Selling a funeral home building to a church, school, or other non-funeral buyer

Some funeral home buildings outlive the business inside them. A town shrinks, the next generation goes elsewhere, and no operator wants the calls at a price that works. Yet the same property, with its chapel, parking lot, and wide doors, may be exactly what a growing congregation or a private school is looking for.

This guide is about that sale: the real estate as its own exit. It does not cover how an appraiser values the building, which is in our guide to valuing funeral home real estate, or keeping the property and leasing it to a funeral buyer.

When does selling the building to a non-funeral buyer make sense?

It makes sense when no funeral operator will pay a fair price for the business, or when a non-funeral buyer will pay more for the property than an operator would pay for business and building together. Small-volume firms hit both conditions most often.

The scale of that group is large. In a Funeral Director Daily report on small-volume firms, Glenn Gould is quoted saying 30% of firms do fewer than 100 cases a year and 68% fewer than 200, citing NFDA’s 2023 estimate. The same piece covers his and Jake Johnson’s argument that such firms may realize more by selling the real estate separately from the operating business.

That argument rests on a simple point. A 70-call firm may support little goodwill once a buyer deducts a director’s salary. The building, on a busy road with 60 parking spaces, still has value to someone. If that is your situation, our guide to selling in a shrinking town covers the business side.

Who buys former funeral homes?

Churches, schools and daycares, professional and medical offices, residential converters, and developers who want the land. Each pays for different features and faces a different approval path.

Two published cases show the pattern. In Chicago, Nadig Newspapers reported in 2019 that a congregation planned to move into a 17,500-square-foot funeral home building, pursuing a cash purchase after selling its own property; the site’s B3-1 zoning required a special use. In Denver, BusinessDen reported in 2022 that a Montessori school paid $3.5 million for a 15,640-square-foot former funeral home after first leasing part of it.

Financing narrows the field. Under 13 CFR 120.110, non-profit businesses are ineligible for SBA business loans, though for-profit subsidiaries are eligible. A church or nonprofit school will usually need cash or a conventional lender, which can lengthen the contingency period.

Is the new use allowed on your property?

Find out before you market the building. Zoning, deed restrictions, and any historic designation decide which buyers are realistic and how long closing will take.

Ask the planning office three questions. What uses are permitted by right in this zone? Which need a special or conditional use permit, and how long does that hearing take? Does any approval for the funeral use lapse when that use stops? In many codes, a nonconforming use that is discontinued for a set period cannot be resumed, which matters if a funeral buyer appears later.

Religious buyers have an added protection. The Justice Department’s RLUIPA guidance explains that the law bars zoning rules that treat religious assemblies on less than equal terms with nonreligious ones, among other limits. It does not guarantee approval, but it shapes how a city handles a church application.

Then read your deed and title report. Look for restrictive covenants, reversion clauses, easements with a neighboring church or cemetery, and any covenant from your own purchase decades ago. A title company can flag these in a week; finding one at closing can kill the deal.

What has to come out of the building before closing?

Everything that makes it a funeral home: specialty equipment, any crematory, fuel tanks if present, signage, and all remains and records. Agree in the contract who removes what, by when, and at whose cost.

Get two contractor quotes for this scope before you negotiate. Then choose between doing the work yourself before closing or giving the buyer a credit. A buyer who sees an unpriced crematory will usually guess high.

What happens to the operating business?

It needs a licensed home before the building changes hands. Most owners sell the calls, goodwill, and preneed book to a nearby firm, merge with one, or close the business under state rules.

Selling the book to a neighbor is often the best outcome. Families keep a familiar director, preneed contracts are honored, and you are paid something for goodwill. If no firm will take the business, the closure steps, from license surrender to preneed transfers and record custody, are in our guide to closing versus selling a funeral home.

The sequence matters. A workable order looks like this:

1. Test the operator market confidentially before deciding the building goes to a non-funeral user.
2. Line up the successor firm for calls, preneed, and records, and agree on a transfer date.
3. List the building, or approach likely users directly, with a zoning summary and decommissioning quote in hand.
4. Sign the building contract with a contingency period long enough for the buyer’s approvals.
5. Transfer families and records, then surrender licenses as your state requires.
6. Finish decommissioning and close the real estate sale.

If the building buyer needs a long approval, a short leaseback can let you keep serving families until the successor firm is ready. Our guide to selling the business and the real estate separately compares that with other structures.

How do you compare a split sale with a single operator offer?

Compare the net cash from each path after decommissioning, transaction costs, and delay, not the headline figures.

The split often wins when the building is large and the business is small. It rarely wins when a funeral operator wants both.

Mind confidentiality, too. A commercial listing sign tells families, staff, and competitors that the funeral home is leaving before you have told them yourself. Approach likely users quietly first, tell your staff, and coordinate family notices with the successor firm before anything goes public. For the full selling process, start with our seller’s guide.