Monday, February 24, 2020

A Primer on UMC Assets: Departing Annual Conference and Remaining Local Churches

Today's post is by UM & Global blogmaster Dr. David W. Scott, Director of Mission Theology at the General Board of Global Ministries. The opinions and analysis expressed here are Dr. Scott's own and do not reflect in any way the official position of Global Ministries. Dr. Scott is neither a lawyer nor an accountant, and thus the following should not be interpreted as legal advice.

The vast majority of UMC assets (over 90%) are held by local churches. While local churches own this property, the trust clause stipulates that local church property (of all sorts – real estate, tangible personal property, and intangible property including financial assets) “shall be held in trust for The United Methodist Church and subject to the provisions of its Discipline.”

Yet annual conferences have important roles to play in managing these UMC assets. They exercise oversight of local assets held in trust for the denomination, as is also made clear in the BOD. ¶2503 states that local church property is “subject to the Discipline, usage, and ministerial appointments of said Church as from time to time authorized and declared by the General Conference and by the annual conference within whose bounds the said premises are situated.” (Emphasis added.) Elsewhere, annual conferences are given clear rights in the purchase and sale of any real property by local churches.

If, as explored last week, a US annual conference were to declare itself independent of the UMC, this would raise the question of what would happen to the assets of the local churches within that annual conference. Would they remain with the UMC or go with the departing annual conference?

While the Protocol (and perhaps other proposals) would address this question, since the BOD currently makes no provision for US annual conferences to leave the denomination, the answer to this question is complicated, more so than the relatively straightforward answer to the question of the property of local congregations exiting annual conferences that remain within the UMC.

The BOD connects local church property both to the denomination as a whole and to the annual conference in which it resides. This would raise complications for local church property within a departing annual conference. There would be conflicting obligations of trust for the local church to the departing annual conference and trust to the continuing denomination.

A local church who wanted to abide by the annual conference’s decision could say that it was acting in accordance with its obligation to use its property in trust for the annual conference. A local church that wanted to stay in the UMC in opposition to the annual conference’s decision could say that it was acting in accordance with its obligation to use its property in trust for the denomination. The latter might be the stronger case, but that doesn’t mean the former would have no case. Either way, lawsuits would likely ensue.

Here’s where the difference in legal statuses of the UMC as a whole and of the annual conference would come into play. The denomination as a whole is not a legal person able to own property or bring lawsuits to claim property; the annual conference (or at least its board of trustees) is.

Since the annual conference is generally the body tasked with enforcing the trust clause on local churches, a departing annual conference would have no incentive to enforce that clause on its churches on behalf of the denomination it was leaving. Thus, it’s safe to assume churches that wanted to leave with the annual conference would not face trust clause property barriers from that annual conference.

However, a local church or factions within a local church that wanted to stay with the denomination probably could sue to sever their trust clause obligations to the departing annual conference, arguing that they were instead being faithful to their trust clause obligation to the denomination.

One of the questions they would face in making their case would be how the situation could be remedied under a legal settlement. In other words, they would probably have to propose joining another annual conference to remain part of the UMC, thus entangling the other annual conference and probably the jurisdiction (who has authority over annual conference boundaries) in the lawsuit.

It is also possible that either loyalist churches or individuals within the departing annual conference or an adjacent loyalist annual conferences could sue to try to gain control of the property of local churches that willingly depart with an annual conference. They would have to prove standing, as discussed last week. That is, these loyalist players would have to demonstrate that they were harmed by the departing local churches and indicate who should receive the property if it was found that the property should stay with the UMC.

The BOD makes no provisions for the transfer of local church property to another church or an individual without consent of the annual conference, so it would probably be difficult (though not impossible) for other local churches to sue to gain control of the property of churches departing with their annual conference. That property would probably need to be given to a loyalist annual conference.

Adjacent annual conferences could also sue, since under current principles of United Methodist polity, they could, with the jurisdiction’s consent, claim the territory “vacated” by the departing annual conference. Such a case might be weaker for annual conferences trying to cross jurisdictional lines to claim territory, since the BOD clearly gives jurisdictions the right to set annual conferences boundaries within their own territory.

GCFA could also use its authority to “safeguard and protect the interests and rights of the denomination,” but it is unlikely that GCFA would have the resources to bring thousands of suits against all departing congregations.

A departing annual conference could also try the reverse strategy: to sue a local church within its borders that wanted to remain in the UMC, seeking that their property be transferred to the departing annual conference. It’s not clear that the annual conference could win such a suit. It’s likely that a lot of the argument would hinge on when and to what extent the BOD applied to a departing annual conference vs. when and to what extent whatever new rules it adopted for itself were in effect.

Of course, sometimes the threat of a lawsuit is an effective tactic to force others to negotiate. Thus, even if they weren’t confident that they could win, departing annual conferences could threaten to sue loyalist local churches, hoping to provoke negotiations about financially severing the tie between the church and the annual conference.

The bottom line is, again, that there are plenty of opportunities for lawsuits. Note that I am not recommending any of the lawsuits mentioned in this piece. I am merely trying to explore some of the legal issues around property that might arise in the UMC within the tumult of the next several years with the hope that by surfacing these issues, such lawsuits can be avoided.


  1. In discussions at local churches most say we never recieved a dime from our conference why should they want our property

  2. Yes, many churches do say this. They have no recollection of what investment the AC made when their church was begun. They have no record of who paid the pastor when their church began. Many do not know that the initial loan was subsidized by the annual conference. But they still say it.

  3. I bleieve that the Judicial Council, while considering proposals brought to the Feb 2019 Special Session of the General Conference, did indicate that an annual conference could secede from the UMC under the present BOD. A member of Judicial Council says it is in the notes.

    1. Thanks for pointing this out. Did they indicate whether an annual conference in the jurisdictions needed General Conference approval to leave, as is required for annual conferences in the central conferences to become autonomous? If so, then annual conferences (and jurisdictions) should not assume that they can act unilaterally to withdraw without facing possible lawsuits.

  4. We actually have a precedent for what happens to local churches when the annual conference withdraws. In the recent past both Puerto Rico and Sweden withdrew. In both cases, one in a central conference and the other in a jurisdiction (Northeastern), all the local churches, complete with their assets and liabilities, were withdrawn with the annual conference, and there was no objection raised.

    1. Sweden was in a central conference, and there is a provision in the Book of Discipline for annual conferences in central conferences to become autonomous or merge into united churches (which is what Sweden did). Puerto Rico is a more interesting precedent, since, as you point out, it was part of the Northeastern Jurisdiction, not a central conference. They also became autonomous. To my knowledge, none of the churches in Puerto Rico wanted to challenge that decision. The decision was also ratified by General Conference. I think the difficulty comes in when some churches are not willing to abide by an annual conference's decision to seperate, especially if that decision was not ratified by General Conference. I think in that instance, there is still a strong potential for lawsuits.