CHURCH PROPERTY RECOVERY

Denominational churches often are not only members of the denomination but through the organizational documents of the church, the denomination, and even a filed real estate title the congregation does not have the power to withdraw their property or assets from the denomination. The rationale for this is that denominational members are believed to trust the denomination to protect their offerings, which are turned into property and assets at the local level, even after the member has died or moved to another local church.

In Ohio District Council of the Assemblies of God v Speelman, 2018 Ohio 4388, Slip Op., (Ohio App. 12th, 2018), declining local church membership caused the remnant of the local congregation to seek a merger with another denominational group and to “disaffiliate” with the Plaintiff. The local church joined the Plaintiff denomination in 1972. The Pastor Defendant was paid $200 per week during his tenure from 2006 to 2011 but he could not arrest the decline in church attendance although his efforts were briefly summarized by the Court and seemed genuine. The trial court after a bench trial (a trial without a jury) ruled in favor of the Pastor Defendant holding the “disaffiliation” and merger with another denominational group was lawful. The appellate court reversed and ordered the trial court to consider organizational documents of the denomination and the local church. The local church title to property did not contain a reservation of the denomination’s ownership interest. On remand, the trial court entered judgement in favor of the Plaintiff denomination but on the damages theories only ordered the property and assets, an 18,000 square foot facility and equipment, returned and only $100 in monetary damages. The Plaintiff denomination appealed the damages award and the appellate court ordered the trial court to assess reasonable monetary damages for loss of use of the facility and affirmed the ordered return of property and assets. Punitive damages, though sought by the denomination, were not assessed because the Pastor Defendant admitted he had assumed the local church denominational affiliation was “voluntary” and terminable at will and did not read the local church organizational documents. Thus, the court found no “malice” with which to support an award of punitive damages.

Local church titles often do not contain reversionary clauses because lending institutions do not believe by foreclosure they can recover clear title against such clauses. Denominations do not require such clauses because local churches need mortgages. This case, as in most, a reversionary clause in the title does not matter. The organizational documents of the local church and denomination control in most cases. Even in cases where the local church documents are unavailable or otherwise murky, the denominational organizational documents will usually be sufficient to force reversion of the property and assets to the denomination. Monetary damages judgments may also be possible and the losing local church leadership should not count on mercy from the denomination bent on recouping litigation costs the denomination often feels were unnecessarily expended. Indeed, if the local church leadership acted with intent or maliciously, punitive damages might be awarded.

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