New York Religious Corporations Law and the Mortgage of a Church
Provided by HG.org
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.
Generally, these types of loans are acquired to ensure the funds are available for a project of some sort. One of these included the monetary compensatory payouts for child abuse victims due to church officials. When severe negative consequences occur due to the actions members of the church hierarchy, action is needed.
While churches do not usually need to acquire court approval for transactions, this type of request is unique and not usually accomplished. When someone that owns the property seeks a mortgage or loan through normal circumstances, court approval would not be needed, but the church and the building itself are not owned by a person specifically. Churches such as the Archdiocese of New York and similar structures and affiliations are deemed religious corporations which are then subject to all New York Religious Corporations Law. This would mean that certain actions require the assistance of the courts for approval and progressing further.
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 or lease properties, and with the courtsí approval it is possible to obtain loans through a mortgage of property that the church owns. The New York State Attorney Generalís 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.
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 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. If this does not occur, the church officials may face negative legal consequences.
Court Approval in New York
There are two options for obtaining court approval in New York for religious corporation activity. It is possible through applying directly through the New York Attorney Generalís 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.
When applications or filing is more complex, the second option should be chosen. This is important if the action of the church may be opposed. To take this route, the administration must start a petition with the Supreme Court of the State of New York in the same county where the real estate property resides. When the Archdiocese is involved, this may be the path taken. The petition filed must have details of the transaction that is proposed and the consent of the administration officials on the documents that are provided. All information must be attached with the proposed mortgage or contract of sale that applies to the real estate property.
There are various actions that may occur with these petitions or applications. The administration of the church may face opposition in the courts, and other complications may arise during these transactions. 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.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.