Common Types of Church Contracts and How to Handle Them

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Like any other business or organization, churches must routinely enter legal church contracts to operate. Therefore, church leaders must be aware of and understand the implications of common types of church contracts that may affect their churches and the consequences of violating those contracts.

Furthermore, churches generally should put someone in charge of keeping track of and maintaining their contracts. Taking this step ensures that someone is aware of important deadlines, such as renewal and payment dates, and that the church maintains complete copies of all contracts to which the church is a party.

Churches also should develop clear policies about who can and cannot bind the church to a contract. Requiring a review of all or most contracts by legal counsel also is a wise policy to put in place to avoid legal disputes in the future over these contracts.

Employment Contracts

Employment agreements for pastors, ministers, and other key staff members are important to define the financial and legal relationship between the two parties. Having experienced legal counsel to review and oversee the contract negotiation process for your church can be essential to protecting your church’s interests.

All employment contracts should contain certain basic information, such as the contract’s timeframe, the applicable salary and benefits, and the job duties and responsibilities of the position. In addition, depending on the religious denomination, the contracts may include other specific information. It can be helpful to have the contract expressly state whether the employee is ministerial, exempt or non-exempt as an employee.

Other crucial elements in an employment contract may include:

  • a definition of what constitutes good cause for termination of employment
  • expected work hours
  • leave time availability
  • severance pay if the church were to cease operations
  • contract renewal terms
  • fringe benefits beyond salary and insurance coverage, such as housing allowance, utility allowances, mileage reimbursement, and cell phone reimbursement

Real Estate Leases and Purchase Agreements

All churches need space to hold services, house their offices, and operate other activities and programs. As a result, churches must purchase land and buildings to house themselves or rent commercial space from other property owners. If a church provides housing for a minister or pastor, the church also may purchase a residential property.

If a church chooses to rent commercial space, it must be familiar with common lease terms and their rights and responsibilities under any leases it signs. Enlisting the help of an attorney to help negotiate its leases and understand its obligations under leases is a wise move, particularly when entering into a long-term lease agreement.

Likewise, purchasing land on which to build or an existing commercial building can involve some measure of negotiations. The church must engage in the due diligence process and ensure that the proper inspections are completed before closing the transaction to protect the church’s interests. The same procedures are necessary when purchasing residential property to house a pastor or minister.

Miscellaneous Business Church Contracts

Operating any type of entity, even a church, typically requires entering different contracts as needs arise. For instance, the church may need to lease a copier or printer for the church office, which also may involve a service contract. In addition, the church may need to contract for repairs to the building as problems arise or for periodic cleaning of the building or landscaping of the property. While some churches can take care of some of these needs through volunteers, other churches must hire professionals to fulfill at least some basic maintenance needs.

Likewise, churches may need to contract for the purchases of certain supplies, such as paper goods, office supplies, hymnals, and other basic needs. These church contracts typically have simple terms but may also be subject to negotiations for better prices if buying in bulk. Churches must also be aware of the consequences of defaulting on these contracts.

Call Church Law Center Today for Help With Church Contracts

Don’t hesitate to contact an experienced California church and religious organization lawyer at the Church Law Center when you need assistance with legal issues related to your church, religious organization, or nonprofit organization. You can reach our offices by calling (949) 892-1221 or contacting us online to learn more about how we can help. We offer a wealth of experience handling the unique legal issues that nonprofit and religious organizations routinely face, including church contracts.

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