Determining the ownership of church property requires in denominational churches more than a copy of the deed. Likewise, determining who has authorization to act upon behalf of the property owner, to transfer or encumber the ownership interest, may require inquiry into governing documents from a denomination and the local church. This is especially true when the attempted transfer of ownership arises from a dissident faction
In Romanian Orthodox Episcopate v Estate of Carstea, Slip Op. (Mich. App. 2022), the trial court determined that application of Neutral Principles of Law, enforcing the denominational governance documents, required quieting title in the denomination. The appellate court affirmed the decision, but held Neutral Principles of Law did not apply because the dissident group, led by a disciplined and laicized former priest, did not have authority to transfer title to the new church corporation. The denominational governing documents allegedly prohibited “defecting parishes from retaining church property.” Therefore, even if the local church sought disaffiliation, the local church did not have right, title or interest in the church property with which to transfer the property to the new church corporation.
Generally, a local church in good standing in its denomination will have authority to transfer property or mortgage its property in usual and customary business transactions. A written waiver by the denomination may also be required by a lender. Even in usual and customary business transactions, the local church should confer with the denomination consistent with the governing documents. Almost never, however, will a defecting congregation be able to keep its church property if the denominational governance documents prohibit it.