Alienations & Encumbrances

Alienations & Encumbrances FAQs

What is an encumbrance? +

In legal terms, an encumbrance is a claim against a property by a party that is not the owner. An encumbrance can impact the transferability of the property and restrict its free use until the encumbrance is lifted. The most common examples in ECCT are:

  • Financial Encumbrances, e.g., mortgages, loans, or promissory note.
  • Easements, e.g., allowing a person or an organization the right to use another owner’s property for a limited, specific purpose, e.g., using portion of the property to build a fence.
  • Leases longer than 360 days.

What is an alienation? +

An alienation is an exchange of property typically between a seller and a buyer. In an alienation, a seller often transfers title to property to a buyer.

Why do encumbrances and alienations have to be approved by the Standing Committee? +

The short answer is because this action is canonically required (ECCT Canon 4, Sec. 3). However, that’s not the end of the story. ECCT, as represented in these matters by the Standing Committee, is here to help with the goal of ensuring that your parish negotiates the best agreement possible for its shared resources. As a shared fiduciary with the parish, ECCT serves as a second set of eyes on leases, liens, mortgages, easements, and all other forms of encumbrances and alienations ensuring the safeguarding of the parish’s short and long-term interests.

Should the parish close and its assets (including property) return to the care and oversight of the diocese, it is critical ECCT is aware of all encumbrances entered into by a parish to ensure that the diocese is able to fulfill the terms of the encumbrance as it is obligated to do.

What is due diligence? +

In business terms, due diligence is the process or effort to collect and analyze information before making a decision or conducting a transaction. In layperson’s terms, “do your homework!”

Who should I consult to do my due diligence for a lease? +

If your parish is considering a lease, consult with a real estate agent to receive a comparative market analysis that analyzes market rental rates. Ideally, a property attorney would also review your proposed rental agreement.

Who should I consult to do my due diligence for a mortgage, loan, or promissory note? +

If your parish is considering a mortgage, loan, or promissory note, consult with banks and online lenders to determine the best possible rate.

Who should I consult to do my due diligence for an easement? +

If your parish is considering an easement, consult with a property attorney and surveyor.

 

Who should I consult to do my due diligence for an alienation? +

If your parish is considering an alienation, first exhaust all other options for the highest and best use of your property, including consulting with ECCT about other opportunities that might be available. Once all options are exhausted, ensure that you secure the services of a real estate agent, complete an appraisal of the property, execute a title search, consult a real estate attorney, and be prepared to provide the three highest, best bids to the Standing Committee and Bishops in your online submission.

My parish is seeking to rent our rectory, where can I find a template for a residential lease? +

Residential leases are a common encumbrance in ECCT. As such, we have provided a template designed to mitigate liability for the parish. These templates can be modified for your particular parish’s needs, however we recommend retaining the essentials as much as possible. Please read through and consider the needs of your particular parish and make changes as appropriate for your particular situation.

What legal responsibilities should my parish be aware of as we consider entering into a residential lease? +

The state of Connecticut Judicial Branch has created a “Rights and Responsibilities of Landlords and Tenants in Connecticut” guidebook which contains a wealth of information. We strongly encourage any parish entering into a residential lease to review the guidebook, which can be accessed here.

If the building we are renting was built before 1978, do we need to provide information to possible tenants related to lead-based paint? +

The law requires that “Landlords must disclose known information on lead-based paint or lead-based paint hazards before leases take effect. Leases must include a specific warning statement about lead-based paint.” Additional information on lead-based paint disclosure can be accessed here.

How long does the approval process take? +

This question is a bit more complex than it appears. The approval process, from submission of materials via the online form through to the decision of the Standing Committee and Bishops, takes approximately 10-12 weeks.

However, the early part of the process, the work of identifying options, engaging in conversations, and exploring together how God may be inviting your parish into new ways of using your assets for God’s mission, is one that has no set timeline. It can be as fast or as slow as your parish determines. Remember: due diligence is critical and often takes time.

Learn more about the Alienations & Encumbrances timeline.

Who do I contact with questions about the Alienations & Encumbrances process? +

If you have questions about the Alienations & Encumbrances process, including questions regarding the status of a submitted application, please contact the Rev. Canon Ranjit K. Mathews, Canon to the Ordinary.