What Property-Related Transactions Require Diocesan Approval?
June 06, 2018
One of the most common interactions between parish and diocesan leaders occurs in the context of renovation projects, loan transactions, leases, easements and sales of parish real estate. The Episcopal Church canons require the consent of the Bishop and Standing Committee before a parish enters into certain transactions. Episcopal Church Canon I.7.3 provides that:
No Vestry, Trustee, or other Body, authorized by Civil or Canon law to hold, manage, or administer real property for any Parish, Mission, Congregation, or Institution, shall encumber or alienate the same or any part thereof without the written consent of the Bishop and Standing Committee of the Diocese…
How does this canonical requirement apply to the following situations?
Q1: A parish is planning a major renovation of its parish hall, to be financed by a loan that will be secured by a mortgage/deed of trust on parish real estate. Consent required?
Q2: The vestry has determined to sell the parish rectory. Consent required?
Q3: A parish plans to finance a major renovation by a bank loan secured by pledging a portion of its endowment account. Consent required?
A3: No. Endowment funds are not real property; since there is no lien being placed on real property of the parish, no consent of the Bishop and Standing Committee is required.
Q4: A parish desires to lease an unused area in the parish house to a local charitable organization. Is this an “encumbrance or alienation” requiring consent?
A4: Maybe. It depends on the length of the lease. If the term of the lease--including renewals--is for more than three years or more, consent is required.
Q5: The parish has an opportunity to receive a grant from the local county, which provides financial support for maintenance of historical properties. A condition of the grant requires the vestry to enter into an easement agreement with the county. Consent required?
A5: Yes. An easement on real estate imposes limitations on the use of that property. For canonical purposes, this is an “encumbrance.” Consent of the Bishop and Standing Committee is required.
Who can help? In the Diocese of Washington, the Diocesan Finance Committee serves as staff to the Standing Committee and Bishop on property sale and encumbrance matters. Contact Paul Cooney, staff liaison to the Finance Committee, if you have questions.