Sharing or leasing your building? Churches and nonprofits need facility use agreements

Churches and nonprofits can share there facilities with outside groups, but they need to be good stewards of their property. Here’s how.

By Fritz Hahn
Founder and Managing Member, Ministry Pacific Insurance Services

Churches and charitable nonprofits often open their facilities to outside groups for benevolent reasons. There is a genuine shortage of affordable places for community groups to meet. Houses of worship and other organizations often step up to fill the void.

“We commend this spirit. At the same time, this should not be done without careful consideration.”

It’s best to clearly communicate expectations and requirements before the building is ever occupied by an outside group.

At minimum, churches and nonprofits need a facility use agreement to govern the occupation of their property by outside groups. This agreement should be reviewed by legal counsel. This includes funerals and weddings.

The facility use agreement needs to cover topics including:

• Rules and requirements of use

• User fees

• User insurance requirements

• Insurance carrier approval

• Housekeeping rules

• Waiver of liability/assumption of risk

• Responsibility of maintenance and upkeep of facilities

• Installation and/or use of playground equipment and compliance with safety regulations

In addition, churches and nonprofits should require tenants and other facility users to secure the following insurance coverage:

• Personal property Tenants should secure coverage for their own personal property and other contents.

• Fire damage legal liability This covers a tenant's liability for damage by fire to the rented premises (including garages) that the tenant occupies.

• General liability This provides the tenant coverage for medical expenses and attorney fees resulting from bodily injuries and property damage for which they may be legally responsible. This adds a layer of protection for the organization that owns the facility.

• Sexual misconduct liability insurance This coverage can provide protection for claims of sexual abuse made against the tenant.

• Business automobile coverage
  Vehicles owned by the tenants used or stored on the property must be covered.

• Leased or hired automobile coverage This type of insurance provides liability damages when a tenant’s employee or volunteer drives a personal or leased automobile on behalf of their organization. This coverage can help pay settlements, judgements and attorney fees if the driver is responsible for an automobile accident occurring on the owner’s property.

• Workers’ Compensation coverage Churches should require proof of this coverage so that if employees are injured on their campus, these workers are covered by the leasing organization and will not look to the property owner for relief.

This is a detailed topic and this article is intended to be an overview, not an exhaustive treatment. In addition, legal counsel should review all facility use agreements. If you have further questions, please contact us and we’ll be happy to help. The goal is to create an agreement and policy  beneficial to all.

Fritz Hahn

Ministry Pacific