Who Controls the Property of a Disaffiliated Church?

Key point. The property of a local church affiliated with a hierarchical denomination may revert to the denomination if the church votes to disaffiliate.

A Maryland court ruled that a parent denomination retained control of the property of a local congregation that voted to disaffiliate. The congregation of a church affiliated with the African Methodist Episcopal (AME) Church voted in 1993 to disaffiliate from the parent body as a result of what it perceived to be burdensome financial demands and a decline in moral conditions within the denomination.

Both the dissident congregation and the AME Church claimed the church's property, and a court was asked to determine the rights of the parties. The court ruled that the local congregation was entitled to retain its property. It based its conclusion on the fact that the church's deed did not contain a "reverter clause" transferring title back to the national church in the event of a disaffiliation.

The court further relied upon the AME Church Discipline (the national church's primary body of governing rules). This resource contained no provision for local church property being held in trust by the national church, and like the local church's deed, contained no reverter clause. The national church appealed, and an appeals court reversed the trial court's ruling and awarded the church's property to the national church.

The court acknowledged that the deed and the AME Church Discipline did not contain any trust provision or reverter clause. However, the court insisted that these omissions did not require that the seceding church retain its property. Quite to the contrary, "the absence of an explicit reverter upon withdrawal clause does not necessarily mean that the local church is entitled to retain control of its property."

Rather, a court must consider all relevant documents. The court concluded that two other documents clearly vested control of the property in the national church. The first document was the church's articles of incorporation, which specified that the "powers and authority of the trustees shall be in subjection to the discipline of said church."

The court concluded that the phrase "said church" had to refer to the national church since "there is simply no such thing as a local discipline of any AME congregation." The court concluded: "Based exclusively on the language in the [articles of incorporation] requiring that the trustees hold the property `in trust' for the AME Church, we hold that [the local church] was not entitled to retain control of the land after their departure from the AME Church." The court concluded that the local church trustees, on the basis of trust law, owed a duty of loyalty to the national church which precluded them from allowing the local congregation to retain control of the property following the congregation's withdrawal from the AME Church.

Rather, the local trustees had a duty to ensure that the property remained for the use and benefit of the membership of the AME Church….In other words, in light of the trustees' powers under…principles of trust law pursuant to the [articles of incorporation], we conclude that once the local members chose to discontinue fellowship with the AME Church, the trustees were without power to allow the departing members to retain control of the property because that was not for the benefit of the membership of the… AME Church…. Accordingly, although there may be no explicit reverter upon withdrawal provision in this case, we are satisfied that the trust provision in the [articles of incorporation] had the same effect.

The court rejected the local church's contention that "in order for a parent church to retain control of local church property there invariably must be an explicit reverter upon withdrawal provision." Board of Incorporators v. Mt. Olive African Methodist Episcopal Church, 672 A.2d 679 (Md. App. 1996).