14 Reasons to Create a Facilities Use Agreement

Consider the following issues before allowing community groups to use your facilities.

Richard R. Hammar, Attorney, CPA
Bio
  1. Have the outside group sign a “facilities use agreement” that (1) provides the group with a mere license to use the property; (2) contains a hold harmless and indemnification clause; (3) states that the church provides no supervision or control over the property when being used by the group. This document should be prepared by an attorney.
  2. The church should be named as an additional insured under the group’s liability policy.
  3. Review the group’s liability policy to ensure that it provides adequate coverage, and does no exclude sexual misconduct.
  4. If the outside group’s use of the property will involve any participants who are minors (including minor children of participants), then the outside group should warrant that it has exercised a high degree of care in conducting background investigations on all persons who will have access to one or more minors to determine their suitability for working with or being present with minors during the outside group’s use of the property. The outside group also should warrant that it will use a high degree of care in supervising all activities involving minors during its use of the property under the terms of the agreement.
  5. Check with the church insurer to determine coverage issues in the event the church is sued as a result of an accident or injury occurring during the group’s use of the property.
  6. If you deny use of your property to any group because of its religious affiliation, be sure that you are legally permitted to do so under applicable federal, state, and local laws. Check with an attorney regarding the application of such laws to your church.
  7. The Americans with Disabilities Act prohibits places of public accommodation from discriminating against persons with a disability. The Act exempts religious organizations from this provision. Be sure to see if state and local law contains a similar exemption.
  8. There are several potential violations of copyright law that may arise when an outside group is using the church: (1) An outside group that plays copyrighted music or shows copyrighted videos or images may be committing copyright infringement. (2) If the outside group makes audio or video recordings containing copyrighted music, this is another possible example of copyright infringement. (3) If a musical group performs a concert in which copyrighted music is performed, then this may result in copyright infringement.
  9. The fees received by the church may be subject to the federal “unrelated business income tax.” Generally, this tax will not apply unless the rented facilities are subject to an “acquisition indebtedness” (a mortgage loan).
  10. The agreement should clarify that the outside group will be solely responsible for the collection of any sales taxes on the sale of any product during its use of the facilities, and that it will indemnify the church for any taxes it is assessed as a result of the outside group’s sales occurring on (or a result of) its use of the premises.
  11. The outside group should agree to indemnify not only the church but also the church’s officers, agents, and employees from any and all claims or damages in connection with the use of the property by the outside group.
  12. The agreement should contain a non-assignability clause.
  13. The agreement should state that the church does not warrant or represent that the property is safe or suitable for the purposes for which it is permitted to be used under the terms of this agreement, and that the outside group (for itself and on behalf of all of its members, guests, or participants who will be using the property) acknowledge that the church is providing the property and all appliances on as “as is” basis.
  14. The agreement should clarify that the church will bear no liability if the agreement is cancelled due to any legal or regulatory compliance issue, such as a zoning ordinance.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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