For all congregations -- all sales and mortgages of church property, all leases of rectories and other leases of church property in excess of one year MUST have the consent of the Diocesan Standing Committee.
For Missions and Incorporated Missions -- in addition to the above, all leases, sales, or mortgages of church property must have the consent of the Diocesan Commission on Missions.
Please note that leasing of church property may subject that property to real estate taxes. Please contact the congregation's lawyer or the Diocesan Chancellor to fully understand the possible tax ramifications of such an action.
Missions and Incorporated Missions
The Department of Missions must approve all matters involving the real property of the congregation. If it approves of the sale, mortgage or lease, the Department of Missions must then seek the consent of the Bishop and Standing Committee in the same instances as would a parish.
Parishes and Aided Parishes
Written consent of the Bishop and Standing Committee is required to:
- Sell real estate,
- Mortgage real estate,
- Lease real estate to tenants for more than one (1) year, or
- Lease of rectory for any length of time.
Leases for one year or less that automatically renew themselves, without review and approval, are considered leases "for a longer term than one year." Leases with no term or an indefinite term are also considered leases "for a longer term than one year."
Parishes and others contemplating entering into a mortgage or encumbrance on real estate which would require a guarantee of mortgage or guarantee of loan from the Diocese of Newark must first obtain permission to mortgage the property from the Bishop and Standing Committee and then seek such guarantee from the Diocesan Council of the Diocese of Newark, the governing body for encumbrance of diocesan funds.
What Must be Provided to the Bishop and Standing Committee
In the discharge of the responsibilities placed upon them by canonical and civil law, the Bishop and Standing Committee have adopted the following rules and regulations with respect to selling, leasing and mortgaging real estate.
Selling or Leasing: No application to sell or to lease real estate to a tenant will be entertained until the petitioner has filed the following documents in proper form with the Bishop's Office:
- A Resolution, or other proof, that the Vestry of the parish, or the Executive Committee AND Department of Missions, has authorized (subject to the consent of the Bishop and the Standing Committee) the proposed sale or proposed lease.
- A brief statement of how the sale or lease of this property will aid in the congregation's strategy for growing its mission.
- A Petition which shall contain or be accompanied by supporting schedules, containing the following:
- A description of the property,
- Information as to whether the property has been consecrated,
- The reason or reasons for selling or leasing the property,
- The full name, address, and the relationship, if any, of the lessee or purchaser to the parish or mission.
In the case of a lease:
Written appraisal of rental value by a qualified real estate professional;
Proof of liability insurance coverage carried by the leasing body or organization. Such coverage should be in the amount of not less than one and one-half million dollars, and should specifically stipulate the parish, the leasing body or organization, and/or the Diocese of Newark as additional insured;
A copy of the proposed lease
In the case of a sale:
The terms and conditions of the sale together with a statement of the intended disposition of the proceeds of the sale, and
The Petition must be accompanied by a written appraisal of a qualified real estate appraiser.
Mortgaging: No application to mortgage real estate will be entertained until the petitioner has filed the following documents in proper form with the Bishop's Office:
- A Resolution, or other proof, that the vestry of the parish, or governing body of any other owner of real estate, has authorized (subject to the consent of the Bishop and the Standing Committee) the proposed mortgage.
- A Petition which shall contain or be accompanied by supporting schedules containing the following:
- A description of the property by metes and bounds,
- A statement of the size and terms of the mortgage, including the interest rate, amortization period, and name of the mortgagee,
- A statement of the reasons why it is necessary to borrow the money secured by the mortgage, and a description of the plan for the ultimate repayment of the amount borrowed,
- A statement of all outstanding indebtedness (current and year end for the last two years),
- A brief income and operating statement of the parish for the last two fiscal years showing sources of income, including pledges, plate offerings, rental income, income from investments, and the like; and expenses, including salaries and other expenses.
- A detailed listing of all financial assets (trust funds, endowment income, etc.), including their present value and year-end value for the last two years;
- A statement of parish pledge/contribution to the Diocese for the previous three years;
- A statement of the current parish membership showing the number of baptized persons and communicants for the five years prior.
When Requests Must be Submitted
The foregoing documents in proper form should be received in the Bishop's Office, 31 Mulberry Street, Newark, New Jersey, 07102, ONE FULL MONTH PRIOR TO CONSIDERATION BY THE STANDING COMMITTEE, following which the petitioning congregation, or other petitioner, will be advised of the manner in which the petition will be entertained. Please note that timely submission allows for a review of the petition for missing information and an opportunity to provide it prior to the Standing Committee meeting. Normally, correct petitions, fully prepared and duly submitted to the Bishop's Office, will be sufficient for the Standing Committee to take action. A member of the Standing Committee shall notify the petitioner if it is necessary for a representative of the congregation to appear to present the petition in person. Upon personal appearance before the Standing Committee, a petitioner may request a waiver of any of the foregoing documents.
IT SHOULD BE NOTED THAT REGULAR STANDING COMMITTEE MEETINGS ARE HELD THE FIRST WEDNESDAY OF EACH MONTH, EXCEPT JULY AND AUGUST.
Parish vestries, and all others required to petition for consent of the Standing Committee, are cautioned to establish a date for closing the transaction which will allow ample time for preparation of the petition and its accompanying schedules and the presentation thereof to the Bishop and Standing Committee. It is suggested that counsel for the petitioning body review the petition and its accompanying schedules before filing the petition with the Standing Committee.
Parishes and others that are contemplating sales of real estate, leasing to a tenant, or borrowing on mortgage, are also cautioned that any sales contract or other form of commitment executed before the Bishop and Standing Committee have given their consent should contain a provision that performance of the contract or commitment is conditioned upon and subject to written consent to the transaction in question being obtained from the Bishop and Standing Committee.
Parishes and other owners of real estate are also cautioned that the Standing Committee may:
- look very critically upon any proposed disposition of real estate by sale or by lease, if the real estate in question may be needed in the future for some church purpose or use, or its future use for church purposes appears to be an advantageous and real possibility, or if the proposed compensation is not in general agreement with the appraised value;
- cause an inquiry to be made into any lease that has continued in effect for a period of one year or more without their written approval.
The Statutes of the State of New Jersey (N.J.S.A. 16:12-4) provide as follows:
No sale, conveyance or mortgage of any real estate other than burial lots in churchyards or cemeteries, and no lease for a longer term than one year shall be made by such corporation without the previous written consent of the Bishop and a majority of the Standing Committee of the Diocese within which the Corporation is located. Such consent shall be acknowledged or proved and recorded with the deed, lease, mortgage or instrument of conveyance. Without such consent the sale, conveyance, mortgage or lease shall be void.
Title I, Canon 7, Section 3 of the Protestant Episcopal Church in the United States (1991) goes beyond the New Jersey statute quoted above, in that it relates to church real estate held by owners other than incorporated parishes. The section reads:
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 the Standing Committee of the diocese of which the parish, mission or congregation, or institution is a part, except under such regulations as may be prescribed by canon of the diocese.
Canon 10 of the Canons of the Diocese of Newark provides:
A Parish may enter into a lease or leases of Parish-owned property, other than for residential use, without the prior consent of the Bishop and Standing Committee provided the term of such lease does not exceed (1) year in duration, and the lease does not obligate the Parish to extend or renew the tenancy beyond one year. No Parish-owned property shall be used or leased for residential purposes without the prior consent of the Bishop and Standing Committee, in writing, regardless of the extent of such use and the duration of such lease, except that no such consent shall be required for the occupancy of Parish-owned property by Clergy or lay employee(s) of such Parish.
For additional information contact Kay Lark at email@example.com or 973-430-9976.