Review Deed Before Conveying Property

Key point. Some deeds to local church property contain restrictions on the conveyance of the property. In some cases, a violation of these restrictions may result in a reversion of the property to a state or national church agency.

An Arkansas court ruled that title to a church's property reverted to a national church when local church trustees attempted to convey the property without permission of the national church as required by a restriction in the deed to the property.

In 1973, a couple transferred real estate to the trustees of a Church of God congregation. The deed stated that the trustees could not "sell, convey or encumber" the real estate without the written consent of the national church. In 1993, the trustees conveyed the property by quitclaim deed to a second group of trustees acting on behalf of the local church, and a month later this group of trustees conveyed the property by quitclaim deed to themselves as trustees for an independent church.

This conveyance was made for the sole purpose of separating the congregation from the national church. The national church sued the trustees, claiming that their actions amounted to a breach of the restrictions in the church's original deed. The trustees conceded that the language of the original deed explicitly provided that the property could not be sold or reconveyed without written authorization from the national church.

The trustees also conceded that the national church never gave written consent to the local trustees to convey the property. However, the trustees insisted that (1) they had the right to secede from the national church because it had changed its doctrine on the exclusive nature of the Body of Christ; and (2) the Church of God is not a "hierarchical" church and as a result it could not prevent a local congregation from conveying its property. A trial court declared the two deeds to be void and ruled that the national church owned legal title to the church property. A state appeals court agreed with the trial court's ruling. It observed:

In the case at bar, it is undisputed that a deed was executed in 1973 which prohibited any conveyance of the subject property without written approval from [the national church]. Even if the [trial] court had found the church to be congregational, there would still be no material issue as to whether the property could be conveyed. This is because, by the plain language of the deed, the [trustees] were not authorized to make any conveyances inasmuch as they never obtained the necessary approval to do so.

The court disagreed with the trustees that the trial judge erred by not giving the following jury instruction:

An individual church is free to secede from any denomination if it elects to do so, but cannot take the church property with it where the effect of that action would be to devote the church property to doctrines fundamentally different from those to which the property was dedicated. Conversely, if it is the parent organization that has departed from the basic articles of faith, the local church has a right not only to secede, but also to retain the property.

The court concluded that "the proposed instruction was an incorrect statement of the law, and therefore should not have been given to the jury." It observed:

In Belin v. West, 864 S.W.2d 838 (1993), the Arkansas Supreme Court held that, if a civil court must resort to the interpretation of church doctrine, the court's exercise of jurisdiction in this regard is in violation of the first amendment. The court … quoted the United States Supreme Court as follows: "[T]he first amendment permits hierarchical religious organizations to establish their own rules and regulations for internal discipline and government, and to create tribunals for adjudicating disputes over these matters. When this choice is exercised and ecclesiastical tribunals are created to decide disputes over the government and direction of subordinate bodies, the Constitution requires that civil courts accept their decisions as binding upon them" (quoting from Serbian Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976)).

The proposed jury instruction in [this] case could only have been applicable if the jury found that the local church was under a hierarchical structure because the instruction refers to a parent organization. Had the jury made such a finding, the instruction would have been erroneous because the evidence clearly demonstrated that the Church of God, as a parent organization, established its own rules and regulations. Pursuant to Belin v. West, a civil court is without authority to interpret the doctrines of a hierarchical church which has its own rules for establishing internal discipline and government. Therefore, it was not for the jury to determine whether the parent organization had departed from its basic articles of faith …. In the case before us, the proposed instruction would have presented the jury with an incorrect statement of the law. Therefore, the trial court did not err in refusing the instruction.

The court also rejected the trustees' claim that the deed restriction was invalid on the basis of lack of consideration (that is, the national church gave nothing in exchange for the restrictions imposed on the local church) and a misrepresentation by the national church that the property would be subject to local church control. The court observed that the trustees "have no standing to assert that [the national church] failed to give consideration for the deed because [they] were not the ones who made the conveyance. Similarly, [their] misrepresentation argument fails because any representations made by [the national church] at the time of this conveyance were made to the conveyors of the property, not the [church trustees]."

What this means for churches

This case illustrates once again the importance of being familiar with restrictions contained in deeds. Before considering a sale or conveyance of church property, church leaders should carefully review all deeds to the property to confirm whether or not any restrictions exist. Conway v. Church of God of Prophesy, 1996 WL 617274 (Ark. App. 1996).