Key point 7-03.3. Most courts apply the "neutral principles of law" rule in resolving disputes over the ownership and control of property in "hierarchical" churches. Under this rule, the civil courts apply neutral principles of law, involving no inquiry into church doctrine, in resolving church property disputes. Generally, this means applying neutral legal principles to nondoctrinal language in any one or more of the following documents: (1) deeds to church property; (2) a church's corporate charter; (3) a state law addressing the resolution of church property disputes; (4) church bylaws; or (5) a parent denomination's bylaws.
A New York court ruled that a parent denomination held title to the property of a local church that voted to disaffiliate from the denomination.
The members of a Methodist church voted to withdraw from The United Methodist Church (UMC). The UMC asked a court for a declaration that it was the legal owner of the church's property. The court noted that it could resolve a property dispute between a local church and a parent denomination so long as it could do so by applying "neutral principles of law." The focus in resolving such a dispute is "on the language of the deeds, the terms of the local church charter, state statutes governing the holding of church property, and the provisions in the constitution of the general church concerning the ownership and control of church property."
The court concluded:
Although nothing in the deeds, the certificate of incorporation of the church or the state statutes governing the holding of church property discusses the property rights of a member of the UMC, the Book of Discipline of the UMC, which binds [affiliated churches], states that all property deeded to a UMC church or its predecessor is required to be held in trust for the UMC or its predecessor. Absent an express trust provision in the deed, an implied trust is created where, as here, the property is conveyed to a local church of the UMC or any predecessor to the UMC; the name, customs and polity of the UMC or any predecessor to the UMC are used in such a way that the local church is known to the community as part of such denomination; and the congregation of the local church accepts the ordained ministers appointed by a bishop of the UMC or any predecessor to the UMC. We therefore conclude that Â… the [local church in this case] held its property in an implied trust for the UMC.
What this means for churches
Most church property disputes are resolved on the basis of neutral principles of law contained in deeds, local church charters and bylaws, and denominational bylaws. So long as a civil court can resolve such a dispute by referring to neutral provisions in these documents, without any inquiry into doctrine or polity, it may do so. The court in this case concluded that local churches affiliated with the UMC held their title in trust for the national church as a result of non-doctrinal provisions in the UMC Book of Discipline.
The United States Supreme Court has noted that one of the principal advantages of the neutral principles of law approach to resolving church property disputes is that it permits religious organizations to "order their affairs" in advance of a property dispute through "appropriate reversionary clauses and trust provisions" that could reflect the intentions of a church and its members. Many churches and denominational agencies have done so. Several examples are cited in section 7-04 of Richard Hammar's book, Pastor, Church & Law (3rd ed. 2000). North Central New York Annual Conference v. Felker, 816 N.Y.S.2d 775 (N.Y.A.D. 2006).