Key Takeaways

  • Religious corporations in New York are governed by both the Religious Corporations Law (RCL) and, where applicable, the Not-for-Profit Corporation Law (N-PCL).
  • The formation process varies depending on the religious denomination and often requires consent from ecclesiastical authorities.
  • Religious corporations must obtain court or Attorney General approval to sell, lease, or mortgage property.
  • Each denomination has unique governance and procedural requirements under the law.
  • Trustees and governing boards play a critical role in corporate decisions, and legal compliance is crucial.
  • RCL Section 12 outlines judicial procedures for property transactions.
  • Legal assistance is highly recommended due to complex statutory requirements.

The New York Religious Corporations Law is a law that covers religious organizations that have decided to form a corporation.

Introduction to New York Religious Corporations Law

In many circumstances, it can be beneficial for organizations of a religious nature to form a corporation. For example, when a religious organization incorporates, they will have access to the same legal benefits afforded to corporate entities, including limited liability.

When a religious group forms a corporation, they will be subject to the New York Religious Corporations Law (RCL). These groups are also governed by the Not-for-Profit Corporations Law (NPL) in certain circumstances. When these two laws interact, it can be very complicated. Any religious group that is thinking about incorporating needs to seek guidance from a lawyer to make sure they fully understand both the NPL and RCL.

Thanks to the Establishment Clause of the United States Constitution, establishing a religious corporation is considerably easier than forming other types of corporations. In the New York RCL, you will find statutes that cover all types of religious corporations, as well as statutes that apply to specific denominations.

If your religious group maintains a building intended for worship, you will need to file Articles of Incorporation in the county where your organization is physically located. This differs from other corporations who must file their Articles of Incorporation with the State.

Another difference between religious corporations and regular nonprofit corporations is that religious corporations do need the permission of the attorney general before dissolving. In most cases, a religious corporation will need to acquire permission from the attorney general before selling property. However, if the sale of property is a part of dissolving the company, permission will need to be granted by the New York State Supreme Court. Any issues that are not covered by the RCL are subject to the NPL.

You should contact an attorney for selling property as a religious corporation or attempting to dissolve your religious corporation.

Churches of New York are generally not considered to be a corporation. The exception is the New York Archdiocese, which is a religious corporation. This means that the Archdiocese is subject to the Religious Corporations Law.

Churches of New York are allowed to:

  • Buy property.
  • Lease or sell property.
  • Mortgage property to obtain a loan with court approval.

Before any of these actions can take place, permission must be granted by the New York State Attorney General. The reason that permission is needed is that there are statutes whose purposes is preventing churches from selling property to the detriment of church members.

Generally, religious institutions do not own property or have real estate holdings. A large number of New York churches have only one building that is used expressly for worship. The RCL helps facilitate real estate transactions while protecting churches and their members.

Formation and Structure of Religious Corporations

Forming a religious corporation in New York typically involves filing a certificate of incorporation with the county clerk of the county where the principal place of worship is located. The required contents of the certificate differ depending on the denomination and are detailed in specific articles of the New York Religious Corporations Law (RCL). For example:

  • Protestant churches must include information such as the church name, location, and names of trustees.
  • Roman Catholic parishes must include the names of the bishop and vicar general, along with lay trustees.
  • Jewish congregations have their own specific provisions under Article 10 of the RCL.

Certain religious corporations must also obtain ecclesiastical approval or consent from denominational authorities before incorporation. These internal governance rules, often derived from religious doctrine, work in tandem with state laws.

Governance and Trustee Responsibilities

Each religious corporation is managed by a board of trustees or directors. The number of trustees is usually fixed by law and varies by denomination. The trustees are elected by qualified voters of the congregation or appointed by religious leadership, depending on the rules applicable to that faith tradition.

Trustees are responsible for:

  • Managing the corporation’s property and finances.
  • Ensuring the corporation complies with the RCL and other applicable statutes.
  • Making decisions regarding construction, renovation, or sale of real property.

