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  • How Do I Handle a Church Property Dispute?

    church property dispute

    While churches are a place for worshippers to gather, it is easy to forget that they are also nonprofit organizations that are protected by the First Amendment. In addition, churches are considered property, which means they are subject to many of the same issues that affect private properties, including property taxes and the selling or leasing of land. However, there are also a host of issues that are unique to churches, including instances when a congregation chooses to split from its denomination and the newly formed congregation claims ownership of the church property. 

    Oftentimes, church property disputes are handled internally. However, if church officials fail to take the necessary precautions, follow government regulations, or establish transparent procedures, legal action may be taken against the church. When property disputes and other issues arise, it is highly recommended to consult with a lawyer who is sensitive to the unique concerns of religious organizations.

    What Are the Options for Church Ownership?

    In the state of Virginia, a church property may be owned by the following two entities:

    • The church trustees: Until fairly recently, all church properties were owned through trustees of the church. However, more churches have decided to incorporate and transfer ownership from the trustees to the church corporate entity.
    • The incorporated entity: There are a number of benefits to this. For example, the trustees of the church are released from their fiduciary responsibility associated with the property. In addition, whereas trustees must get circuit court order approval for all property transactions, corporate ownership allows transactions to occur without court approval. There are a wide range of codes that trustees must follow. While property ownership by a church corporation does not mean that none of these codes need to be followed, it does simplify the number of rules that are imposed, thereby making the process much less complicated.

    What Are Examples of Church Property Issues?

    Whether a property owner is a private citizen or a church, there are a number of potential complications associated with owning property, some of which are common to all property owners and others which are unique to churches. The following are examples of common real estate problems that churches face.

    Titles Issues

    If there is uncertainty surrounding the land’s ownership, this can cause problems, particularly if the church has a long-standing history. For example, if the land is initially owned by one or more individuals who hold it in trust on behalf of the church, the situation can become complicated if one of the title owners passes away without revolving important title issues or if surviving heirs are unsympathetic to the church. 

    Selling the land or using it as collateral for a load will be difficult if the title issues are not resolved. Any property owners, including church corporations, should have a clear understanding of what their real estate titles say and that the church’s organization is described in the property deed, particularly if the church changed its legal entity over the years. 

    Church’s Governing Documents

    These documents should include information about how the church property can be sold or have significant renovations made. Having these guidelines in place will help protect the property as a major asset. However, problems can arise if the governing documents are connected to an outside authority like a parent organization of the wider denomination.

    Risks Associated With Owning Real Estate

    There is a certain degree of risk that is involved in owning land, and that applies to owners of church property. For example, if someone is injured on church property, the injured party can sue the church, whether that person is a member of the church or not. This is just one example of a type of risk that the church’s insurance policy must address. 

    However, there are other types of risk that must be considered as well, including how a bad decision can damage the property or lower its value. It is always a good idea to consult with an experienced lawyer before proceeding with any transactions that could impact the church’s real estate.

    Eminent Domain

    This refers to the power that the government has to take over private property and convert it for public use. According to the Fifth Amendment, the government may only exercise this power if they compensate the property owners. Oftentimes, the government wants to take part of the church’s property for utility easement or to build a road. Churches facing eminent domain are urged to contact a lawyer who can explain their legal rights.

    Zoning Disputes

    According to the Religious Land Use and Institutionalized Persons Act (RLUIPA), zoning laws may not discriminate against churches, or adopt zoning laws that violate people’s civil right to peaceably assemble. Churches must familiarize themselves with the zoning laws and consult with a lawyer before purchasing land or changing the use of the church property. A church law attorney will thoroughly explain the local zoning law as well as the impact they have on the church property and its members.

    Personal Injury

    Churches and religious organizations have a responsibility to take reasonable care to protect members or visitors from getting injured while on the property. If someone does suffer an injury while on church property, they may file a personal injury lawsuit against the church. Liability insurance coverage will help cover these costs. 

    Insurance Coverage Disputes

    In most cases, insurance disputes between churches and insurance companies involve coverage exclusions or the duty to notify. For example, claims involving sexual misconduct by a church employee or volunteer are not typically covered in a general liability insurance policy. In order to defend these types of cases, the church will need to obtain additional coverage. 

    This is also a statute of limitations for filing a claim. Insurance policies include information about the deadline for notifying the insurer. If the claim is filed after the deadline has passed, the claim will likely be denied. 

    What Happens When Church Property Ownership Is Challenged?

    If a corporation or trustee challenges the ownership of church property in Virginia, the courts must stick to neutral principles of law to resolve the dispute, and they must focus only on the part of the dispute that has to do with property ownership. This may seem simple from a legal standpoint, but matters can become complicated because Virginia courts may not rule on matters that are considered an ecclesiastical dispute. The courts cannot rule on matters related to church governance since property issues and governance issues are so closely intertwined. 

    There following are examples of practical scenarios that churches should consider and be prepared to address:

    • The church wishes to separate from the parent denomination due to a doctrinal conflict, but it wants to keep the property where it has been for over 100 years. The church should consider whether the governing documents give the local denomination the right to keep the property or if it is held in trust for the denomination. The church should also confirm whether the church is listed on the actual deed.
    • If a member of the church believes that the church’s pastor is abusing their duties, church members may seek to have the pastor removed from their position. However, this will depend on whether the property is owned by the church corporation, by trustees, or by the pastor. Depending on the church member’s standing, they may or may not be eligible to take legal action against the pastor.
    • If the church that is part of a larger denomination has gotten smaller over the years and would like to merge with another church and have that church take over the property, it will need to be confirmed whether the property is owned by the local church or the denomination. In addition, the local church will need to examine the governing documents to learn whether the property must return to the denomination if the local church no longer exists.

    Church property disputes can be extremely time-consuming and expensive. While many of these disputes are avoidable, others are not. The best way to manage the risks associated with a property dispute is to contact an experienced and dedicated lawyer who understands the unique legal challenges that churches face. 

    Church Law Attorneys at Anchor Legal Group, PLLC Handle a Range of Church Property Disputes

    If your church community requires legal assistance for a property dispute, it is in your best interest to contact one of our church law attorneys at Anchor Legal Group, PLLC at your earliest convenience. To schedule an initial consultation, call us today at 757-LAW-0000 or contact us online. Located in Virginia Beach, we serve clients throughout Chesapeake, Norfolk, Suffolk, Portsmouth, Newport News, Hampton, and Eastern Shore, Virginia. We also serve our clients throughout the United States through our network of associated attorneys.