Religious Corporation Law

June 18, 2020

Who Owns the Temple? Disputes Involving New York State Religious Corporation Law

A recent Court decision from the Civil Court of the City of New York (Kings County) involves a dispute regarding possession of real property located in Brooklyn, New York. More importantly, the building which is the subject of the litigation houses a synagogue which also serves as headquarters for the Lubavitch movement, a Chasidic (Jewish Orthodox) sect.

The Court decision is quite lengthy (over 100 pages), which is quite unusual for a landlord-tenant matter. It discusses the history of the dispute, as well as the controlling law. This blog post will summarize the pertinent issues, and how they may apply to similar situations in New York State.

The Agudas Chasidei Chabad of the United States is a religious corporation which was incorporated in 1940 to establish, maintain, and conduct a place of worship in accordance with the Chasidic ritual and mode of worship of the Jewish Orthodox faith. In order to do so, they acquired property located at 770 Eastern Parkway in Brooklyn. The organization later acquired adjacent properties and joined them together to form one building.

October 4, 2019

Do Real Estate Sales by Religious Institutions Benefit Congregants?

By Weiss & Weiss

We wish to share a recent news article with our readers concerning whether selling real estate owned by religious institutions to developers benefits congregants and the neighborhood in general. Many properties owned by religious institutions have been owned by the organization for decades and, during that time, served the needs of congregants. However, perhaps over the years the particular population of a religious denomination in an area has dwindled and the institution is currently serving a greatly reduced number of congregants. In addition, long-held properties may be facing deferred maintenance issues such as a roof that needs replacement and the like.

Of course, real estate developers have always been hungry for a good deal and target congregations that may own such obsolete properties. Such developers seek to demolish the religious building and change the use entirely, perhaps to build luxury apartments to be sold for a handsome price. As a result, not only does the religious institution cease to exist, but the character of the neighborhood may change. Persons served by the soup kitchen in the church will have to find somewhere else to go while a wealthy developer will count his money.

The law in New York does provide some safeguards for congregants in this situation. As we have discussed in prior posts , a New York Religious Corporation seeking to sell, lease or buy property, or obtain a loan backed by a mortgage on property it owns, must obtain approval of the New York State Attorney General’s Office . The Attorney General reviews a petition presented by the institution in support of the contemplated transaction. Such petition needs to contain the governing documents of the religious institution, proof of the due calling and required vote of the trustees and congregants as needed by the governing documents and a complete description of the transaction in an affidavit. In sum, the Attorney General is also looking to confirm that the proposed deal benefits the congregants. For instance, if the transaction reduces mortgage debt and the new mortgage has more favorable terms, the Attorney General is likely to approve it. In the alternative, if the building is sought to be sold and a new building may be built in a distant location which prohibits attendance by current congregants, the Attorney General may determine that such a deal will not adequately serve the needs of current congregants and will be rejected.

August 7, 2019

Recent Developments in New York State Religious Corporation Law

By Weiss & Weiss

Recently in the news is an Appellate Court decision regarding a Lutheran Church located in Staten Island, New York City’s “forgotten” borough. This case involved a lawsuit brought by the Eltingville Lutheran Church against its parent organization, the Metropolitan New York Synod of the Evangelical Lutheran Church of America (the “Synod”). This case applies many of the legal principles discussed in prior blog posts regarding religious institutions and the application of both the New York Religious Corporations Law, as well as the Establishment Clause contained in the First Amendment of the United States Constitution.

The lawsuit arose when the Synod, which was the parent organization of the Church, issued a ruling that the Synod would permanently take over all management operations of the Church, including the ownership of all Church property and the real property on which the Church was located. They also declared their intention to close the Church, and to seize its property and assets following its application of permanent Synod administration.

The Church objected to such a takeover, arguing that it was solvent, had Congregants who worshipped at the Church on a regular basis, and that there was no reason for the Synod to take over the Church, or to close its doors.

April 4, 2019

Return of the Rogue Rabbi – Elections and New York Religious Corporation Law

By Weiss & Weiss

Recently in the news is a follow-up story relating to a dispute regarding control over a Chelsea synagogue. A prior blog post related the original story about a “rogue Rabbi” who took control of the synagogue pursuant to a lease agreement, and was accused of violating the lease by, among other things, tearing out original pews, renting the synagogue out for parties, and other alleged wrongful conduct. That dispute is still being litigated.

The new dispute relates to a recent election held by the synagogue to elect a new Board of Trustees. Certain members have disputed the validity of the election, and have filed suit to reverse the results of the election. As our prior blog posts have explained, such disputes are usually governed by the New York Religious Corporation Law. The law governs all religious institutions, including the so-called “major” religions, Christianity, Judaism, Islam, and Hindu.

