Property and Stewardship Issues
Denominational Polity Statement
Whereas there are discrepancies in Denominational Polity concerning property and stewardship issues;
Whereas real property assets are being devalued by congregational neglect;
Whereas some congregations are failing to make regular loan payments;
Whereas the ability of a district to foreclose on loans in default is questionable;
Therefore, the Pacific Southwest District Board of Administration petitions the Annual Conference of the Church of the Brethren to define what means districts may use to preserve real congregational assets for the denomination.
Action of the Pacific Southwest District Board of Administration: The District Board of Administration of Pacific Southwest District, meeting in regular session on August 11-13, 1995, passed the query on to District Conference, which will meet October 7, 1995, in San Diego, California.
R. Jan Thompson, Chair, Board of Administration
Joe Vecchio, Recording Secretary, Board of Administration
Action of the Pacific Southwest District Conference: Passed on to Annual Conference, Church of the Brethren, by the Pacific Southwest District Conference, meeting October 7, 1995, in San Diego, California.
Lowell Brubaker, Moderator
Letha Ressler, Clerk
1997 Report of the Committee
Our charge is to “…review and recommend revision of polity to allow districts and the General Board to assume ownership of real property in cases of default and report their recommendations to the 1997 Annual Conference.”
The right of a district to assume control of congregational property is addressed in Chapter VI of the Manual of Organization and Polity (1992). The context of that discussion, focused primarily in Part I-D, appears to be concerned with withdrawal of a congregation from the denomination, or abandonment of property, or division within a congregation which could lead to loss of the property for purposes of the Church of the Brethren. The section contains little reference to the specific situation of a loan to a congregation from the district or the General Board.
This committee construes its charge to be limited in scope–limited to the narrow circumstance of a congregation’s failure to make timely payments on a loan for which it was the intent of the parties that congregational real estate would serve as security. Any more comprehensive interpretation of the word “default” opens the door to a number of polity issues that go beyond the simple question of property management. We particularly note the last several lines of VI, I-D, 5 of the Polity Manual: “The rights described in this polity for the district board to take control…shall be exercised solely for the purpose of assuring that the property or its proceeds are not diverted from use for the Church of the Brethren and shall not imply a right on the part of the district board to otherwise effect or control the use of the property by a congregation of the Church of the Brethren.” That language appears to have been crafted to counsel caution in how districts may seek to assume control of local property.
Civil law of all the states provides clear procedures for execution of promissory notes, for preparation and filing of mortgages or trust arrangements to collateralize them, and for orderly foreclosure proceedings in the event of default. While we know that lenders and borrowers usually seek to clarify rights and responsibilities at the tame a debt arrangement is entered into, perhaps that conventional wisdom needs to be reiterated in polity. Accordingly, we offer the following language as an additional paragraph, to be number VI, I-D, 5, with current paragraphs 5 and 6 to be renumbered 6 and 7. The intent of this proposed language is prospective only. The committee regards it as administratively and legally inappropriate to attempt to retroactively address any past situation in this manner
5. Congregational Loan Obligations to Other Brethren Entities: In the event a local congregation obtains a real estate loan, or a guarantee or a co-signature on same, from another Brethren entity (e.g., General Board, district, a partner congregation), the following procedures are recommended: [a] The parties should execute all documents appropriate in the jurisdiction for establishing a loan and for providing proper security for it in favor of the creditor/guarantor/co-signer. Assistance of legal or appropriate financial counsel is strongly urged. [b] Schedules and procedures for regular payment should be documented. [c] Key representatives of each side should meet prior to closing the arrangement, carefully review the reciprocal rights and obligations, and examine the scenarios for how deterioration in payment performance will be handled. [d] In the event payment performance does lag, the parties should meet promptly to explore alternative or remedial measures. In the event of clear default, the parties may wish to utilize the dispute resolution procedure set forth in paragraph 6 immediately below, although neither party shall be deemed to have an absolute right to demand such. [e] While the parties are encouraged to resolve any default in as reconciling a manner as possible, nothing in this paragraph shall be construed as abridging the right of the creditor/guarantor/co-signer to exercise its full rights under controlling civil law of the jurisdiction as it may, in its sole discretion, find necessary.
Some interpretations of our charge might have invited us to establish procedures for situations in which there am no clear written provisions for assumption of ownership of church property. It is our conclusion that it would not be appropriate to expand current polity to allow such action without far broader discussion on its implications. We do observe that Section IV, II-C, 2 of the polity manual would seem to permit an expanded list of grounds on which a district could move into a congregation “to take charge and control of all property…” However, that section specifically defers to the restrictive provisions of Chapter VI for the scope of its application. As alluded to in an earlier paragraph, a unilateral expansion of the operation of such language in polity could signal a dramatic change in the relationship of local congregations and districts. While the Church of the Brethren may need to examine that issue at some point, we as a Committee decline to introduce it here as part of a report whose original impetus was simply a matter of property loans.
Ann Quay, chair
Action of the 1997 Annual Conference:
The report was given by the committee, and was adopted by the delegate body as written.