Senate Bill S229

2023-2024 Legislative Session

Authorizes sale or mortgage of certain real property of religious corporation without leave of supreme court

download bill text pdf

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to corporations, authorities and commissions
Jan 04, 2023	referred to corporations, authorities and commissions

2023-S229 (ACTIVE) - Details

Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Religious Corporations Law
Laws Affected:: Amd §12, Rel Corp L
Versions Introduced in Other Legislative Sessions:: 2015-2016: S8001
2017-2018: S2935
2019-2020: S1895
2021-2022: S2567

2023-S229 (ACTIVE) - Summary

Authorizes a religious corporation to sell real property where consideration paid therefor and fair market value thereof is less than $200,000, and mortgage real property when such mortgage secures debt of less than $200,000, without leave of supreme court.

2023-S229 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S229

SPONSOR: GALLIVAN
 
TITLE OF BILL:

An act to amend the religious corporations law, in relation to the sale,
mortgage and lease of real property of a religious corporation

 
PURPOSE:

This bill amends Section 12 of the Religious Corporations Law to provide
an exemption to the current requirement for court approval of the sale,
mortgage or lease of property owned by a religious corporation. This
exemption would only apply to the sale of real property whose fair
market value and actual sale price do not exceed $200,000.00 or to the
mortgage of real property where such mortgage secures a debt of less
than $200,000.00.

 
SUMMARY OF PROVISIONS:

Section 12(1) of the Religious Corporations Law requires that a reli-
gious corporation intending to sell, mortgage or lease (for a period of

more than five (5) years) first must submit a petition to the Supreme
Court of the judicial district or the County Court of the county in
which the corporation has its office or principal place of operation.
The court then gives a minimum fifteen (15) day notice of hearing on the
transaction to the Attorney General and any other member, officer or
creditor of the corporation that the court may choose. A "show-cause"
hearing is then held at which any party may appear and argue why the
petition should not be granted. Once satisfied that the consideration
and terms of the transaction are fair & reasonable, the court may
authorize the sale, lease or other, disposition of the property.

 
JUSTIFICATION:

This process is a difficult, time-consuming and an expensive process for
churches and other religious organizations that are trying to dispose of
or encumber relatively modest properties. Exempting transactions under
$200,000.00 enables these organizations to conduct routine business
efficiently and economically while still insuring large amount trans-
actions receive the scrutiny of the court.

 
LEGISLATIVE HISTORY:

2021-22: S.2657 Referred to Corporations, Authorities and Commissions

2019-20: S.1895 Referred to Corporations, Authorities and Commissions

2017-18: S.2935/A.9983 Passed Senate/Referred to Corporations, Authori-
ties and Commissions

2015-16: S.8001 Referred to Corporations, Authorities and Commissions

2010 - S.4163 Reported and Committed to Finance

2009 - S.4163 Referred to Corporations, Authorities and Commissions

2008 - S.1591 Passed Senate

2007 - S.1591 Passed Senate

2006 - S.2497-A Passed Senate

 
FISCAL IMPLICATIONS:

There are no fiscal implications to the State but may save the courts
time and money.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2023-S229 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    229
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 4, 2023
                                ___________
 
 Introduced  by Sen. GALLIVAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and Commissions
 
 AN ACT to amend the religious corporations law, in relation to the sale,
   mortgage and lease of real property of a religious corporation

