Guidelines for Real Estate Transactions
Revised as of September 14, 2015
These Guidelines are intended to help parishes and missions of, and institutions affiliated with, the Episcopal Diocese of North Carolina satisfy the canonical requirement that the Standing Committee of the Diocese provide its advice and consent to the Ecclesiastical Authority of the Diocese before certain transactions involving church property can take place. Certain capitalized terms used throughout these Guidelines are defined in Part III below. References to applicable Canons are set forth in brackets (e.g., “[Ref: Canon 10, § 2]”).
If you are looking for checklists and exhibits, they are available at the following links:
Checklist A (Exhibit A-1)
Checklist B (Exhibit B-1)
Checklist C (Exhibit C-1)
Checklist D (Exhibit D-1)
Checklist E (Exhibit E-1)
I. INTRODUCTION
Vestries of parishes and missions and governing bodies of Diocesan institutions may from time to time wish to undertake transactions that affect the property of the churches or institutions they serve. These transactions can take various forms.
The Constitution and Canons of the Episcopal Church and the Constitution and Canons of our Diocese provide that all property held by a parish vestry, the Trustees of the Diocese, or the governing body of a Diocesan institution is held in trust for the use of the named entity and for the benefit of the Diocese and the Church. (Constitution art. IX, § 8) When a vestry or institutional governing body desires to undertake a transaction affecting Church property, the Canons work to insure that the interests of the Diocese and the Church are considered. This is done by requiring the vestry of a congregation, or the governing body of a Diocesan institution, to obtain the written consent of the Ecclesiastical Authority of the Diocese, normally the Bishop, before completing transactions that convey or grant interests in Church property.
In order to grant its written consent to a transaction, the Ecclesiastical Authority must first have the “advice and consent” of the Standing Committee. Obtaining the written consent of the Ecclesiastical Authority is thus a two‐step process. First, the vestry or governing body must request that the Standing Committee give its advice and consent to the Ecclesiastical Authority by providing to the Standing Committee the resolutions and documents described in the appropriate checklist appended to these Guidelines. Second, the vestry or governing body must obtain the written consent of the Ecclesiastical Authority. Therefore, Standing Committee approval is an essential “gating item” for vestries and other governing bodies seeking to complete transactions affecting Church property.
II. THE STANDING COMMITTEE
A. Membership. The Standing Committee consists of five clergy and four lay members elected by the Convention of the Diocese. The membership of the Standing Committee and the manner in which Standing Committee members are elected are set forth in Article VIII of the Constitution of the Diocese. Various matters pertaining to the membership and operation of the Standing Committee are governed by Canon 9.
B. Meetings. The Standing Committee holds regular meetings at Diocesan House in Raleigh on the third Monday of each month. The dates of upcoming Standing Committee meetings are published on the Diocesan website at //www.episdionc.org/committees. A portion of the agenda is routinely devoted to considering requests by parish and mission vestries and the governing bodies of Diocesan institutions for the Standing Committee’s advice and consent to the Ecclesiastical Authority in connection with various transactions. (1) Meetings are sometimes canceled when there is no pressing business. Special meetings can be arranged in exigent circumstances, but the Standing Committee prefers to keep such meetings to a minimum in view of the frequency of its regular meetings. The Standing Committee has a tradition of conducting its business in face‐to‐face meetings rather than via conference call or other electronic means.
C. Officers. The officers of the Standing Committee are the President and the Secretary. (Canon 9, § 1) The President sets the agenda of the Standing Committee and chairs all meetings. The Secretary records the proceedings of the Standing Committee and prepares an annual report to the Diocesan Convention of all official acts taken during the preceding year.
D. Review of Requests for Advice and Consent in Real Property Transactions. The President may appoint a member of the Standing Committee to review and confirm the adequacy of documents submitted by Governing Bodies asking the Standing Committee to provide its advice and consent to the Ecclesiastical Authority. When a member of the Standing Committee is a licensed attorney, he or she may be asked by the President to review these requests, determine whether all supporting documents required by these Guidelines are present and in order, and provide a summary of the proposed transaction to the full Standing Committee. The Standing Committee reviews proposed transactions with care. Governing Bodies seeking Standing Committee approval for a transaction should bear in mind that sufficient time is needed for a careful review. Although the Committee makes every effort to work with Governing Bodies, the Committee cannot ensure that last‐minute requests will be accommodated. Failure to submit required documents may result in delays in obtaining the advice and consent of the Standing Committee. Governing Bodies desiring to consummate transactions under a particular schedule should bear in mind the requirement that documents be submitted to the President by the first day of the month in which the Standing Committee is to meet to consider such requests. Documents not received by the first day of such month may not be considered and dealt with by the Standing Committee until the following month.
The Standing Committee welcomes any additional material or background a Governing Body may wish to submit in connection with a request for advice and consent. In particular, Governing Bodies seeking to borrow funds are encouraged to submit descriptions of their proposed sources and timing of repayment.
