Church Property – Part 2

A Texas court ruled that a church had to be evicted from its property because its use of the property for religious purposes violated a “restrictive covenant” in a prior deed.

Key point 7-13. A restrictive covenant is a restriction on the use of property. Such restrictions often are noted in deeds to property, but they may appear in other documents as well. Such restrictions apply to a church's use of its property.

* A Texas court ruled that a church had to be evicted from its property because its use of the property for religious purposes violated a "restrictive covenant" in a prior deed. An oil company owned and operated an oil pipeline terminal that served as a bulk fuel storage facility. Adjacent property owners complained about soil and groundwater contamination, and sued the oil company for damages. A settlement of these claims was reached that imposed on the oil company a duty to clean up the property and monitor the success of its efforts. The settlement agreement also required the creation of a "restrictive covenant" in the title to the property. The covenant stated that the property "shall be used for commercial/light industrial purposes only." The oil company eventually sold the property to a commercial company, which later sold the property to a church. The sale to the church involved a warranty deed that was "subject to any and all restrictions, encumbrances, easements, covenants and conditions" on the property.

Following its purchase of the property the church converted an existing building into a sanctuary where worship services were conducted four times each week. The oil company later learned of the church's purchase and use of the property, and it informed the church in writing that its use of the property for religious purposes violated the restrictive covenant in the deed. The oil company later asked a court to issue an order prohibiting the church from using the property "for church services or activities related to the church or anything else other than commercial or light industrial purposes." The court did so, and the church appealed. A state appeals court concluded:

The church is organized primarily for religious purposes. All other activity on the property is conducted for the purposes of supporting the church's religious mission. Church services may constitute only seventeen percent of the time the property is used for activities; however, they form the fundamental core of the church's use of the property. The issue we must address here is not, of course, whether these sorts of religious activities on property are generally permissible or desirable, but whether the church's use of the property is a distinct or substantial breach of the restrictive covenant's requirement that the property be used solely for "commercial/light industrial" purposes. Our resolution of this issue must rest not on any personal views regarding religious activities but on Texas law. Applying these principles, we conclude that the church's use of the property for church purposes is a distinct or substantial breach of the terms of the restrictive covenant.

The court rejected the church's argument that enforcing the restrictive covenant violated its right of religious freedom under the state constitution. It noted that the courts have "routinely rejected the notion that a neutral, otherwise valid restrictive covenant violates constitutional religious freedom protections if applied against a church." It cited an earlier case in which a church built a sanctuary and education building on property that was subject to a restrictive covenant prohibiting any structure except a single-family dwelling. Ireland v. Bible Baptist Church, 480 S.W.2d 467 (Tex. App. 1972). In ordering the church to demolish its buildings, a court rejected the church's claim that doing so would violate the constitutional guaranty of religious freedom.

The court acknowledged that restrictive covenants might be ignored if they "applied only to Baptist churches while permitting those of other denominations." But, because the covenant in this case "applied equally to the religious activities of all denominations and faiths," it was presumably valid.

. Many churches have purchased property that contains one or more restrictive covenants that restrict a church's lawful use of its property. If church leaders are not aware of the existence of a covenant, they may inadvertently violate it. As this case demonstrates, this can compel the church to limit or even cease use of the property. Here are some points to note: (1) Carefully inspect the proposed deed to any property you are acquiring by purchase or gift. Does it contain one or more restrictive covenants that could hinder the church's use of the property? If so, this issue must be resolved before title to the property is transferred to the church. (2) Check out prior deeds in the "chain of title" of property prior to purchase, since restrictive covenants may be imposed in a prior deed. Such covenants "run with the land" because each subsequent deed, like the deed in this case, recites that it is "subject to any and all restrictions, encumbrances, easements, covenants and conditions" on the property. (3) Check out the deed to your current property to see if it contains one or more restrictive covenants. Do the same with prior deeds in the chain of title. A title company or real estate attorney can perform this task for you. Cornerstone Church Corporation v. Pizza Property Partners 160 S.W.3d 657 (Tex. App. 2005)

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