Home > Uncategorized > Messy Real Estate Issues: Delving Into the Mire that is “Church Property Law”

Messy Real Estate Issues: Delving Into the Mire that is “Church Property Law”

Churches are not perfect.  Disputes happen – either within the congregation or within the denomination.  A lot of these issues boil down to church polity – the laws of the church or denomination.

There is typically no place for Courts in issues of church polity.

Sticky issues may result when a church wants to leave a denomination and either start its own church, or join a different denomination.   Real estate disputes complicates church disputes.  Simply put, when real estate is involved – the Courts can get involved.

I. General Law Regarding Church Property Disputes “Neutral Principles of Law” Approach

In 1979, the U.S. Supreme Court made clear that courts have more than one method available in resolving church property disputes. Jones v. Wolf, 443 US 595, 602206 (1979) held that a court may employ the:

neutral principles of law or different approaches.

The Neutral Principles of Law approach is the majority approach, being applied in most States.  Under the Neutral Principles test, a court determines property ownership by identifying and applying secular provisions of the church’s governing documents as well as deeds, articles of incorporation, statutes, and similar materials.

The Supreme Court in US v. Jones explained the benefit of this Neutral Principles of Law approach,

“the primary advantages of the neutral principles approach are that it is completely secular in operation and yet flexible enough to accommodate all forms of religious organizations and polity.  The method relies exclusively on objective, well-established concepts of trust and property law familiar to lawyers and judges.  It thereby promises to free civil courts completely form entanglement and questions of religious doctrine, polity, and practice.” US v. Jones 443 US at 603. 

 

Therefore, under this approach, when deciding who owns church property:

  • look to the Deed – who owns the real estate?
  • Does the deed contain  a “reverter” clause – stating the property reverts back to the denomination, if the church leaves the denomination?
  • Does the deed contain any language  that would indicate an express trust of any kind was created for the benefit of the denomination?

 II. Hierarchical Approach – Michigan’s minority approach and the case of Lamont

Although the Neutral Principles of Law approach is the majority approach, this is not the approach that Michigan courts have adopted and upheld as recent as 2009.  In Lamont Community Church v. Lamont Christian Reformed Church 285 Mich. App. 602 (2009), the Michigan Court of Appeals reaffirmed the hierarchical test as governing church property disputes.

There the Court held that the Lamont Community Church, after splitting with the Lamont Christian Reformed Church and leaving the CRC, was not entitled to the church property. It relied on the Hierarchical analysis in holding that the CRC denomination was hierarchical with respect to property, therefore under the hierarchical method for resolving church property disputes the court was required to defer to the denomination’s determination that the property belonged to the CRC.

 i.                    The Facts of Lamont

 

The facts in Lamont are as follows:

Lamont Christian Reformed Church (hereinafter “LCRC”) was originally incorporated in 1880.

LCRC is a member of the Zeeland classis and of the Christian Reformed Church (“CRC”).

In 1998, LCRC created a corporation to hold the church property, the “Lamont Christian Reformed Church Property Corporation”.

This corporation was created separately from LCRC intending that if LCRC decided to leave the CRC, it could do so and retain the church property.

After the church transferred this property into the property corporation, LCRC began to look into affiliating itself with another denomination, the United Reformed Church.

On September 15, 2004, LCRC’s consistory approved the committee report submitted for leaving the denomination.  See Lamont, 285 Mich. App. 602, 605 – 606.

Disputes between the classis and LCRC’s consistory lead to the split of this church.

A number of people within this LCRC announced they were leaving LCRC but they did not contact the classis to consult regarding disaffiliation.

On October 30, 2005, 132 signatures were obtained as signatures of commitment to an unnamed new congregation.

In late November 2005, LCC transmitted Articles of Incorporation to the State which were filed on December 2, 2005 and therefore the Lamont Community Church, a separate congregation affiliated with no particular denomination, was created.

Sometime thereafter, LCC demanded that LCRC turn over the church property.

The Lawsuit resulted.

 ii.                  The Court Applied the Hierarchical Approach

The Michigan Court of Appeals in analyzing the rights of the parties applied the Hierarchical approach, holding:

“the First Amendment…severely circumscribes the role that civil courts may play in resolving church property disputes by prohibiting civil courts from resolving church property disputes on the basis of religious doctrine and practice and requiring that courts defer to the resolution of issues of religious doctrine or polity by the highest court of a hierarchical church organization.” (Emphasis added.) Lamont, Supra at 615. 

 

To briefly summarize Michigan’s approach its inquiry is simple:

1.      Is the Church Hierarchical or Congregational?

a.      If Congregational, the Court can apply  Neutral Principles of Law in deciding the dispute;

b.      If Hierarchical, the Court must defer to the highest court of the organization.

 

An exception exists – was an express trust created that holds the property for the benefit of another? If so, the Court will uphold that express trust.

To summarize,  in Lamont, the court determined whether or not CRC is hierarchical or congregational.

The determination over whether the denomination is hierarchical is a factual question. “A denomination is organized in a hierarchical structure when it has a central governing body which has regularly acted within its power while the looser congregational structure generally has all governing power and property ownership remaining in the individual churches.”  Lamont Community Church citing Calvary Presbyterian Church v Presbytery of Lake Huron of United Presbyterian Church, 148 Mich. App. 105, 108 (1986).

The Lamont court held that the CRC is clearly hierarchical finding this based on Michigan case law.  As the Michigan Supreme Court in Borgman v. Bultema, 213 Mich 684, 690 (1921) stated:

“I do not see how anyone could read the 86 articles of the church order of the Christian Reformed Church which is a supreme law or constitution of the church without coming to the conclusion that this religious denomination is much more than a federation of churches.” 

III. Lesson: See the headline to this Post – Church Property Issues are Messy.  

This is especially true in Michigan, which applies a minority approach. A crucial inquiry is whether or not a church is “hierarchical” or “congregational.” This inquiry will bear much weight on who has ultimate ownership rights in the Property.

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