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Volume 10 - Opinions of Counsel SBRPS No. 119

Opinions of Counsel index

Nonprofit organizations exemption (generally) (ownership - joint tenancy) - Real Property Tax Law, § 420-a:

In general, a corporation cannot be a joint tenant with a natural person, so a nonprofit organizations exemption cannot be granted where the applicant religious corporation purportedly has only a joint tenant’s interest in the title to the property for which exemption is sought.

Our opinion has been requested concerning the eligibility of a specific church to receive a nonprofit organizations exemption (per Real Property Tax Law, § 420-a). The deed to the parcel in question indicates that title to the property is in the named church, the church’s bishop, and a lay individual (who happens to be a co-signer of the mortgage to the property), all as “joint tenants with rights of survivorship.” Since the church does not have sole ownership, the question is whether the exemption may be granted. We think not.

The exemption is applicable to “[r]eal property owned by a corporation or association organized or conducted exclusively for religious . . . purposes . . . and used exclusively for carrying out thereupon . . . such purposes . . .” (RPTL, § 420-a(1)(a)). Hence, title must be in the nonprofit organization if the exemption is to be granted. Here, however, the church purportedly has only a joint tenant’s interest in the title, along with two natural persons.

It is true that we have often stated that, where property is owned by two or more joint owners, each owner may apply his or her exemption to the entire assessment (e.g., 1 Op.Counsel SBEA No. 54), but our research has found no support for the proposition that a religious organization may be a joint tenant in a church building. Indeed, the only New York State judicial decision of which we are aware is from a lower court which simply stated, “Furthermore, a corporation cannot hold as a joint tenant, either with an individual or another corporation” (Moore Lumber Co., Inc. v. Behrman, 144 Misc. 291, 292, 259 N.Y.S. 248, 250 (Municipal Court, Borough of Manhattan, 1932)). Although rendered by a lower court, this decision has been cited in several real property treatises {1}

A corporation, it has been held, cannot hold as a joint tenant, either with an individual or another corporation [citing Moore]. This rule, it would seem, is based upon the fact that a corporation has perpetual succession, and therefore there cannot be the mutual right of survivorship which is so essential to a joint tenancy (Rasch, New York Law and Practice of Real Property [2nd ed], § 14.42).

(Accord: Warren’s Weed New York Real Property, Joint Tenants, § 1.07(1); 24 NY Jur2d, Cotenancy and Partition, § 18; Real Property Service, New York, § 2.8; see also, 18B Am Jur2d, Corporations, § 2048). {2}

If the deed is defective in that it attempts to establish a joint tenancy in a party not legally competent to be a joint tenant, further inquiry seems necessary. A correction deed could resolve the problem (see discussion of correction deeds in 10 Op.Counsel SBRPS No. 7). Similarly, judicial reformation of the deed is possible (Warren’s Weed New York Real Property, Reformation, § 7.02). The court would seek to determine the intent of the parties (Real Property Law, § 240(3); 43A NY Jur 2d, Deeds, § 204).

Were a court to construe the deed in question and agree that a joint tenancy is impossible given the facts, so as to avoid canceling the transfer in toto, it might determine that the deed should be read as establishing a tenancy in common. Then, a nonprofit organizations exemption could presumably be granted to the one-third interest of the church (assuming the other statutory criteria of § 420-a are satisfied). However, in the absence of such judicial holding (or a correction deed clarifying title), no exemption seems warranted.

November 22, 2000

{1} A concurring opinion in a Missouri case also cited the Moore decision (Wantuck v. United Savings and Loan Ass’n, 461 S.W.2d 692, 698 (Mo.Sup.Ct. 1971)).

{2}  Section 22 of the Religious Corporations Law does authorize incorporated churches to be joint tenants in homes for the aged poor, but that provision is limited to such specific property use.