Over the course of a religious institution’s life cycle, it is possible that in addition to ordinary business matters, one must make decisions and choices of special importance.
This could be, for example, the purchase or sale of real estate, or any conveyance or sale of an asset with artistic or historical value.
Obviously, such transactions may only be valid and legally binding if carried out by a religious institution that has been recognised by the Italian legal system as a Legally Recognised Ecclesiastical Entity (“LREE”), which will then, in such cases, carry out what is known as a “special transaction”.
More specifically, the LREE acts by and through its legal representative (“LR”), duly enrolled in the register of legal persons maintained at the local Prefecture. The law (to wit, Art. 4, paragraph 1, Presidential Decree no. 361/2000, and Art. 5, paragraph 2, Law no. 222/1985) thus contemplates formal identification of the entity’s legal representative. Once identified, an LREE’s LR may carry out ordinary transactions; special transactions, however, require approval by the ecclesiastical superior.
Therefore, although the LR is vested with actual authority to represent the entity, one must make a case-by-case determination of whether a certain economic transaction falls within the scope of such authority, or whether specific authorisation must be sought for the transaction to be legally valid and binding.
Sales of Real Estate and Notary Verification
Sales of real estate are the quintessential special transaction, and are governed by specific regulations under the Code of Canonical Law (Can. 638 § 3) which establishes that the Holy See’s authorisation is required for conveyances above a specific threshold as set by the Holy See for each ecclesiastical region. For Italy, this threshold is Euro 1 million. One must note that for any sale of real estate, the notary’s services shall safeguard the interests of both the LREE as well as the other parties involved. Indeed, Art. 54 of the regulations applicable to the Notary Law expressly restrict the notary – lest the deed be voided – to execute the deed in the absence of any party with legal standing to object to the execution of the same. Thus, the notary shall verify that the legal representative (for any transaction above a certain amount) is duly authorised pursuant to canonical law.
Different Types of Special Administration
At this point, we should note that under canonical law, special transactions are not all the same.
Specifically, the authority to carry out such transactions may be subject to different authorisation requirements within the chain of command. The type of authorisation the LR must secure depends on the category of assets subject to such special transaction.
Thus, moving forward with a review of individual transactions, as contemplated under the law in question, one must divide assets into specific categories in order to determine which type(s) of authorisation the legal representative must secure:
For this type of property – be it personal property or real estate – one must assess the value of the individual asset in order to determine whether canonical authorisation is required, and if it is, to identify what type of authorisation is needed.
To wit, Canon 1292, §1 sets forth, amongst other provisions, that there is a threshold of value to reference when a conveyance of an item of ecclesiastical equity is desired.
That threshold is set by the Episcopal Conference. The IEC [Italian Episcopal Conference] Resolution presently in effect (given miscellaneous amendments made in the interim) is no. 20 of 27 March 1999, which established that the new limits are two hundred million Lira and two billion Lira.
Thus, with reference to the Euro currency, pursuant to the regulations in question we can divide these types of assets into three tiers of value:
Ex-voto, Res pretiosae Assets; Assets with Intrinsic Artistic or Historical Value
Canon 1292, §2, examines a particular category of assets which, by their nature, warrant particular care. Thus, should the LR which to convey such assets, greater supervision over the related deeds (which, naturally, are deemed special transactions) is required.
To wit, the regulation includes the provision that “as these […] are ex-voto […] assets donated to the Church, or are precious items of artistic or historical value, a valid conveyance additionally requires a license from the Holy See”.
Thus, for such assets, irrespective of their economic value, the LREE’s legal representative may only take action (e.g. to sell or donate them) if explicitly authorised by the Holy See.
The LREE’s Bylaws
Because there is no bright line distinguishing ordinary and special administration – and because such delineation may vary from one LR to another – the Entity should have a set of bylaws that sets forth which transactions qualify as special administration requiring authorisation from an ecclesiastical superior, as well as the protocol for issuing the related authorisation. These bylaws would not only facilitate the LR’s work, but that of third parties as well, when their legal rights and interests might be affected by such special transactions.
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