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivisions 1 and 9 of section 12 of the religious  corpo-
 rations law, subdivision 1 as amended by chapter 555 of the laws of 2015
 and  subdivision  9  as  amended by chapter 962 of the laws of 1969, are
 amended to read as follows:
   1. (A) A religious corporation shall not sell, mortgage or lease for a
 term exceeding five years any of its real property without applying  for
 and obtaining leave of the court or the attorney general therefor pursu-
 ant to section five hundred eleven of the not-for-profit corporation law
 as  that  section  is  modified by paragraph (d-1) of subdivision one of
 section two-b of this chapter or section five hundred  eleven-a  of  the
 not-for-profit  corporation law, except that a religious corporation may
 execute a purchase money mortgage or a purchase money security agreement
 creating a security interest in personal property purchased by it  with-
 out obtaining leave of the court therefor.
   (B)  NOTWITHSTANDING  THE PROVISIONS OF PARAGRAPH (A) OF THIS SUBDIVI-
 SION, ANY SOLVENT RELIGIOUS CORPORATION MAY SELL ANY OF ITS REAL PROPER-
 TY WITHOUT A COURT ORDER IN THE FOLLOWING CIRCUMSTANCES:
   (I) THE RELIGIOUS CORPORATION SHALL HAVE AND MAINTAIN IN  ITS  RECORDS
 AN  APPRAISAL  REPORT  PREPARED BY A PROFESSIONAL APPRAISER AND DATED OR
 UPDATED WITHIN NINETY DAYS OF THE SALE SHOWING THE FAIR MARKET VALUE  TO
 BE LESS THAN TWO HUNDRED THOUSAND DOLLARS;

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD00100-01-3
 S. 229                              2

 
   (II)  THE SALE SHALL BE AN ARM'S LENGTH TRANSACTION FOR A CASH CONSID-
 ERATION AT THE FAIR MARKET VALUE OF THE PROPERTY WHICH SHALL  BE  WITHIN
 TEN PERCENT OF THE APPRAISED VALUE;
   (III) THE GOVERNING BODY OF THE RELIGIOUS CORPORATION SHALL HAVE GIVEN
 NOTICE  FOR NOT LESS THAN THIRTY DAYS TO THE MEMBERS OF THE CONGREGATION
 SERVED BY THE RELIGIOUS CORPORATION IN A MANNER LIKELY TO BE SEEN  BY  A
 MAJORITY OF SUCH MEMBERS INCLUDING BUT NOT LIMITED TO PUBLICATION IN ANY
 BULLETIN,  NEWSLETTER,  OR SIMILAR DOCUMENT NORMALLY DISTRIBUTED TO SUCH
 MEMBERS; AND
   (IV) A CERTIFICATE OF COMPLIANCE WITH THE REQUIREMENTS OF  THIS  PARA-
 GRAPH  EXECUTED BY THE PERSON OR PERSONS EXECUTING THE DEED ON BEHALF OF
 THE RELIGIOUS CORPORATION  UNDER  THE  PENALTIES  OF  PERJURY  SHALL  BE
 ATTACHED  TO  AND  RECORDED WITH THE DEED; AND WITH RESPECT TO RELIGIOUS
 CORPORATIONS SUBJECT TO SUBDIVISION  TWO,  THREE,  FOUR,  FIVE,  FIVE-A,
 FIVE-B,  OR FIVE-C OF THIS SECTION, SUCH CERTIFICATE SHALL HAVE ENDORSED
 THEREON THE CONSENT OF THE CHURCH AUTHORITY OR AUTHORITIES WHOSE CONSENT
 WOULD BE REQUIRED UNDER SUCH SUBDIVISIONS OF  THIS  SECTION  BEFORE  THE
 FILING OF AN APPLICATION TO THE COURT.
   (C)  NOTWITHSTANDING  THE PROVISIONS OF PARAGRAPH (A) OF THIS SUBDIVI-
 SION, ANY SOLVENT RELIGIOUS CORPORATION MAY MORTGAGE  ANY  OF  ITS  REAL
 PROPERTY WITHOUT A COURT ORDER IN THE FOLLOWING CIRCUMSTANCES:
   (I)  THE  RELIGIOUS CORPORATION SHALL HAVE AND MAINTAIN IN ITS RECORDS
 AN APPRAISAL REPORT PREPARED BY A PROFESSIONAL APPRAISER  AND  DATED  OR
 UPDATED WITHIN NINETY DAYS OF THE MORTGAGE SHOWING THE FAIR MARKET VALUE
 TO BE LESS THAN TWO HUNDRED THOUSAND DOLLARS;
   (II)  THE MORTGAGE SHALL BE AN ARM'S LENGTH TRANSACTION WITH A MORTGA-
 GEE LICENSED TO MAKE MORTGAGE LOANS IN THE STATE FOR AN ADVANCE OF  CASH
 IN A PRINCIPAL AMOUNT NOT MORE THAN TWO HUNDRED THOUSAND DOLLARS;
   (III) THE GOVERNING BODY OF THE RELIGIOUS CORPORATION SHALL HAVE GIVEN
 NOTICE  FOR NOT LESS THAN THIRTY DAYS TO THE MEMBERS OF THE CONGREGATION
 SERVED BY THE RELIGIOUS CORPORATION IN A MANNER LIKELY TO BE SEEN  BY  A
 MAJORITY OF SUCH MEMBERS INCLUDING BUT NOT LIMITED TO PUBLICATION IN ANY
 BULLETIN,  NEWSLETTER,  OR SIMILAR DOCUMENT NORMALLY DISTRIBUTED TO SUCH
 MEMBERS; AND
   (IV) A CERTIFICATE OF COMPLIANCE WITH THE REQUIREMENTS OF  THIS  PARA-
 GRAPH  EXECUTED BY THE PERSON OR PERSONS EXECUTING THE DEED ON BEHALF OF
 THE RELIGIOUS CORPORATION  UNDER  THE  PENALTIES  OF  PERJURY  SHALL  BE
 ATTACHED  TO  AND  RECORDED WITH THE MORTGAGE; AND WITH RESPECT TO RELI-
 GIOUS CORPORATIONS  SUBJECT  TO  SUBDIVISION  TWO,  THREE,  FOUR,  FIVE,
 FIVE-A,  FIVE-B,  OR FIVE-C OF THIS SECTION, SUCH CERTIFICATE SHALL HAVE
 ENDORSED THEREON THE CONSENT OF  THE  CHURCH  AUTHORITY  OR  AUTHORITIES
 WHOSE  CONSENT WOULD BE REQUIRED UNDER SUCH SUBDIVISIONS OF THIS SECTION
 BEFORE THE FILING OF AN APPLICATION TO THE COURT.
   9. If a sale, mortgage or lease for a term exceeding five years of any
 real property of any such religious corporation WITH RESPECT TO WHICH  A
 COURT  ORDER WAS REQUIRED UNDER SUBDIVISION ONE OF THIS SECTION has been
 heretofore or shall be hereafter  made  and  a  conveyance  or  mortgage
 executed  and  delivered  without  the authority of a court of competent
 jurisdiction, obtained as required by law, or not in accordance with its
 directions, the court may,  thereafter,  upon  the  application  of  the
 corporation,  or  of  the grantee or mortgagee in any such conveyance or
 mortgage or of any person claiming through or under any such grantee  or
 mortgagee  upon  such  notice to such corporation, or its successor, and
 such other person or persons as may be interested in such  property,  as
 the  court may prescribe, confirm said previously executed conveyance or
 mortgage, and order and direct the execution and delivery of a confirma-
 S. 229                              3
 
