why do churches need attorney general approval to sell assets

The New York State Attorney General’s Office must grant permission for these actions to proceed. This is due to statutes in place that prevent the church from selling a property out from under church members because a leader or individual has decided a building should be sold for some reason.

Full Answer

Should your congregation sell its property?

Sometimes a congregation decides to sell all or part of its property because it needs the money. And sometimes the decision to sell is part of a vision for what the neighborhood needs.

Can a religious corporation sell all of its assets?

NOTE: This guidance addresses transactions involving real property. If a religious corporation intends to sell or otherwise dispose of all or substantially all of its assets, regardless of their form, including intangible property such as bonds, stocks or certificates of deposit, Article 2-b of the RCL should be consulted.

What is the most important asset a church has?

Among the many amazing assets and tools with which Churches are equipped, the real property on which they worship, train, minister, and serve has to rank near the top of the list.

Who owns the property in a church?

Historically, prior to church incorporation, all property was owned through trustees of the church, for the benefit of the church. As a result of the Falwell decision in the early 2000’s [1], more churches have been deciding to incorporate and transfer ownership from the trustees to the church corporate entity.

When did the Hierarchical Church sell its property?

A hierarchical church obtained court approval of the sale of some of its property in 1987, although it failed to comply with the requirement that it notify the state attorney general of its intent ...

How long can a church lease in New York?

New York law specifies that "a religious corporation shall not sell, mortgage or lease for a term exceeding five years any of its real property without applying for and obtaining leave of the court …." New York law also requires several "congregational" (and some hierarchical) churches to notify the state attorney general prior to the sale, mortgage, or lease of their property.

Is the church requirement to notify the state attorney general prior to the sale of their property unconstitutional?

Key point. A New York law requiring certain churches to notify the state attorney general prior to the sale, mortgage, or lease of their property is not unconstitutional.

How to write a BPO?

1. Provide a written Brokers’ Price Opinion (BPO) that includes three comparable sales to justify their opinion of the value of the property to be conveyed. 2. Draft a purchase agreement that spells out all of the terms of the proposed sale.

Is a bill of sale a correct instrument?

A “bill of sale” is not the correct instrument. A deed that describes the property to be conveyed is the correct document. The survey the neighbor ordered will contain the necessary legal description of the land. The deed will be recorded with the governmental unit responsible for maintaining land records when the transfer occurs.

What is the most significant asset owned by a religious corporation such as a church, synagogue or mosque?

By Weiss & Weiss. Often the most significant asset owned by a religious corporation such as a church, synagogue or mosque in New York is real estate. For a variety of reasons, the religious institution may wish to sell, mortgage or lease its property.

How long can a religious corporation lease in New York?

New York’s Religious Corporation Law declares that “ [a] religious corporation shall not sell, mortgage or lease for a term exceeding five years any of its real property without applying for and obtaining leave of the court…”. In layman’s terms, the New York Statute requires that the religious corporation apply by Petition to the Supreme Court ...

What is required to be advised of a title company when closing a transaction?

If a title company is insuring the transaction on behalf of the purchaser, it will require a copy of the Order of the Supreme Court and proof of the consent of the Attorney General.

What is the purpose of the New York Statute?

Without the Supreme Court’s consent, the transaction will be void. The purpose of the statute is to prevent the congregational leadership ...

How long does a lease last for a areligious corporation?

The sale, mortgage or lease for a term exceeding five years of any real property of areligious corporation requires court approval pursuant to N-PCL § 511. (RCL § 12(1)).

Do you need court approval for an option contract?

Option contracts require court approval at the time the option is exercised . The CharitiesBureau discourages the use of option or other contingent contracts by not-for-profit and religiouscorporations, especially if they may be exercised over a long term.

Why do congregations sell their property?

Sometimes a congregation decides to sell all or part of its property because it needs the money. And sometimes the decision to sell is part of a vision for what the neighborhood needs.

Why did the Presbyterian Church sell its property?

Even after the congregation of Arlington Presbyterian Church in northern Virginia made its decision to sell its church in 2015 to make space for affordable housing – a decision a long time in coming, and not made without difficulty – things continued to shift. In 2017, the congregation realized the developer wasn’t going to use a chunk of the land, so they struck a deal to buy back that piece of the property to preserve it for community green space.

Why did Rock Spring Presbyterian Church sell?

For Rock Spring Presbyterian Church in Atlanta, the decision made in early 2016 to sell its manse was born of financial need. Without some additional source of money, “they were unable to continue more than a couple of months financially,” said Beverly Friedlander Ostrowski, now the church’s interim pastor. “There was very little money in the bank to cover expenses.”

Does DCG help churches?

In one recent situation, DCG helped a centuri es-old church balance its financial goals with its spiritual interests when it decided against accepting a sizable offer from a developer and instead accepted millions less from a nonprofit that hoped to use the facility as an autism center.

Can you sell a property to a denominational organization?

Denominational bodies will usually not allow you to sell a property and use the proceeds for operating expenses. In most cases, the funds must be used for the purchase of a new building, to support a community mission or dispersed to other nonprofits.

Can churches make their own decisions?

