Leaving a Legacy: Reversionary Clauses

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Churches go through transitions and life cycles.  In his book, To Dream Again, Robert Dale describes a church life cycle as a bell curve (vision, growth, plateau, decline, death).

Churches cease to exist every year for a variety of reasons. A church building, for example, is at risk when the congregation becomes very small. A group of new members could join and easily become the majority. The new majority could vote to change the church to another denomination or sell the building. Unfortunately, some former Baptist church buildings, situated in neighborhoods that need churches, are now restaurants or retail stores.

Churches can take steps to make sure that the work of Christ continues even if their congregation does not. One important step is including a reversionary clause in your church’s deed.

FAQs

What is a reversionary clause? It is the provision in a deed transfer where the property transferred is reverted to the grantor if a deed condition becomes violated. Simply stated, the reversionary clause states that if the church ceases to be a church, then the church building reverts to the local Baptist association so that a Gospel witness can continue in the community.

Sample Reversionary Clause: In the event (Church Name) ceases to be a cooperating church with Dallas Baptist Association, Inc. (DBA), as defined by the by-laws of DBA, as may be hereinafter amended, then title to the Property shall automatically revert to and become revested in DBA without the necessity of any further action on the part of DBA.

Why is the requirement that the church be a cooperating church in DBA? Would it be enough to simply require that it be a Baptist church? Experience has taught us that a requirement that it be a “Baptist church” leaves a legal loophole that churches of other denominations to take the building even though they know it violates the spirit of the reversionary clause.

Would putting a reversionary clause in the bylaws of the church work? Bylaws can be amended by a congregation. A new majority in the church can amend the bylaws and remove the reversionary clause.

Does this create any problems with the tax exemption from property taxes?  No, the church property is exempt from property taxes. However, when a church property changes ownership, the local appraisal district will sometimes attempt to tax the property. DBA works with a property tax expert to make sure that all the proper papers are filed to maintain the tax exemption of the church property.

What is the cost to the church? There is no cost to the church. DBA covers the cost of the two title transfers ($1,000 total) from the Baptist Foundation of Texas.

What is the purpose of the reversionary clause? When a church believes that there will continue to be a need for a church to share the gospel of Jesus Christ and to ministry to this community even if the current congregation ceases to exist. They are choosing to leave a legacy that makes it possible for a church with a Baptist faith to continue to preach the gospel and minister to the community.

What steps must be accomplished for a church to add a reversionary clause?

  1. The Church votes according to their constitution and bylaws to deed the property to Dallas Baptist Association with the promise that DBA will immediately deed the property back to the church with a reversionary clause.
  2. The Executive Board of DBA votes to receive the church property and to deed it back to the church with the reversionary clause.
  3. The Baptist Foundation of Texas prepares the legal documents.
  4. The trustees of the church sign the document to deed the property to DBA.
  5. On the next day, DBA signs the document to deed the property back to the church with the reversionary clause.
  6. Both documents are filed with the county clerk’s office.

Questions?

Bob Dean | 214.319.1159

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