Who Owns Church Property?

Can congregations leave their denomination and keep their property?

That question has been percolating within Methodism and other mainline denominations for two decades. The United Methodist Church, the Presbyterian Church (USA), and The Episcopal Church all have language in their constitution and church law that states that the local congregation holds its property “in trust” for the denomination. That language is known as the “Trust Clause.” (See the Book of Discipline, ¶2501 and ¶2503)

The practical result of the Trust Clause is that local congregations may not keep their property, should they decide to withdraw from their denomination. (Many lay members of the church are surprised to find this out in the midst of a conflict over theology and administration with their denominational hierarchy.)

Over the past ten years, there have been numerous court cases where denominations have sued local churches and vice versa over who gets to keep the property when a local congregation withdraws. On top of the wrenching emotional consequences of such legal battles, millions of dollars have been spent to determine property ownership.

The key point to understand here is that each state is different. In some states, a Trust Clause established by a denomination is regarded as final. There is no appeal and no way a local church could keep its property and withdraw (unless they negotiate a property settlement payment to the denomination).

In other states, the courts have said that the denominational Trust Clause is not final, and that “neutral principles of trust law” must be applied in deciding property ownership. Under those principles, the local congregation must have agreed to the trust and placed it in its property deed. And unless the local church trust is specified as irrevocable, the local church can revoke the trust at any time.

Just last week, the Texas Supreme Court decided two cases regarding The Episcopal Church in favor of the “neutral principles” approach. The Court sent back to trial an effort by the Fort Worth Diocese of The Episcopal Church to withdraw from the denomination and keep its property, with instructions to follow “neutral principles.” (This would be the equivalent of an annual conference withdrawing from The United Methodist Church.) The Court also overturned two lower court rulings awarding a local church property to its diocese.

These decisions open up the door for mainline denominational churches in Texas to withdraw from their denomination and keep their property. Given the potential for separation in The United Methodist Church, these rulings hold significance for the future of our denomination.

What is the state of trust laws in your state? Do you have the Trust Clause in your church’s deed? (This is not required, and it could work against a congregation seeking to leave the UM Church.)

I am not advocating separation at this point in our United Methodist Church. If such a separation were to take place, I believe it should happen at the General Conference level, where local churches could be given the option and the process to withdraw and keep their property. However, if the worst were to occur, it would be helpful for local churches to know what their legal options are.

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