The Ins & Outs of Owning Recreational Property
By: Rick Malad, Attorney
Let’s say you acquired some recreational land like I did years ago. You will likely encounter many issues that you did not expect.
Recreational Land Liability
Liability is always or should be a concern. If you use your land for hunting and/or fishing and you invite your friends and family to participate or you are concerned about trespassers, you should know the following;
Indiana Code 34-31-9 Limited Liability Arising from Agritourism Activities. Agritourism is defined, among other things as natural resource-based activities. This includes hunting, fishing, hiking, and trail riding. A provider (owner) is immune from liability for injury to a participant. There are many exceptions, however, such as if the provider charges a fee or knows of some dangerous condition on the land that is not disclosed.
Waiver and Release/ Insurance
Notwithstanding the statute, which is a good one designed to encourage an owner to share his good fortune with his friends and family, the owner should require each participant to sign a waiver and release of liability agreement where the inherent dangers of the activities are acknowledged by the participant. I even include surrounding landowners as releasees since it is always possible for a participant to cross over the boundaries of the owner’s property.
Always purchase insurance on your recreational land and improvements and include liability insurance and medical pay insurance to protect you.
Limited Liability Corporation or Other Entity
You may choose to acquire the recreational land in the name of a Limited Liability Corporation (LLC) or other legal entity which gives you an extra layer of protection. This is beyond the scope of this piece, but certainly recommended in some situations.
An owner owes very little duty to a true trespasser. The owner cannot willfully or maliciously cause a trespasser harm. The best protection you can have is to make sure you have signs on your property indicating that it is private property and no trespassing, for any purpose, is allowed.
Indiana Code 35-43-2-2 Purple Paint Law. Effective July 1, 2018, Indiana followed several other states to enact the Purple Paint Law. Keeping uninvited people off your land can be a full-time job. The Purple Paint Law allows an owner to use purple paint markings to deny entry to his property, basically informing a person, just like a sign would, that the property is private and no trespassing is allowed. Signs are expensive, labor intensive to install, and difficult to maintain. This statute sets out where you must place the markers, the distance between the markers and the size and height of the purple markers.
Ways to Generate Income
Some owners want to simply enjoy and share the enjoyment of this recreational land. There are ways, however, to generate income.
Recreational land assumes that you do not farm your land for profit. If you have some tillable land you may be able to lease it to a local farmer. Those leases should contain information including
- The term of the lease and extension, if any;
- Participation, if any, by the owner which could include paying for a portion of the seed and fertilizer cost;
- Cash rent amount per acre and when it will be paid if no participation by the owner;
- Any other provision such as exclusivity, release and waiver of liability and lease limitation
Conservationists now pretty much agree that selective timbering periodically is healthy for your woods. Hire a well-respected timbering company and, like I have, negotiate a timber management plan that coincides with your wishes and uses for the property. It is a good way to pay for improvements you might want to make on your property.
If you are not a hunter you may be able to lease all or a portion of your land to a third party and his guests for hunting and hunting preparation activities. I would not recommend this if you truly want to enjoy your recreational land. I lease land from other landowners for hunting and recreational purposes. Hunting leases are very complex and beyond the scope of this piece.
Tax advantage options and “keeping it as it is”
There are some options to accomplish both of these things at the same time. My goal for the future of my recreational land is to “keep it as it is” while allowing some limited future option. Two programs that I have taken advantage of are:
Classified Forest— Enrolling in the Indiana Classified Forest program is relatively simple, inexpensive and very tax advantageous. Contact the District Forester in your county for an application and procedures. Basically, if you have over 20 contiguous acres and are willing to observe the rules regarding the classified forest program (such as no development, no timbering without an approved timber management plan and no commercial activities) you may enroll all or a part of your land in the programs and obtain a significant property tax reduction.
Conservation Easement — This is a more complicated and restrictive program. Contact an accredited land trust organization. I used Sycamore Land Trust in Bloomington, Indiana, to start the process on my land. A conservation easement, in its simplest terms, is an agreement between the owner and the land trust to prohibit certain activities from ever taking place on the real estate and specifically allowing certain activities to take place. While there are many negotiable activities, the land trust will insist on certain prohibitions such as raising livestock, use as a commercial enterprise, mining, development of any kind and timbering without an approved timber management plan. Certain allowed activities may be specifically allowed such as hunting, fishing, trail construction and management, some farming and food plat cultivation. Some of your land may be excluded if you have some plans to do development like build a home or, in my case, to expand an already improved area of my land. You must have your land surveyed and you will need to pay a monitoring fee for the land trust to walk your property once a year to make sure all the “promises’ in the conservation easement are followed.
Once you have negotiated your written agreement, an appraisal is made to determine the market value of the land involved before the easement and after the easement with its restrictions. The difference between the two values is considered a charitable contribution to a tax-exempt organization. Both are win-win for an owner who wants to “keep it like it is”. Enjoy your recreational land!