However, New York Religious Corporation Law only provides general guidelines regarding many of the issues which may arise over a disputed election. One potential issue is which individuals qualify as members of the congregation, and, therefore, would be allowed to vote in an election. Congregants or members are usually defined under the law as those who are over 18 years old, and who worship regularly at the institution in question. Certain churches may define congregants as those who receive communion regularly at the church. Contributing funds to the institution on a regular basis may also be a factor in membership qualification. Our firm recommends that the institution’s by-laws be drafted to include a more specific description of membership qualification. Institutions are free to define membership in their by-laws, and such by-laws will be upheld by the Courts. For example, the institution may define regular attendance at services as a qualification for membership, or may limit membership to dues-paying individuals, or to individuals who have contributed a certain level of funding. Specifically defining membership is important for any religious institution, as participants in elections are limited to only members of the congregation. Qualified members may then vote in elections to determine the leadership of the organization.

March 28, 2019

Mortgaging the Church’s Future?

By Weiss & Weiss

A recent New York Supreme Court decision relates to the intersection of two major practice areas of our firm, foreclosure and Religious Corporation law. The case involved a mortgage loan taken out by Grace Christian Church, located in Brooklyn, New York. According to the Court, the Church mortgaged its property to the plaintiff, John T. Walsh Enterprises, LLC, in exchange for a loan of $350,000.00. When it failed to make payments under the terms of the note, the plaintiff brought a foreclosure action against the Church property.

This case is an excellent example of the interaction between these two areas of law. The reason for this is that, under New York’s Religious Corporation Law, a religious corporation cannot sell, mortgage, or lease its property for a term exceeding five years without the consent of the New York Attorney General. Prior blog posts have discussed the legal procedures necessary for a religious institution to obtain such consent. Recent changes in the law have made it possible to obtain such permission directly from the office of the Attorney General, without the necessity of a Court proceeding. However, if the Attorney General’s Office does not give initial consent, the religious institution then has the option of bringing an action in Supreme Court to obtain such consent. Such action must be served upon the Attorney General’s Office, and, if the Court subsequently approves the transaction, whether it be a sale, lease, or mortgage, then the religious institution may proceed with its real estate transaction.

In the Grace Christian Church case, although the Church’s Board of Directors approved the loan transaction, they did not seek approval of the New York Attorney General, as the law requires. In addition, the loan terms were significantly altered at the loan closing, without the consent of the Church’s Board of Directors. A title search performed by an experienced title company would have shown that the property was owned by a religious corporation, and would have required such consent by both the Board of Directors as well as the Attorney General as a condition of closing the loan.

December 13, 2018

Intersection of Religious Corporation Law and Real Estate Law in New York

By Weiss & Weiss

Recently in the news is a decision in a lawsuit regarding the potential eviction of a defrocked nun in a Russian Orthodox convent located in Nanuet, New York. This case is an interesting intersection of two areas of the law that our firm practices; namely, how the decisions of a religious organization can affect the disposition of real property, as well as the residents of said real property.

Prior blog posts have discussed how religious corporations must obtain approval from the New York State Attorney General in order to sell, lease, or mortgage real estate owned by the religious organization. This often causes disputes where there are different factions within the religious organization, and these factions cannot agree on whether to sell real estate in order to relocate the place of worship. As prior posts have discussed, courts are reluctant to intervene in disputes which are solely the result of disputes over religious doctrine. However, disputes over control of a religious organization which can be resolved on the basis of neutral principles, that is, without second-guessing decisions made solely on the basis of theological grounds, may be resolved by the court.

The First Amendment to the United States Constitution generally forbids government involvement in religious disputes. This principle also applies to the Courts, which are, in essence, instruments of the government, whether state or federal. The lawsuit under discussion involves attempts to allow an ejectment action against a nun who was defrocked by her parent religious organization, the Russian Orthodox Convent Novo-Diveevo. Our blog has previously discussed evictions against certain “non-traditional” tenants, such as licensees and invitees, who usually do not have written leases, but reside at certain properties. The usual course of action in such matters is to serve a Notice to Quit, giving the tenant (often referred to as a licensee or invitee, depending on the specific situation) thirty days in which to vacate the premises. If they do not vacate, the owner of the property can then either bring a petition for eviction in the local landlord-tenant court, or, in cases involving more complex issues, a civil action for ejectment in the Supreme Court in which the property is located.

