Clergy – Part 6

Legal Authority

Church Law and Tax 1990-01-01 Recent Developments

Clergy – Legal Authority

A New York court addressed the issue of a minister’s authority to enter into a lease on behalf of his employing church. The minister signed a 10-year lease in 1983 allowing a local charity to use the ground floor of the church for a child care center. The lease provided that all costs of renovating the building to accommodate the child care center would be paid by the lessee. At the time he signed the lease in 1983, the minister was acting without authorization from his bishop (as required by his denomination) and without approval from a civil court (as required by New York law for any church lease of 5 years or more). In reliance upon the lease, the charity incurred substantial costs ($50,000) and began operating the child care center. The minister did not obtain approval from his bishop to enter into a lease until 1985, at which time he began negotiating once again for a lease with the same charity with which he signed the 1983 lease. The new negotiations failed to produce a lease, and the church terminated the old lease in 1986. This action prompted the charity to file a lawsuit seeking judicial enforcement of the 1983 10-year lease. In response, the church argued that the 1983 lease was invalid since it had never been properly authorized by either the bishop or a civil court. The court agreed with the church that the 1983 lease was invalid because the minister’s signature was unauthorized. However, it also ruled that the lessee was entitled to the value of the renovations it made to the property in reliance on the minister’s authority to enter into the lease. New York law is unique in requiring various church property transactions to receive preliminary approval from a state court. The rationale for this requirement “is to protect members of the religious corporation … from loss through unwise bargains and from perversion of the use of the property.” This case illustrates the important principle that churches can incur some liability even for unauthorized property transactions. Soho Center for Arts and Education v. Church of Saint Anthony, 541 N.Y.S.2d 396 (Sup. Ct. 1989).

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