 tory deed or mortgage, or the recording of such  confirmatory  order  in
 the office where deeds and mortgages are recorded in the county in which
 the  property  is  located; and upon compliance with the said order such
 original  conveyance or mortgage shall be as valid and of the same force
 and  effect  as  if  it  had  been  executed  and  delivered  after  due
 proceedings  had in accordance with the statute and the direction of the
 court.  But no confirmatory order may be  granted  unless  the  consents
 required  in  the first part of this section for a Protestant Episcopal,
 Roman Catholic, Presbyterian church or an incorporated African Methodist
 Episcopal Zion church or an incorporated United  Methodist  church  have
 first  been  given  by the prescribed authority thereof, either upon the
 original application or upon the application for the confirmatory order.
   § 2. This act shall take effect immediately and shall apply  to  sales
 and  mortgages of real property occurring on or after the effective date
 of this act.

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Senate Bill S229

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Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Actions

2023-S229 (ACTIVE) - Details

2023-S229 (ACTIVE) - Summary

2023-S229 (ACTIVE) - Sponsor Memo

2023-S229 (ACTIVE) - Bill Text download pdf

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Sponsored By

Patrick M. Gallivan

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Actions

2023-S229 (ACTIVE) - Details

2023-S229 (ACTIVE) - Summary

2023-S229 (ACTIVE) - Sponsor Memo

2023-S229 (ACTIVE) - Bill Text download pdf

Comments