November 16, 2018

Rabbi Gone Rogue? New York Religious Corporation Law Up to Date

By Weiss & Weiss

Recently in the news is the filing of a lawsuit relating to the alleged mismanagement of a New York synagogue located in the Chelsea section of Manhattan for almost 100 years. The lawsuit alleges that an individual hired as a Rabbi for the temple has breached his contact by removing the antique pews in the synagogue, and then renting the space out for large and raucous parties. It also alleges that the Rabbi may not even be a properly ordained Rabbi, and has committed many other acts in violation of his contact, as well as violating the Sabbath and Kosher laws governing the synagogue.

While evaluating the merits of this new case is beyond the scope of this post, many of these general issues often come up when our firm is consulted in matters relating to disputes regarding religious institutions. Prior blog posts have discussed employment issues as well as disputes between different “factions” in a religious institution, be it a synagogue, mosque, temple, or other place of worship.

When our firm is consulted on such a matter, the first question is whether there is a written contract with the individual in question. Most clergy have a written agreement with the congregation that delineates the rights and responsibilities of all parties. The specific duties of the individual should be explained in detail. For example, the number of services to be held, the frequency of such services (weekly, monthly), and the important religious holidays for which services are expected to held on an annual basis. As with any employment contract, the compensation should also be detailed. There should be a specific term of employment, such as five years. It is possible that there could be a renewal clause which gives the congregation an option to renew the contract after its expiration for a set period of time.

October 19, 2017

Religious Corporation Law – Who Reigns?

By Weiss & Weiss

A recently reported case in New York State Supreme Court (Nassau County) addresses issues covered in prior blog posts as they relate to the New York Religious Corporation Law. Kelley v. Garuda (Index No. 7016/2004) is a case involving a dispute regarding the International Society for Kirshna Consciousness and a temple located in Freeport, New York.

The International Society for Krishna Consciousness is known by the acronym “ISKCON”. In this case, the Krishna temple had been “taken over” by certain individuals who were espousing a religious doctrine contrary to that being promulgated by ISKCON. They were running the Temple and were not being answerable to ISKCON, who claimed the authority to own and run the temple in question.

This dispute left the Court with a tricky legal situation. The First Amendment to the United States Constitution states, in pertinent part, that Congress shall “make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” This puts Courts in a difficult position when a dispute arises within a religious institution. As in the ISKCON case, our firm has handled many cases in which there may be conflicts between different factions in a religious institution. These cases may involve any religion. The question then arises whether a Court can get involved in deciding such disputes without running afoul of the First Amendment.

June 15, 2017

“Legal” Gift Ideas for Dad on Father’s Day

By Weiss & Weiss

Our firm wants to extend its best wishes to all Dads for a happy Father’s Day. We would like to mention some gift ideas of a legal nature that cannot be purchased in an ordinary department store.

Your Father may be on the verge of retirement. As such, he may be in the market for a qualified attorney who will negotiate and document the terms of his business sale. Such a sale may involve preparation of a contract of sale, coordination of the payoff of a business or equipment loan, closing document drafting and the like. Once the transaction is complete, your Dad can enjoy a care-free retirement.

If your Father is not ready to retire, he may have an ongoing business in the process of relocation. Our attorneys would welcome the opportunity to negotiate the commercial lease for the new space. We would negotiate its terms in a manner most favorable to dear old Dad.

March 2, 2017

Mortgaging of Church Owned Property under New York Religious Corporations Law

By Weiss & Weiss

News reports have recently discussed the Archdiocese of New York and their seeking Court approval to mortgage church-owned property. The purpose behind such action is for the Church to obtain a loan of $100,000,000.00 from JP Morgan, Chase, N.A., backed by a mortgage on Church-owned property located at 457 Madison Avenue in midtown Manhattan. The loan proceeds will apparently be used to pay monetary settlements to the victims of the Church child abuse scandal.

Laymen may be asking why Court approval is necessary for such a transaction. If an individual owns property, and seeks to obtain a mortgage on the property in order to raise funds, generally, Court approval is not needed. The difference in this situation is that the Archdiocese of New York is a Religious Corporation, and, as such, is subject to the New York Religious Corporations Law.

As prior blog posts have discussed, any New York Religious Corporation seeking to buy property, sell or lease property, or obtain a loan backed by a mortgage on property it owns, must obtain approval of the New York State Attorney General’s Office. The reason behind this statute is to make sure that a religious institution is not “sold out” from under its members by unscrupulous individuals or leaders. Most religious institutions, of course, do not own the large real estate portfolio that the Archdiocese of New York does, and may own a single building which is used for its offices and place of worship. The Religious Corporation Law protects all such institutions by requiring Court approval for such important real estate transactions, in order to insure that loan proceeds are used for purposes that congregants will believe will advance the legitimate interests of the church.