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Reasons Churches Get Involved In Legal Disputes

Risk management is important to all organizations, including churches. While there is no way for a church to protect itself from all legal risks, church leaders are well advised to be familiar with common reasons churches get into lawsuits, and to take reasonable precautions. This article provides awareness of some common legal issues churches encounter.

Sexual Abuse of a Minor:

A true story that nobody wants to be about their own church: The police arrived at the church office unannounced to investigate an allegation of sexual abuse from a children’s classroom the Sunday before. Nobody on the church staff knew anything about it. Somehow the allegation never made it past the children’s ministry volunteers to anyone on the church’s staff or leadership. The staff was caught off guard when the police questioned them about the incident. In addition to criminal liability for the volunteer, the church was exposed to a potential lawsuit.

Sadly, allegations of child abuse are among the most common reasons churches are sued.

Property Disputes:

A religious parachurch organization raised funds to start a new church in an urban neighborhood in the 1970s. The organization helped arrange for the purchase of a building for church services. Somehow the building was never legally transferred to the church. Over forty years later, the church claimed to own the building but had no documentation to prove it. Further, the church was unable to meet the state’s requirements to obtain a transfer of the deed. After months of dispute, the two organizations ended up in a lawsuit over the identity of the rightful owner.

Property disputes are another common cause of church litigation, often stemming from conflicts between denominations and local churches over who owns the property where the church has met for decades.

Personal Injury:

An older, struggling congregation was preparing to merge with a newer church when it was discovered that the older church had a lawsuit pending against it that complicated the merger. The lawsuit arose over a church member who slipped and fell in the church’s parking lot years before and had sued several organizations, including the church, for damages. The litigation lingered for years and eventually complicated the church’s merger attempts.

For any organization that hosts people in its buildings, personal injury lawsuits are always possible.

Insurance Coverage Disputes:

A church met in a jurisdiction where public assemblies were ordered to cease during a specific timeframe due to the COVID-19 pandemic. The church decided to defy the order and meet anyway. The church’s insurance policy provided that there was no coverage for any “illegal actions” undertaken by the church, thus potentially nullifying all coverage.

Even when a church has gone to the effort and expense to obtain liability and property insurance, some claims may be outside their coverage, thus leading to coverage disputes between the church and its own insurance company. This is another common reason why churches end up in legal disputes.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (763) 425-8778 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

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