E. Expiration of Consents. The Standing Committee’s consent for a given transaction expires 365 days from the date of the Ecclesiastical Authority’s written consent, which is ordinarily communicated to the requesting Governing Body by letter. The Ecclesiastical Authority’s written consent may specify a different expiration date. Transactions for which Standing Committee consent has expired must be authorized anew with submission of current information.
F. Consent of Trustees. Governing Bodies should be aware that in situations where the Trustees hold title to real or personal property for the benefit of a parish, mission, or other institution, the consent of the Trustees for a transaction affecting Church property is required in addition to the advice and consent of the Standing Committee. (Canon 10, § 2) Traditionally, the consent of the Trustees is given after the advice and consent of the Standing Committee has been obtained but before the written consent of the Ecclesiastical Authority has been granted. Thus, the written consent of the Ecclesiastical Authority, as communicated (ordinarily by letter) to the applying Governing Body, is the formal acknowledgment to the Governing Body that the consent process is complete.
In addition to the consent requirement, Governing Bodies should bear in mind that the Trustees are a necessary party to any transaction affecting title to property which they hold. Governing Bodies should take into account the necessity of coordinating the signatures of the Trustees on transaction documents in planning for the timing of closing.
III. TRANSACTIONS REQUIRING THE ADVICE AND CONSENT OF THE STANDING COMMITTEE
Checklists A through E, attached to these Guidelines, are intended to assist Governing Bodies in obtaining the Standing Committee’s advice and consent in connection with transactions involving Church property for which the Ecclesiastical Authority is required by the Canons to give its written consent. Such transactions typically conform to five basic types, which are described in Parts III.A through III.E below. Transactions for which the written consent of the Ecclesiastical Authority is not required, and for which Standing Committee approval is therefore likewise not required, are described in Part IV below.
For purposes of these Guidelines, the following terms have the meanings given below:
“Constitution” means the Constitution of the Diocese, as amended.
“Canons” means the Canons of the Diocese, as amended, and “Canon” means any one of such Canons.
“Church” means The Episcopal Church.
“Diocese” means the Episcopal Diocese of North Carolina.
“Governing Body” means, as appropriate to the particular context: (i) in the case of a parish or mission, the vestry of such parish or mission; (ii) in the case of a Diocesan institution, the board of directors or other body exercising similar functions; or (iii) the Trustees.
“Intangible Personal Property” means bank deposits, investments, securities, funds held in endowments, negotiable instruments, and other similar types of personal property.
“Real Property” means land and permanent appurtenances to land, including fixtures. “Tangible Personal Property” means any type of property that can generally be moved (i.e., it is not permanently affixed to Real Property), touched or felt. Examples include items such as furniture, jewelry, art, writings, or similar goods.
“Trustees” means the Trustees of the Diocese, as they may be appointed from time to time pursuant to Canon 10.
A. Sales, Gifts and Other Conveyances or Alienations.
A Governing Body desiring to sell, donate or otherwise convey or alienate any of its interest in Real Property must obtain the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee. Similarly, where title to Tangible Personal Property is held by the Trustees for the benefit of a parish, mission, Diocesan institution or the Diocese itself, such Tangible Personal Property may only be sold, donated, or otherwise conveyed or alienated with the written consent of the Ecclesiastical Authority, who may act only with the advice and consent of the Standing Committee. Where a separate corporation or legal entity other than the vestry of a parish holds title to Real Property for the benefit of a parish, the requirement for the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee, applies in the same way as if the Real Property had been held directly by the vestry. [Ref: Canon 10, § 2; Canon 23, § 2]
Checklist A lists documents that should be furnished to the Standing Committee for transactions involving sales, gifts or conveyances of Real Property and Tangible Personal Property by parishes, Diocesan institutions and the Trustees.
Leases of Real and Tangible Personal Property, although a form of “conveyance,” are treated separately in Part III.B below.
B. Leases.
Except as set forth in Part IV.A below, a Governing Body desiring to lease Real Property (as lessor) to a third party must obtain the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee. Similarly, where title to Tangible Personal Property is held by the Trustees of the Diocese for the benefit of a parish, mission, Diocesan institution or the Diocese itself, such Tangible Personal Property may only be leased by a Governing Body (as lessor) to a third party with the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee. [Ref: Canon 10, § 2; Canon 23, § 2]
Checklist B lists documents that should be furnished to the Standing Committee for transactions involving leases (as lessor) by parishes, missions, Diocesan institutions and the Trustees.
C. Easements and Rights of Way.
Except as set forth in Part IV.A below, a Governing Body desiring to grant an easement or right of way appurtenant to Real Property must obtain the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee. [Ref: Canon 10, § 2; Canon 23, § 2]
Checklist C lists documents that should be furnished to the Standing Committee for transactions involving grants of easements and rights of way.
D. Loans Secured by Real Property or Tangible Personal Property (Including Refinancing Loans).
A Governing Body desiring to encumber title to Real Property by executing a mortgage
or deed of trust as security for the repayment of a loan must obtain the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee. In addition, a Governing Body of a mission must obtain the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee, for a loan secured by Tangible Personal Property. [Ref: Canon 10, § 2; Canon 23, § 2]
Checklist D lists documents that should be furnished to the Standing Committee for transactions involving loans secured by Real Property or Tangible Personal Property.
The consent requirements apply to purchase money loans secured by the Real Property being purchased in the same way as to non‐purchase money loans. [Canon 23, § 2] A purchase money loan, sometimes referred to a “seller financed” loan, is an arrangement in which a seller conveys Real Property to a buyer and accepts the buyer’s promissory note for a portion of the purchase price. The seller may insist that repayment of the note be secured by an encumbrance, in the form of a mortgage or deed of trust on the Real Property or by a security interest in Tangible Personal Property.
Governing Bodies seeking to refinance loans secured by Real or Tangible Personal Property may be required to obtain the consent of the Ecclesiastical Authority under certain circumstances. A representative of the Governing Body should contact the President of the Standing Committee to discuss the details of the proposed refinancing loan.
Governing Bodies should inform potential lenders that the Diocese of North Carolina will not guarantee repayment of any loan issued to a parish, mission, or institution affiliated with the Diocese.
E. Loans Exceeding 50% of Normal Operating Income or the Repayment of Which May Extend Beyond Twelve (12) Months (Including Refinancing Loans).
A Governing Body desiring to engage in a borrowing or similar financing transaction, the aggregate amount of which exceeds 50% of the normal operating income of the parish, mission or Diocesan institution for the previous calendar year or the repayment of which may extend beyond a term of twelve (12) months, must obtain the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee.
Consent is required whether the loan is secured by Real Property, secured by personal property, or unsecured. [Ref: Canon 10, § 2(d); Canon 23, § 2]
Checklist E lists documents that are to be furnished to the Standing Committee for these loan transactions.
Governing Bodies seeking to refinance loans meeting the criteria described in this Part III.E may be required to obtain the consent of the Ecclesiastical Authority under certain circumstances. A representative of the Governing Body should contact the President of the Standing Committee to discuss the details of the proposed refinancing loan.
Governing Bodies should inform potential lenders that the Diocese of North Carolina will not guarantee repayment of any loan issued to a parish, mission or institution affiliated with the Diocese.
IV. TRANSACTIONS NOT REQUIRING THE ADVICE AND CONSENT OF THE STANDING COMMITTEE
Certain types of Church property transactions are exempt from the requirement that the Governing Body obtain the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee. The following is a representative list of these exempt transactions:
A. Real Property Transactions. [Ref: Canon 10, § 7; Canon 23, § 3]
No consent is required for any of the following transactions involving Real Property that is not consecrated for use as a church or chapel:
- (1) Leases that can be canceled without penalty upon notice of thirty (30) days or less to the lessee;
- (2) Temporary easements of less than twelve (12) months’ duration; and
- (3) Transactions involving cemetery lots or other interment rights.
B. Routine Dispositions of Tangible Personal Property. [Ref: Canon 11]
No consent is required for the sale, exchange, abandonment, surrender, or other disposition of any Tangible Personal Property (for example, typewriters and other office equipment, motor vehicles, general furniture and furnishings, appliances, books, etc.) acquired and used directly in the normal and routine course of the conduct of the work and program of the Church in the Diocese. This exemption does not apply to items of personal property that have been consecrated and furniture, furnishings, and fixtures that are peculiarly designed for and used within a church.
C. Intangible Personal Property.
No consent is required for the sale or disposition of Intangible Personal Property.
D. Unsecured Loans Not Exceeding 50% of Normal Operating Income or the Repayment of Does Not Extend Beyond Twelve (12) Months.
No consent is required for unsecured loans that do not exceed 50% of the normal operating income of a parish, mission or Diocesan institution for the previous calendar year, or the repayment of which will not extend beyond twelve (12) months. Please note that if such a loan is secured by Real Property or Tangible Personal Property, however, the written consent of the Ecclesiastical Authority, acting with the advice and consent of the Standing Committee, may be required. Please refer to Part III.D above.
E. Leases (as Lessee).
No consent is required for leases entered into by Governing Bodies as lessees.
V. OTHER TRANSACTIONS
If a contemplated transaction does not appear to fall within any of the categories described in Parts III or IV above, the seeker of the required consents should address inquiries to the President of the Standing Committee, who may consult with the Chancellor or Vice Chancellor of the Diocese.
1 Under the Constitution and Canons of General Convention, the Standing Committee has other responsibilities, such as admitting candidates to the ordination process and monitoring their progress, acting on the election of bishops by other dioceses, and serving as a Council of Advice to the Bishop. These responsibilities are beyond the scope of these Guidelines, which only address the Standing Committee’s responsibility to advise and give its consent before the Ecclesiastical Authority provides written consent to property transactions as required by the Canons.
Chief Financial Officer
