Building Ownership

What Church Leaders Should Know About Trust Clauses

Trust clauses have been in the news lately, leading to questions about what they are and how they can affect ministries.

Ministry leaders often believe their ministry has complete ownership rights of their facilities – but that might not be the case if a denominational trust clause is present.

When a church or ministry is associated with a larger denomination, a trust clause may grant the denomination superior rights to the property – even if the ministry has used it for many years. Trust clauses can be found in a ministry’s property deed. If one is present, that ministry could lose ownership of its building or property if the clause is violated.

It's important to know whether your ministry property is subject to a trust and, if so, what obligations must be complied with to retain ownership.

What is a trust clause?

In brief, a classic trust clause states that a local ministry owns its property in trust for the benefit of the broader denomination, subject to specific rules and obligations determined by the denomination. Any breach of those rules or obligations can trigger the legal transfer of property ownership to the larger denominational body.

Trust clauses are common in many historical mainline denominations. Most originated from the denomination’s desire to unite, connect, and hold together their local churches and ministries under a single organizational umbrella.

Trust clauses allow these denominations to impose civil requirements on member ministries, legally compelling their local bodies to act in accordance with the denomination’s desires or else have their property taken over by the denomination. This top-down hierarchical structure differs from more autonomous congregational traditions, which tend to operate on the premise that affiliated local churches are autonomous, self-governed, and self-owned.

How do we know if our property is subject to a trust clause?

Typically, a trust clause will be included in a ministry’s deed, creating what is known as an “express” trust. To see whether your ministry’s deed is subject to an express trust, check to see whether the document states that your ministry owns the property but holds it in trust for the denomination. If your property is subject to an express trust clause, the deed will generally include the following:

The name of your ministry as the trustee
The name of the denomination as the grantor
A complete description of the property to be placed in trust
Any restrictions or requirements that apply while the property is in the trust
The conditions that would cause the property to be transferred back to the denomination

If the deed to your property does not include an express trust clause, check your denomination’s governing documents, such as its book of order or book of discipline, for language describing the legal ownership of local ministry property. At times, denominations will attempt to convey contingent ownership in ministry property through these documents, creating what is known as an “implied” trust. Look for language that states or otherwise infers that member ministries own their property in trust for the broader denomination. If it does, your ministry’s property is likely subject to an implied trust.

Is a trust clause legally enforceable?

The enforceability of a trust clause is highly dependent upon the law in the state where your church is located. Historically, state courts have taken one of two approaches to the question of enforceability.

The “Hierarchical Deference” principle defers to the judgment of the denomination and its understanding of the trust clause’s existence and effect. Courts that take this approach typically enforce both express and implied trusts and side with the denomination.
The “Neutral Principles Deference” principle examines relevant documents in a purely secular manner, determining whether both parties intended to create a trust. State courts that utilize this approach are far more likely to refuse to enforce implied trusts – and to enforce express trusts only if the trust provision in the deed is found to be binding on the local ministry.

What should we do if our ministry is subject to a trust clause?

How a ministry responds to a trust provision can be influenced by several factors. For instance, ministries that have no plan to disaffiliate and view a trust clause as a part of their local body’s loyalty to the larger denomination and its beliefs do not need to take action.

Other ministries may not desire to part ways with their denomination but may wish to change the legal status of their property to gain greater local control. In these instances, negotiations with the denominational office for the purchase of the property may be worthwhile. Although extremely difficult, some ministries have successfully negotiated a change of their property’s legal status with the assistance of an experienced property attorney.

Still other ministries may be ready to disaffiliate from their denomination while retaining their property upon exiting. Several considerations should be made if your ministry falls into this latter category:

Does your ministry property have a mortgage? In many situations, ministries occupy buildings with a mortgage that’s only partially paid off. With resources stretched thin, it may be worth asking whether it would cost more to hold on to your building than to find a new one.
What is the property’s condition? Many ministry buildings require significant upkeep in light of their age and condition. Some ministries have used the trust clause to their advantage by walking away from high-maintenance properties in exchange for newer, less expensive facilities.
Does your ministry have the financial resources to fight a prolonged legal battle? Think about the type of trust provision, the state in which your ministry is located, and the position being taken by your denomination. Consider whether it’s worth spending significant resources on a battle that could be difficult to win.

If, after considering these factors, your ministry remains committed to disaffiliating from the denomination while retaining its property, it should do two things:

Ministry leaders should gather all available corporate, property, and financial records. This includes titles, deeds, and any other records concerning real property owned by your ministry. If there are mortgages or other debt instruments related to ministry property, locate those as well, along with any financial records. This will allow your ministry and its legal counsel to understand what property it owns and how its assets are titled.
Your ministry should speak to a lawyer well-versed in denominational trust clauses. Legal counsel can explain state trust laws, the steps necessary to prepare for litigation, the likelihood of success, and other alternative means of resolution, such as negotiating a buyout of the property from the denomination.

Additional questions about denominational trust clauses?
Please use our Legal Assist service, which provides ministries with free risk management guidance on these and other issues. The Legal Assist team can also refer ministries to local attorneys knowledgeable in navigating trust clause matters.

Additional Resources

When a Church Considers Ending Denominational Affiliation

Posted February 2023
The information provided in this article is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. We strongly encourage you to regularly consult with a local attorney as part of your risk management program. Your organization is responsible for compliance with all applicable laws.