All trustee actions must align with the religious purpose of the corporation and may be subject to internal religious guidelines and external legal oversight.

Religious Corporations Law and Church Mortgages

Without regulations and rules, it can be difficult to mortgage nonresidential and commercial properties. This issue is particularly complicated when the property in question is a church. In addition to approval from a regional or local religious affiliation, court approval must also be granted before a church building can be mortgaged.

Typically, a church will need a loan to fund some sort of project. This can include monetary payouts meant to compensate for the bad actions of church officials.

Generally, churches do not need approval from a court to complete transactions. However, mortgaging a church building is a unique situation. Normal mortgages and loans do not need court approval. However, church buildings are usually not owned by an individual, which is why mortgaging a church must involve the courts.

Religious corporations, such as the New York Archdiocese, are subject to the Religious Corporations Law, which means the courts must assist these corporations in certain transactions, especially those involving real estate.

RCL Section 12 and Court Supervision

Section 12 of the New York Religious Corporations Law is particularly significant when a religious corporation intends to sell, mortgage, or lease real property. Under this statute, the corporation must petition the Supreme Court in the county where the property is located, even if the Attorney General has already given approval.

The court assesses:

  • Whether the transaction is in the best interest of the corporation and its members.
  • Whether the terms are fair and reasonable.
  • Whether the transaction could impair the religious mission of the organization.

Failure to follow these procedures can invalidate the transaction and result in legal disputes.

New York Court Approval

Religious corporations have two options or obtaining court approval for their activities. By applying directly with the Attorney General, the corporation should be able to decide which option. Hiring an attorney can help religious corporations meet these legal requirements.

Applying with the Attorney General can be a could choice because it can prevent the religious corporation from facing opposition from the community or church members. In order to mortgage church real estate, a petition must be filed with the State Supreme Court in the county where the property is located.

Denomination-Specific Rules and Considerations

The New York Religious Corporations Law includes separate provisions for different religious faiths, recognizing the unique governance structures of each. Here are examples:

  • Roman Catholic Entities: Require ecclesiastical approval and include both clergy and laypersons on the board.
  • Jewish Congregations: Governed under Article 10, with detailed procedures for elections and property management.
  • Orthodox Churches: Often require the consent of a bishop or governing council for significant corporate actions.
  • Islamic Institutions: While not explicitly named in older statutes, are treated under general provisions or newer interpretations allowing religious incorporation.

Understanding these distinctions is critical to ensuring compliance when forming or managing a religious corporation in New York.

Common Legal Challenges for Religious Corporations

Religious corporations often face legal hurdles due to the intersection of civil and ecclesiastical authority. Common issues include:

  • Disputes over Trustee Elections: Especially where congregational factions disagree on procedures or results.
  • Unauthorized Property Sales: Occur when property is sold without proper court approval, potentially voiding the transaction.
  • Internal Governance Conflicts: Arising when there is ambiguity between religious doctrine and state law.

Legal representation is highly recommended to navigate these challenges and ensure proper compliance. You can find experienced attorneys familiar with New York Religious Corporations Law on UpCounsel.

Frequently Asked Questions

1. Do all religious groups in New York need to incorporate?No, incorporation is optional but provides legal protections such as limited liability and clearer ownership of property.

2. Can a religious corporation sell property without court approval?No, court or Attorney General approval is generally required for property sales, leases, or mortgages under the RCL.

3. What is RCL Section 12?It is a statute requiring religious corporations to obtain court approval before transferring real estate interests.

4. Are religious corporations subject to other laws besides the RCL?Yes, they may also fall under the New York Not-for-Profit Corporation Law (N-PCL) and federal laws concerning nonprofits.

5. How many trustees must a religious corporation have?The number varies by denomination, but the RCL typically requires between 3 and 9 trustees for most corporations.

If you need help understanding the New York Religious Corporations Law, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.