All sales, encumbrances, 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 and Bishop, in accordance with the laws of the State of New Jersey and the Canons of the Episcopal Church and Episcopal Diocese of Newark.
If your parish is considering selling any property, here is a quick checklist of what you need to know in order to begin. The detailed sales procedure may be found HERE.
IMPORTANT: Please note that any sales contract must contain a separate provision or an addendum stating that the sale is contingent upon approval by the Bishop and Standing Committee of the Episcopal Diocese of Newark.
- Contact the president of the Standing Committee to discuss your intentions. A liaison from the Standing Committee will be assigned to accompany you through the process.
- Submit to the Standing Committee a copy of your vestry resolution indicating your intent to sell and a separate document (known as the Ministry Plan) that outlines your reasons for selling and specifies how the proceeds of the sale will assist your parish to carry out its mission. The vestry resolution must affirm that proceeds are to be placed in a restricted account with the DIT until the Standing Committee has approved that they be used for any other purpose. In the case of a rectory sale, proceeds are required to be designated for clergy housing (see #4 under "Preliminary Steps" below).
- Obtain an appraisal of the property. The Standing Committee will not accept an appraisal that is more than 6 months old.
- Engage a real estate attorney.
- Engage a real estate agent.
- Once an offer has been made, submit to the Standing Committee all of the materials listed in section 1 under When an offer is made.
Procedures for a Church to Sell, Mortgage or Encumber Property
Written consent of the Bishop and Standing Committee is required to:
- Sell real estate,
- Mortgage or encumber real estate,
(NOTE: Encumbrances include such things as entering into an agreement to install a cell tower on the roof, seeking to provide an easement to or from church property, seeking historical landmark designations, seeking to sell a valuable fixed asset of the property such as a stained glass window.)
- Lease real estate to tenants for more than one (1) year, or
- Lease of rectory for any length of time.
All sales, encumbrances 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 and the Bishop. Failure to secure the consent of the Bishop and the Standing Committee can legally result in any transfer being voided in accordance with NJ statutory law.
Selling, Mortgaging or Encumbering a Property
NOTE: Please read this entire document; background information is provided below.
Several steps are required in order for a Parish to sell, mortgage or encumber property; following the first three steps as you consider making such a decision will help expedite the process:
- If you are considering selling, mortgaging, or encumbering church property, immediately contact the President of the Standing Committee so that the process can be fully explained and understood. This will save time and reduce frustrations for all concerned by improving communication between the Parish and the Standing Committee.
- The Vestry must pass a resolution indicating its approval to sell, encumber, or mortgage the property, subject to the written consent of the Bishop and Standing Committee. The resolution should give the address of the building being sold, encumbered, or mortgaged and state that the Rector or Warden has the authority to act on behalf of the Vestry. A copy of this resolution should be sent to the President of the Standing Committee, who will assign a member of the Property Subcommittee of the Standing Committee to be the contact person for the Parish throughout the process. A template for such a resolution may be downloaded below.
- The Vestry must submit a written statement to the Standing Committee that explains why they wish to sell, mortgage, or encumber the property; how the sale of the property will further the mission of the Church; and whether the property is consecrated.
- IF THE CONTEMPLATED TRANSACTION IS THE SALE OF A RECTORY, the Vestry must also acknowledge in writing that they understand the proceeds from the sale must be held in a separate fund to be used for clergy housing. (The Church may petition the Standing Committee when exceptional circumstances exist to use the funds for other purposes.)
- The Church must obtain an appraisal of the property. The appraisal must have been completed no more than six months prior to the anticipated closing of sale of the property. (In others words, one cannot use an old appraisal as one of the Standing Committee’s obligations in reviewing the request for consent is whether the sale price is for fair and adequate consideration and is an arm’s length transaction between buyer and seller.)
- The Parish is advised to engage a real estate attorney to help guide them through the process.
NOTE: The sales contract must contain a separate provision or an addendum stating that the sale is contingent upon approval by the Bishop and Standing Committee of the Episcopal Diocese of Newark.
- The Parish is advised to engage a real estate agent to assist in the sale process.
When an Offer Is Made to Purchase the Property
1. A Petition shall be submitted to the Standing Committee, which shall contain or be accompanied by supporting schedules, as follows (note that some of these documents will have already been submitted at the beginning of the process, but some may need updating by the time of closing):
- A copy of the Vestry resolution to sell the property
- A legal description of the property (this can usually be located in your deed of the property, thus, providing a copy of the deed will suffice)
- Information as to whether the property has been consecrated
- The reason or reasons for selling the property
- The full name, address, and the relationship, if any, of the purchaser to the parish or mission
- A copy of the fully executed sales contract, which must contain the separate provision or an addendum stating that the sale is contingent upon written approval by the Bishop and Standing Committee of the Episcopal Diocese of Newark
- The terms and conditions of the sale together with a statement of the intended disposition of the proceeds of the sale
- A written appraisal of a qualified real estate appraiser, made within 6 months of the petition to the Standing Committee
2. The foregoing documents in proper form should be received in the Bishop's Office, 31 Mulberry Street, Newark, New Jersey, 07102, THREE (3) WEEKS 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. NOTE: Electronic documents (pdf’s preferred) may also be submitted to the President of the Standing Committee via e-mail.
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.
NOTE: REGULAR STANDING COMMITTEE MEETINGS ARE HELD THE FIRST WEDNESDAY OF EACH MONTH, EXCEPT IN JULY AND AUGUST.
Church 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.
IMPORTANT: Parishes and others that are contemplating a sale, mortgage or encumbrance of church real estate 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 of the Episcopal Diocese of Newark. Failure to provide this provision and failure to obtain the approval can void any contract under New Jersey law.
Church Vestries are also cautioned that the Standing Committee may look critically upon any proposed disposition of church real estate 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;
- The proposed sale price is not for market value in general alignment with the appraised value;
- There is an expectation that the principal of the proceeds will support the operational budget of the Church.
The Statutes of the State of New Jersey, Episcopal Church, and Diocesan Canons Defining the Role of the Bishop and Standing Committee Relating to Church Property
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.
The Episcopal Church Canons
Title I, Canon 7, Section 3 of the Canons 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.
The Canons of the Episcopal Diocese of Newark
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.