In the changing denominational and doctrinal environments in which local churches and denominations find themselves, the ability of local churches to leave the denomination with their property intact is problematic at best. Organizational and governance documents of both denominations and local churches which were typically drafted in a past era, and rarely or never updated, generally drive the loss of local church property to the denomination. It seems less often, but property ownership documents like a deed, especially older ones, often buttress the organizational documents.
In Hebron Community Methodist Church v Wisconsin Conference Board, Opinion and Order (WD Wisc. 2022), the federal court dismissed the federal constitutional challenge by a local church against a Wisconsin statute that expressly preserved the ownership interest of the denomination in the event the local church “disaffiliated.” The argument, which may have been correct, was that the statute violated the Establishment Clause of the First Amendment. However, the federal trial court never reached the constitutional challenge because the local church could not overcome the traditional Neutral Principles of Law analysis adopted in Jones v Wolf, 443 US 595 (1979). The Jones case held “courts may look at the “language of the deeds, the terms of the local church charters, the state statutes governing the holding of church property”” and the provisions therein. In the reported case, the 1855 deed and the 1963 deed recited the property was owned by the denomination. The local church’s articles of incorporation adopted in 1963 stated the local church would “support the doctrine, and it, and all its property, both real and personal, shall be subject to the laws, usages, and ministerial appointments of the Methodist Church.” The denominational documents indicated the local church held its property in trust for the denomination. The local church amended its articles of incorporation a month after filing the lawsuit against the denomination to quiet title. No organizational or other document authorized “disaffiliation” by merely unilaterally amending articles of incorporation. The trial court held that because all of the Neutral Principles of Law markers, deeds and organizational documents, pointed the same way, and against unfettered ownership of the property by the local church there was no reason to reach the constitutional challenge of the statute.
These cases almost uniformly counsel against the effort of the local church to try to keep its property. The local church would be better off to borrow against the property if it is paid off and default, or simply hand a mortgaged property over to the denomination, and use the resources otherwise to be consumed in litigation to start anew. If the property value and the mortgage are not too disparate, the local church might be able to negotiate a different outcome because there may be little for the denomination to gain if equity is thin. While there might seem to be a lack of morality in the foregoing suggestions, and some might blanche at them, the only other alternative is simply to abandon property to the denomination and start anew. If there is a “moral” reason for the “disaffiliation,” it might have such a cost.