Beyond Episcopal theological split, a property fight

When a congregation breaks away from a denomination, who keeps the real estate?

That's become a contentious issue within the Episcopal Church – the US branch of Anglicanism – as almost 100 parishes have voted to leave the church in the wake of its 2003 consecration of a gay bishop. Most aim to stay in their houses of worship while realigning themselves with conservative Anglican bishops in other countries.

On Wednesday, Anglican bishops from around the world gather in Britain to discuss their differences over scriptural interpretation and homosexuality at the once-a-decade Lambeth Conference. But in America, those differences are already ending up in court.

The stakes are high. Not only are some of the properties valuable, the legal battle over them is wrenching apart close-knit religious communities. Presbyterians and other denominations are keeping a close eye on the wrangling because they also have conservative congregations that are trying to pull out in response to actions of their denominations.

So far, the courts have not clarified the issue. Some congregations have had to forfeit their houses of worship. But on June 27, a Virginia county court upheld the constitutionality of a Civil War-era state law that would allow 11 congregations to leave the Episcopal Church and take their property with them. The law, called the "Division Statute," provides that when evidence exists that a church is in a state of "division," the local congregation can decide who controls the property.

"We see the ruling as a validation of the stand we have taken – these are properties our parishioners have paid for and maintained over the years," says Jim Oakes, vice chairman of the Anglican District of Virginia, an association of breakaway congregations now linked to the archbishop of Nigeria.

But canon law of the Episcopal Church, like those of several US denominations, stipulates that all property is held in trust for the denomination and not owned by the local church. When congregations choose to leave, control of church property reverts to the diocese.

Church law "provides that property of the church at any level is held in trust for the Episcopal Church – a very important canon in a hierarchical church," says Stephen Hutchinson, a canon law expert of the Episcopal Diocese of Utah. (Representatives of the national church declined the opportunity to comment.)

The Virginia ruling is worrying other denominations with similar structures. The decision is "deeply troubling" and "a violation of the First Amendment," Bishop Charlene Kammerer, leader of the United Methodist Church in Virginia, said in a statement.

The local congregations involved, which voted in December 2006 to pull out, include parishes of considerable historical value, such as Falls Church, where George Washington was a member, and nearby Truro Church, wealthy and prestigious congregations with properties together worth an estimated $25 million.

The tug of war has been wrenching.

"The reality is that this is a tightly knit community and it's absolutely heartbreaking," says Henry D.W. Burt, secretary of the Episcopal Diocese of Virginia, which sued, along with the national office, to retain the properties. "A lot is at stake here, including the freedom of Virginia churches to organize themselves in ways related to their religious beliefs." The Virginia diocese has vowed to "continue to pursue every legal option available." The county judge will rule on a few remaining issues, before any formal appeal can be made.

A few dioceses have avoided litigation by negotiating and selling the local property to a departing congregation. When Christ Church in Plano, Texas – one of the largest Episcopal parishes in the country – voted to leave in 2006, the bishop of Dallas Diocese reached a settlement by which the congregation paid $1.2 million for the property. In other cases, the national church or a congregation has sued to hold onto the land and real estate.

In California, the breakaway St. James Church in Newport Beach won in county court, but later lost on appeal. The case has been consolidated with several others in the state and is now before the California Supreme Court. That court will resolve differences in how lower courts reviewed the cases.

US Supreme Court rulings of the past permit a court to choose between two alternative approaches in making such decisions: (1) defer to the hierarchy, if the congregation belongs to a hierarchical church; or (2) apply neutral legal principles in examining church documents.

Cases are pending in other states.

The church confronts another thicket of difficulty: Two entire dioceses are seeking to pull out, taking their parishes and assets with them.

In December 2007, the Diocese of San Joaquin in central California voted to split off and align itself with the conservative Anglican leadership of the Southern Cone, based in Argentina. The Episcopal House of Bishops voted to remove the diocesan bishop and replace him with another. The archbishop of the Southern Cone insists they cannot do so because he is no longer under their jurisdiction. The church is suing its former bishop and seeking to have assets frozen.

The Diocese of Pittsburgh is expected to vote this fall on a similar "realignment." Bishop Robert Duncan, a key leader among US traditionalists, has formed a new corporation with the same diocese name outside the Episcopal Church. The church says it is not possible for a parish or diocese to leave, only individuals.