Restrictions, Covenants and Other Constraints Can Make These Transactions Complicated
Lately, we’ve seen several churches enter joint ventures with a developer. The church may no longer need the property because of declining enrollment, or they may have property that can be sold or developed to fill a financial need. Such partnerships often entail special considerations.
The Deal
$26M transaction in Bronx County with a $19M loan.
Bronx County
Fee Policy – $77,071
Loan Policy – $14,009
Title Fees – $1,000+
Recording Fees to Bronx County – $500+
Mortgage Tax to NY State – $504,000
Transfer Tax to NY State – $169,000
Cornerstone Insight
When a developer and a church team up to develop church property, either as a joint venture or outright sale, neither party may realize that church-related projects have their own unique complications. It isn’t as simple as razing a building to build condos or building on what is currently an unused parking lot.
There are several issues that developers and churches should understand. To start, such ventures require approval from a court or attorney general, depending upon the type of non-profit. Additional agencies are involved if the church is a designated landmark.
In addition, covenants and restrictions recorded on the premises may limit potential uses of the property. For instance, a covenant and restriction search could turn up a deed from 1920 that says only a religious or community facility can occupy the property.
Also, it isn’t always clear who in the church has the authority to sign the deed if the property is sold or developed.
If you have any questions about church property or other specific title issues, or if you would like to discuss an upcoming or potential transaction, please contact us.
