Reversions of Church Property

Watch out for reversion clauses in church deeds.

Vollmann v. Rosenburg, 972 S.W.2d 490 (Mo. App. 1998)

Background. It can happen to any church. Someone donates or sells real estate to a church. The deed contains a clause stating that title will revert back to the previous owner if a specified condition occurs. Years go by, and the condition is forgotten. The church inadvertently violates the condition, and the previous owner (or his or her heirs) claim title to the property! A similar scenario occurred in a recent case. A woman died in 1977, leaving a will that contained the following provision: “I give, bequeath and devise … my real estate propertyconsisting of 10 acres … to the Salvation Army to be used, in perpetuity as a children’s camp, the aforesaid property never to be sold.”

After a number of years, the Salvation Army concluded that it was no longer feasible to use the property as a children’s camp because of unanticipated changes in the surrounding area, and it sold the property to a third party. The previous owner’s heirs immediately filed a lawsuit asking the court to award them title to the 10 acres because of the Salvation Army’s sale of the property in violation of the provision in the previous owner’s will. A court agreed that the Salvation Army forfeited all of its ownership in the property as a result of the attempted sale.

Application. Church leaders should not even consider selling church property without first examining the deed to see if there are any restrictions on the sale of the property. The last thing you want to do is trigger a reversion of the property to the previous owner. Further, carefully review any proposed deed when acquiring property through purchase or gift. Has the owner inserted a provision in the deed restricting the church’s use or disposition of the property? If so, you will need to determine if the restriction is acceptable. You should also try to persuade the owner either to eliminate the restriction, or make it as flexible as possible. Ask yourself this question, “How will future generations of church leaders view this restriction?”

This article originally appeared in Church Treasurer Alert, February 2000.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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