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Property Restrictions
A nonprofit hospital is often created as a result of a sizable monetary or property donation. In the event that property has been donated for the hospital, there can be restrictions on its use. Since the charitable trust doctrine requires that the assets be dedicated to the same purpose forever, it is very important that you review the language of the deed to ensure that it allows for such a change.
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Not long after nonprofit Catholic Healthcare West acquired Long Beach Community Medical Center in Long Beach, California in 1998, CHW began planning to consolidate services with its nearby facility, St. Mary Medical Center (St. Mary’s). In June 2000, CHW announced that reductions in reimbursements and increases in overhead at Long Beach were driving CHW to close the facility and completely relocate all medical services to St. Mary’s. Despite an outpouring of public support for the hospital, CHW closed its doors on September 29, 2000 and began efforts to sell the facility. There was one critical detail that was overlooked, however—a deed restriction on the land that required it to be forever used as a nonprofit hospital. The Mayor and City Council refused to let CHW sell the facility for any other purpose. After much legal wrangling, CHW gave the city back the property on October 31, 2000. As a result of significant community effort, the doors to the renamed Community Hospital of Long Beach were re-opened on June 27, 2001. |
What You Can Do:
- Request that the seller provide all documentation on the real estate, including the original deed granting the hospital’s land and all subsequent deed changes.
- Find a real estate expert who is willing to review the documents for you.
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