Incorporation & Property Ownership

Only a legal entity can own property i.e. an individual, named individuals, or an incorporated “company”. The problem for most churches is that they are none of these!

The solution is to set up a “trust” arrangement whereby a legal entity owns the property & agrees to hold it for the church.

Historically, churches would rely on a group of people to act as trustees, i.e. “Tom & Sam & John own this property in trust for xyz church.”

In 1930, the Baptist Union of Victoria was incorporated by an Act of Parliament. This means it was now a legal entity that could own property and hold property in trust for the churches. Over time, churches transferred their property from to the BUV to be held in trust for them, and Trust Deeds were drawn up.

The advantages of the BUV holding the property in trust as opposed to individuals is:

  • BUV would outlast named trustees (who die, move away, lose paperwork)
  • BUV would outlast specific churches
  • BUV had stated purpose
  • BUV had recognition in state law
  • Schedule B of the Act of Incorporation specifically dictated the Rules for disposal and acquisition of property, and the Rules for use of assets.

 

Schedule B of the Act of Incorporation

Schedule B restrictions on property are designed to ensure that the fruit of the labours of past generations is protected from misuse by the current generation in order to ensure provision of property for future generations. In short, the intention is to hold these assets in perpetuity.

Currently only three of the BUV churches own property directly or have it held by trustees other than the BUV. Even those churches that have incorporated in their own right still have property held under Schedule B trust.

A trustee’s primary responsibility is to uphold the intent of the trust – the BUV Secretary & Executive Council are responsible to ensure trust requirements (as defined in Schedule B) are upheld.

For this reason, churches dealing in property matters often have to involve the BUV.

 

What can and can’t churches do with their property?

What does this mean for the church? How are they obligated or restricted when it comes to use of their property?

A church can / must:

  • Use the property
  • Maintain it
  • Build / alter property
  • Lease the property
  • Use the income
  • Use it as security
  • Create easements
  • Sell at market value
  • Give it to the Union

 A church can not:

  • Act without permission of a Special Church Meeting
  • Stop the Union taking control in certain circumstances
  • Sell below market value
  • Use the money from sale (or mortgage) for non-property issues

 

When does Schedule B apply?

All property purchased by a church in the name of BUV is immediately subject to Schedule B unless written agreement is reached in advance of the purchase.

 

When does Schedule B end?

All property remains subject to Schedule B until sold, at which point the funds from the sale are held in trust by the BUV. The church can use the interest generated by the funds for whatever purposes they deem appropriate, but the principal amount remains subject to Schedule B forever. If the church officially closes, the BUV Advancement Fund becomes the owner of the property or the proceeds of a property.

 

BUV Act of Incorporation:

BUV Incorporation Act 1930 (please note that this document contains the original version of Schedule B - refer to the Plain English version for current wording)

Amendments to Sch B - Minutes of Assembly March 1994

Schedule B: Plain English Version  

Info on Incorporation of Victorian Baptist churches

Sample Deed of Trust

Guide for churches holding a Special Church Meeting