clearly referencing the baseline documentation
Signed by the landowner (preferably under penalty of perjury or notarized)
Signed by a representative of the land trust
With the name and qualifications of the preparer
Stating in substance: “This natural resources inventory is an accurate representation of [the protected property] at the time of the transfer.”
Additional contents for baseline authentication enhancing its admissibility would be
The timing of baseline creation in relation to the time the information was gathered
The identity of those who participated in its preparation or supplied information, and their qualifications
The land trust’s regular practice to prepare baselines
The land trust’s regularly conducted course of activity to keep and preserve the baselines
The qualifications of the person who attests to the last two points
Any other points that would indicate the trustworthiness of the baseline
Baseline Documentation After the Fact.
Both Practice 11B and the Treasury Regulations require that the baseline report be prepared before the closing. There are cases in which that requirement is not met. The land trust may prepare a current condition report in such a case, applicable to the conditions at the time the report is prepared. Such a report might also be made at the time the property changes hands or at a time when significant changes have occurred that should be documented. If reserved rights have been built out, for example, or a natural disaster has altered the landscape, both land trust and landowner may be benefitted by an updated report. Such a report would not invalidate an earlier one but merely be additive to address the new circumstances.
The following acknowledgement could be signed by a grantor or subsequent owner, creating a baseline as of a date after the creation of the original easement.
ACKNOWLEDGEMENT OF BASELINE DOCUMENTATION
The undersigned, being the grantor/successor under a conservation easement granted to Tardy Valley Land Trust (“TVT”) with respect to land located at ___________________________________________________ (“the Property”), hereby certifies to TVT that I have read and independently reviewed this baseline report which includes the “relevant documents” listed below is an accurate representation of the physical features and uses of the Property and its condition on the date hereof. [I agree that the conditions documented in said baseline documentation do not necessarily represent the conditions of the Property allowed or required by the conservation easement and that TVT in no way waives any rights, either at or in equity, to enforce the provisions of the conservation easement.]
I declare under penalty of perjury under the laws of the State of _________ that the foregoing is true and correct and that this declaration was executed on December __, 2006.
Tardy Valley Land Trust
? Conservation Restriction History, titled ______________________________
? Baseline Inspection Report, dated __________
? Photos (numbered 1 through ___ , and dated __________)
? Photo Log, dated __________
? Photo Key, dated __________
? Preparer’s Affidavit, signed and dated, __________
Ann Taylor Schwing is of counsel at Best Best & Krieger LLP (www.bbklaw.com), Commissioner and Secretary of the Land Trust Accreditation Commission, an independent program of the Land Trust Alliance (www.landtrustaccreditation.org), and a member of the governing boards of Scribes, The American Society of Legal Writers, and the Anthony M. Kennedy American Inn of Court. She wrote the final drafts of Land Trust Alliance, Amending Conservation Easements: Evolving Practices and Legal Principles (Aug. 2007). She is a former president of The Land Trust of Napa County (www.napalandtrust.org) and author of Open Meeting Laws 3d (2011) (www. openmeetinglaws.com), California Affirmative Defenses (published annually by West), and other books. She writes this Article as an individual and does not speak for any organization.