The Mishna states that a shul or any other object which has kedusha can only be sold to acquire an object with even greater kedusha. The Mishna adds that this is also true for the “leftover” money. Rava (27a) explains that this is only true when an object with kedusha is sold to buy another object with greater kedusha. For example when there is money left over when selling a shul to buy a Torah, this remaining money also has kedusha and can only be used for other objects of greater kedusha. However, if money is collected from a community to buy a Torah or build a shul, and there is money left over that wasn’t needed this money does not have kedusha and can be used for other purposes.

The Gemara implies that when collecting tzedaka to build a shul or buy an object with kedusha, the money must be used for that purpose. Only the leftover money can be used for other purposes, and that is only after the original goal is accomplished. The question is why. Generally, we say that merely putting something aside (hazmanah) does not change its status. So why does our gemara imply that setting aside money for a shul gives it kedusha so that it must be used to build a shul?

The Magen Avraham (Poland, 1633-1683) answers that indeed the money has no kedusha. Nevertheless, since the community donated money to build a shul, using the money for another purpose would simply be stealing. According to this answer, if everyone agreed to use the money for another purpose, it would be permitted. The Taz (Poland, 1586-1667) also says that the money has no kedusha, but gives a different explanation. He says that by donating money, it’s as if the person made a neder, a vow, to help build a shul. Therefore, even though there is no inherent kedusha in the money, if they use it for another purpose, the community will not be fulfilling their neder. According to this explanation, the original money could be used for something else, if the community donated more money to build the shul and fulfill their neder.

The gemara states that all of these halachot only apply to regular people, however, if the seven trustees of the town sell the shul then all of the money, not just the leftover money, loses its kedusha and can be used for any purpose. The Shulchan Aruch (OC 153:7) paskens that there is only a need for the seven trustees of the town when no one was specifically put in charge of the sale. However, if someone was appointed to be in charge of the sale, then he has the status of the seven trustees, and he can remove the kedusha from the shul. Nowadays, each shul will generally have one gabbai or rabbi who takes care of these matters who would have this authority.

The Gemara also states that the seven trustees must sell the shul in front of the community. The Mishna Berurah (153:32) explains that it does not have to be literally before them, as long as everyone knows about it, whether through a public announcement or letter. He also explains that even if people in the community object to the sale, if the majority agrees to it, then the sale is good and the money loses its kedusha.