Home > business, Real Estate > Churches and Real Estate Law: Leaving a Denomination can be Expensive.

Churches and Real Estate Law: Leaving a Denomination can be Expensive.

About a year ago I wrote a post about Messy Legal Issues Involving Church Property – you can see it here

My article was really a comment on the unique manner in which Michigan law views real estate disputes when churches decide to leave a denomination.

– in a nutshell, Michigan law looks at how the church is organized – if it is  organized under a hierarchy, courts will direct the church and the hierarchy to follow their governing documents. If the church is “congregational”, essentially a more loose affiliation with a denomination, then courts generally will apply Michigan real estate law.

I just noticed this recent article about a Mega Church leaving the PC USA Denomination and the church will need to pay Millions of Dollars to the denomination, you can see that article here.

I won’t delve into the specific reasons this church decided to leave the PC USA, (if you are interested on the specifics,  I would think Rev. Kevin Deyoung’s Blog would be a good resource).

Regarding the legal issues governing this outcome, the article  notes that the Church Real estate had a “reverter clause’ in the deed.

Simply put, the church agreed, contractually, that in the event the church left the denomination, the church property would revert back to the denomination.

This is an example of the majority of state’s rules on how to decide church real estate disputes – by real estate law. Courts know that they should not interfere with church polity – the rules that govern churches and denominations, but when the issue is one of real estate law, real estate law should govern.

All that being said, this article is a good reminder, particularly for those churches in Michigan, or any other state applying the minority jurisdiction to church property:

If you are thinking of leaving your denomination, ask two questions:

1. Is your denomination “hierarchical” v.s. “congregational”?

2a. If your denomination is hierarchical, what do your governing documents say (e.g. – book of church order)

2b. If your denomination is congregational, what does the deed to your real estate say? (e.g. – is there a reverter clause in the deed?)

questions? comments?

email: Jeshua@dwlawpc.com


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