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Volume 4 - Opinions of Counsel SBEA No. 42

Opinions of Counsel index

Fraternal organizations exemption (Improved Order of Red Men) - Real Property Tax Law, §§ 421, 428, 454:

Real property owned by a subordinate lodge of the Improved Order of Red Men and used for fraternal purposes is not eligible for an exemption from taxation pursuant to either section 421 or 428 of the Real Property Tax Law. No exemption may be granted pursuant to section 454 of such law unless the property is located within the boundaries of an Indian reservation.

Our opinion has been requested on the taxable status of property owned by a subordinate Lodge of the Improved Order of Red Men. The lodge building and the parcel of land on which it stands is used exclusively for “fraternal purposes and on a nonprofit basis.” Certain nonprofit corporations or associations are entitled to exemption pursuant to section 421 of the Real Property Tax Law. In determining whether real property satisfies the requirements of section 421 it must be borne in mind that statutes exempting real property from taxation are strictly construed by the courts. This means simply that any claim to an exemption must clearly fall within a given statutory exemption provision to be successful.

Section 421 of the Real Property Tax Law exempts from taxation real property owned by nonprofit organizations whose charter and activities strictly conform to those purposes enumerated in the section. While a lodge, such as this, may engage in some of the enumerated activities, the fact that the lodge is also used for fraternal and other nonexempt purposes makes section 421 inapplicable. The statute requires that the real property be owned by a corporation or association organized exclusively for the enumerated purposes and that such property be used exclusively for the enumerated purposes. Because of this policy of strict construction of exemption statutes, fraternal organizations do not qualify for the exemption provided for certain other nonprofit organizations under section 421.

Section 428 of the Real Property Tax Law does provide an exemption for certain real property of fraternal organizations that falls within the requirements set forth in the statute. It has long been the opinion of this office that “real property owned by a subordinate lodge of a fraternal organization is not entitled to a real property tax exemption” (2 Op.Counsel SBEA No. 38). Section 428 provides as follows:

§ 428. Fraternal organizations; entire net income for education and relief of members
Real property owned by any fraternal corporation, association or body created to build and maintain a building or buildings for its meeting or meetings of the general assembly of its members or subordinate bodies thereof and for the accommodation of other fraternal corporations, associations or bodies, the entire net income of which real property is exclusively applied or to be used to build, furnish and maintain one or more asylums, homes or schools for the free education or relief of its members or for the relief, support and care of the worthy and indigent members thereof, their wives, widows or orphans, shall be exempt from taxation and exempt from special ad valorem levies and special assessments to the extent provided in section four hundred ninety of this chapter. (emphasis supplied)

The courts have held that exemptions from real property taxation are not favored and are to be strictly construed. To be eligible, the real property in question must clearly fit within the language of the applicable statutory provision. The language of section 428 clearly indicates that the type of “fraternal corporation, association or body” which is entitled to an exemption is one which has a “general assembly of its members or subordinate bodies thereof.” Such language clearly contemplates the Grand Lodge of a fraternal corporation, association or body and not individual subordinate lodges thereof. This conclusion has been consistently sustained by the courts in New York when called upon to determine the exempt status of various fraternal organizations under section 428 (see, Ithaca Masonic Temple Corp. v. Calistri, 57 Misc.2d 721, 291 N.Y.S.2d 721).

In People ex rel. Mizpah Lodge v. Burke, 228 N.Y. 245, 126 N.E. 703, the Court of Appeals concluded:

Corporations or associations may be created for the purpose of building and leasing such a meeting place as the statute contemplates, but mere subordinate lodges or fraternal orders are not created for that purpose. The disposition of the net income to charitable purposes does not help the case. Relator’s enterprise is charitable rather than mercenary, but it is not the kind of charitable enterprise that comes within the letter of the statute, if it had been the intention of the legislature to exempt from taxation all lodge buildings the net income of which was devoted to charitable purposes, it would doubtless have expressed such intention without the use of unnecessary or ambiguous words.

Accordingly, the real property owned by a subordinate fraternal lodge is not entitled to an exemption from real property taxation under section 428 or section 421 of the Real Property Tax Law.

There is one other exemption provision of the Real Property Tax Law which has possible relevance here. Section 454 provides that “the real property in any Indian reservation owned by the Indian nation, tribe or band occupying them shall be exempt from taxation and exempt from special ad valorem levies and special assessments to the extent provided in section four hundred ninety of this chapter.” The section clearly provides that eligibility depends on the particular location of the real property in question i.e., the real property must be “in any Indian reservation.” Since the real property in question is not located within the confines of an existing Indian reservation it is subject to property taxation along with all other such property under section 300 of the Real Property Tax Law, which provides that “all real property within the state shall be subject to real property taxation, special ad valorem levies and special assessments unless exempt therefrom by law.” (emphasis supplied)

November 12, 1973

Updated: