DE Chancery Court Decision Clarifies Title Owner of Church Real Estate

March 2011Newsletters In the Zone

In The Peninsula-Delaware Conference of the United Methodist Church, plaintiff, v. Robert Short, et al. (Del.Ch. Jan. 12, 2011) Laster, V.C., the Chancery Court was asked to decide whether church property belonged to the trustees of the church on behalf of the local congregation or the United Methodist Church (UMC).

From 1914 to 2010, the congregation of the Bethany United Methodist Church (the Bethany congregation) worshipped at the church property in Millsboro, Delaware. Until 2010, the Bethany congregation was affiliated with the Peninsula-Delaware Conference of the UMC (the Pen-Del Conference). In 2009, a dispute arose between the Bethany congregation and the UMC. The Pen-Del Conference filed its action in Chancery Court to obtain a declaration that the UMC holds title to the building traditionally used by the congregation, the plot of land where the church is located and the chattels associated with the operation of that church (collectively, the “church property”). The Bethany congregation disputed this claim and argued its members, and not the UMC, held title to the church property.

The original deed to the real estate was recorded in 1914 and transferred title to the “trustees of Bethany Methodist Episcopal Church at Lowes Crossroads.” The Bethany Methodist Episcopal Church was incorporated as a religious corporation under the laws of the State of Delaware. In 2007, additional contiguous property was transferred to the trustees. When the congregation was formed, it affiliated with the Methodist Episcopal Church. From 1939 through 1968, the Methodist Church merged several times to finally form the UMC. The Bethany congregation was part of the Dover District, which was part of the Pen-Del Conference, a division of the UMC. As a member of this conference, the congregation agreed to abide by the UMC’s governing documents.

The sole issue before the Chancery Court was a determination of the ownership of the church property. The decision required an examination of the two deeds that transferred the real estate, the charter of the congregation and the governing documents of the UMC.

The court noted each of the deeds granted the land in question to the “trustees of Bethany Methodist Episcopal Church,” and as such, title does not vest in the individuals who serve as trustees, but rather such title is held in trust for the benefit of the Bethany congregation as a member congregation of the UMC. The UMC’s governing documents also provide that local church property is held in trust for the parent denomination. Accordingly, the court found the church property is held in trust for the benefit of the UMC, which is entitled to all possessory rights.

For more information, please contact Michael J. Isaacs at 302.622.4213 or [email protected].