Opinion ID: 6045101
Heading Depth: 2
Heading Rank: 3

Heading: Decree of Sale

Text: In denying the Bill of Review, the circuit court also held that after reviewing the record, it found no error of law in the underlying action where it issued the Decree of Sale. On appeal, EWC argues there were two legal errors apparent upon the face of the record below. First, EWC argues the circuit court erred when it concluded EWC’s property was subject to taxation by the City. Second, EWC argues the circuit court erred when it held EWC could not challenge the delinquent real estate taxes because the statute of limitations to do so had expired. Tax Exempt Status EWC argues the circuit court erred when it concluded EWC’s property was subject to taxation during the years in question. EWC contends its property is exempt from taxation pursuant to Article X, Section 6(a)(2) of the Constitution of Virginia, and that this exemption is 5 self-executing. The City responds that the circuit court properly denied the bill of review on this point because the property was not “automatically exempted” from taxation. Rather, the City contends that EWC was required to apply to the City Assessor for a determination whether it was entitled to an exemption. Article X, Section 6(a)(2) of the Constitution of Virginia provides that “property owned and exclusively occupied or used by churches or religious bodies for religious worship” shall be exempt from state or local taxation. Code § 58.1-3606 states the General Assembly’s interpretation of the term “religious worship” in the Constitution and does so expansively, as set forth below: A. Pursuant to the authority granted in Article X, Section 6 (a)(6) of the Constitution of Virginia to exempt property from taxation by classification, the following classes of real and personal property shall be exempt from taxation: .... 2. Real property and personal property owned by churches or religious bodies, including (i) an incorporated church or religious body and (ii) a corporation mentioned in § 57-16.1, and exclusively occupied or used for religious worship or for the residence of the minister of any church or religious body, and such additional adjacent land reasonably necessary for the convenient use of any such property. Real property exclusively used for religious worship shall also include the following: (a) property used for outdoor worship activities; (b) property used for ancillary and accessory purposes as allowed under the local zoning ordinance, the dominant purpose of which is to support or augment the principal religious worship use; and (c) property used as required by federal, state, or local law. EWC is correct that we have referred to this exemption as “self-executing.” In Warwick County v. Newport News, 153 Va. 789, 806 (1930), we construed the former constitutional provision for tax-exempt property and held that all property is liable to taxation, “unless exempted by the self-executing provisions of the Constitution, section 183.” Id. The Attorney General has also issued two opinions referring to this exemption as “self-executing” or 6 “automatic.” The first is a detailed opinion from 1984 discussing various tax exemptions and the impact of the 1971 revisions to the Constitution on those exemptions. 1984 Op. Atty. Gen. 353, 1984 WL 184387 (Feb. 14, 1984). In that opinion, the Attorney General stated: The exemptions authorized in the 1971 Constitution, Art. X, §§ 6(a)(1) through 6(a)(4) for publicly owned property, church property, nonprofit cemeteries, public libraries and nonprofit institutions of learning are:
2. Do not depend upon §§ 58-12(1) through 58-12(4); and 3. Must be strictly construed, even as to the property of governments and churches. Id. at  (emphasis added). The second opinion, issued in 1993, addressed whether a city’s delay in recognizing the tax-exempt status of property acquired by a religious organization was legally proper. 1993 Op. Atty. Gen. 244, 1993 WL 494573 (Oct. 20, 1993). The Attorney General opined that Section 6(a)(2) provided for an “automatic exemption of ‘real estate and personal property owned and exclusively occupied or used by churches or religious bodies for religious worship or for the residences of their ministers.’” Id. at  (emphasis added). Although property owned by a religious organization for worship is exempt from taxation by localities, localities are required to maintain an inventory of all tax-exempt property and keep a record of such information, along with the fair market value of such property. Code § 58.1- 3604. Further, Code § 58.1-3605 authorizes localities to “require by local ordinance any entity, except the Commonwealth, any political subdivision of the Commonwealth, or the United States, which owns real and personal property exempt pursuant to this chapter to file triennially an application with the appropriate assessing officer as a requirement for retention of the exempt status of the property.” These authorities establish that the tax exemption for property owned by religious organizations is “automatic” or “self-executing,” unless a locality chooses to exercise its 7 authority under Code § 58.1-3605 to pass an ordinance requiring such entities to file an application every three years to retain the property’s exempt status. During the years in question, however, the City did not have such an ordinance.  Therefore, the self-executing provision of Article X, Section 6(a)(2) of the Constitution of Virginia governed. Any properties used for “religious worship” in the City that qualified for tax-exempt status under Article X, Section 6(a)(2), as defined by Code § 58.1-3606, were automatically exempt from taxation during the years in question. EWC asserts that its property, which it refers to as a “learning annex,” qualified for this automatic exemption. During oral argument the City disagreed, arguing the exemption only applies to property used for “worship and housing.” We disagree with the City’s narrow interpretation of the exemption. As explained above, Code § 58.1-3606 contains an expansive definition of religious worship that, in addition to “worship and housing” includes “property used for outdoor worship activities,” “property used for ancillary and accessory purposes” that “support[s] or augment[s] the principal religious worship use”, and “property used as required by federal, state, or local law.” Code § 58.1-3606(A)(2). Based upon the record before us, we are unable to determine whether EWC’s property in question would qualify for this exemption. We note that it appears EWC attempted to proffer evidence of its use that would qualify for tax-exempt status, but the circuit court never gave EWC an opportunity to present that evidence. Instead, the circuit court agreed with the City’s