Autonomous, independent churches can make their own decisions. However, churches that belong to a denomination might not own the building and must work with the appropriate denominational bodies and follow internal legal governing rules to sell the building. Consider What You’ll Do with the Money.

Can a church be sold?

Although a traditional real estate agent can help establish the value of the property and put together marketing materials, selling churches is very complicated. How a church is valued, positioned on the market, inspected and negotiated with buyers is unique. Hiring a church broker who not only has expert commercial real estate advice but also experience with strategic asset development for churches and congregations can help community leaders who have decided to put their church building on the market avoid costly mistakes.

How do churches own property in Virginia?

In Virginia, there are generally two options for church property ownership: by its trustees, or by the incorporated entity. Historically, prior to church incorporation, all property was owned through trustees of the church, for the benefit of the church. As a result of the Falwell decision in the early 2000’s [1], more churches have been deciding to incorporate and transfer ownership from the trustees to the church corporate entity. Corporate ownership is preferable for a number of reasons: (1) By transferring ownership of the property to the corporation, the trustees are released from further fiduciary obligations in regards to the property. (2) Corporate ownership of real property also allows property transactions to happen without court approval; whereas trustees must obtain a circuit court order approving any and all transfers or encumbering of the property (except to the successor incorporated church), which can be a time-consuming process. (3) To boot, there is a lengthy section of code (Va. Code 57-7 through 57-17) that addresses everything from how trustees can transfer property, to trustee ownership of personal property, to a church split, to lawsuits against trustees. While property ownership by a church corporation does not avoid all of these statutes, it does simplify the number of rules imposed by Virginia law and the process of resolving disputes.

What to do if church disputes property?

If you are anticipating a potential dispute within your church over property ownership or your church is considering a situation like those mentioned in our above hypotheticals, be prepared to invest a significant amount of resources in attorneys’ fees and lots of time fighting both outside and potentially inside a courtroom. These disputes are often long and drawn-out and can involve large amounts of real estate equity.

What are the problems with church property?

In the church property lawsuits and disputes that we have seen, complications arise from a few common problems. Often, there are no records that clearly state who owns the property. Trustees who are listed on the deed are often no longer church members or possibly deceased. This is further complicated when the governing documents of the church—their constitution, bylaws, or articles of incorporation (if incorporated)—are unclear on how property is to be owned, who can vote on a property transfer, and what restrictions are imposed. When a higher denomination is involved, the complication can increase exponentially. The local church may think they own the property, but in reality the parent denomination is listed on the deed as a party, or has put into either its own governing documents or the local church’s governing documents that the local church property must be held in trust for the denomination.

Why is corporate ownership preferable?

Corporate ownership is preferable for a number of reasons: (1) By transferring ownership of the property to the corporation, the trustees are released from further fiduciary obligations in regards to the property. (2) Corporate ownership of real property also allows property transactions to happen without court approval;

Does a church corporation have to avoid all statutes?

While property ownership by a church corporation does not avoid all of these statutes, it does simplify the number of rules imposed by Virginia law and the process of resolving disputes. When church property ownership—either by a corporation or by trustees—is challenged, Virginia courts are restricted to using neutral principles ...

Do local churches own property?

The local church may think they own the property, but in reality the parent denomination is listed on the deed as a party, or has put into either its own governing documents or the local church’s governing documents that the local church property must be held in trust for the denomination.

What is the purpose of a lawyer in a church petition?

This means that a lawyer should be hired to assist with the entire process to include the cases where someone opposes the action. Other motions or information may be necessary, and legal representation has the knowledge and experience in these matters to assist throughout the situation.

How to get approval for a religious corporation in New York?

It is possible through applying directly through the New York Attorney General’s Office once the information is known in which direction to go for the church. There are also legal requirements in place that must be satisfied which usually means a lawyer should be hired to assist with this option in these matters. Routine actions are typically the reason to take this route where no controversy or public outrage may occur. This is also the better possibility to avoid opposition from members of the church in the community.

Why is the Religious Corporation Law important?

In order for important real estate transactions to occur, the Religious Corporation Law is in place to protect the religious institution without court approval first being sought and granted. This is also to protect church members in the church itself only using loaned monies for valid and legal interests of the church as a whole.

Can a church be mortgaged?

Mortgages of commercial or nonresidential property may be difficult to manage with different rules and regulations. When the object is a church, these circumstances become more complicated. Approval to mortgage a church building is often needed by the local or regional religious affiliation as well as the courts of the state.

Do churches need court approval for child abuse?

While churches do not usually need to acquire court approval for transactions, this type of request is unique ...

Can a church own real estate?

It is not common for a church or religious institution to have ownership of property or large real estate holdings. Many churches affiliated in the state only have one or two buildings in use for offices and worship by members of the religion. In order for important real estate transactions to occur, the Religious Corporation Law is in place ...

Is the Archdiocese of New York a religious corporation?

New York Religious Corporations. The churches of New York are not often considered a corporation of any type. However, the Archdiocese of this state is a Religious Corporation and this means that the church itself is affected and subjected to New York Religious Corporations Law as applied by the state. These types of companies may buy, sell ...