In general, churches and religious associations may assume two different forms of organizational structures:
Churches and religious associations may exist without being incorporated. However, incorporation may be required for the church to hold title to land.
A religious corporation or association and the church whose doctrine it represents are two different entities that may coexist independently. The objective of one is materialistic while the other deals exclusively with faith and matters of the spirit.
The right to incorporate has to conform with the corporation statute as to the purpose of the proposed incorporation as well as with the general laws of the state. Incorporation of churches and religious associations may take place under general laws or under express statutory provisions.
Under the constitutions of two states (Virginia and West Virginia), churches cannot be incorporated; in some other states, incorporation is prohibited except for the purpose of holding title to such real estate as may be prescribed by law, generally for church edifices, parsonages, and cemeteries. Many other states provide, as an alternative, incorporation under the general nonprofit corporation statutes.
In general, with certain statutory limitations, religious corporations have the capacity to acquire and hold real property for purposes consistent with their creation and existence.
In some states, by virtue of statute, the sanction or approval of a court is essential to any encumbrance or alienation of church property.
In addition to compliance with statutory provisions, it is always necessary to ascertain fully those acts which are permissible, those which are prohibited, and which others, if any, require authority from a supervisory body.
The determination of whether a church can hold, encumber or convey real estate requires the careful examination of all the documents under which the church operates (constitution, charter, rules, discipline, bylaws, etc.). Copies of all these documents must be requested and examined, in conjunction with the related statutory provisions, for the purpose of determining the church power or capacity to execute real estate transactions.
Frequently, unincorporated religious associations attempt to take title in the name of the church alone. With few exceptions, such attempts will not vest title in the church since the church as an unincorporated religious association is generally not a legal entity in which legal title can vest.
As a solution to this situation, title to real estate property could be held by some of its members, in trust, for the use and benefit of the unincorporated religious association.
A "corporation sole" is a corporation consisting of one person only, such as a bishop, chief priest, minister, paster or clergyman, presiding elder, or other presiding officer of a religious denomination or church and their successors. In certain states, a corporation sole is allowed to become a corporation under state law.
The alienation or encumbrance of property held by the trustees of an incorporated religious association may sometimes be affected by problems that afflict the congregation.
Among such problems may be:
From the title insurance point of view, no attempt should be made either to get involved in any church dispute or to take side with any church faction.
The same principle is applicable to the disposition of real property after the extinguishment or dissolution of the congregation.