Community of Christ

Contracts and Leases

Legal - Contracts and Leases

Contracts

A contract must be prepared each time a congregation, campground, or other church-affiliated entity purchases services or equipment. In order to expedite the processing of the agreement, please complete a Service Agreement Information form with as much detailed information as possible. The form and a copy of the business meeting minutes approving the contract should be faxed to Legal Services at (816) 521-3099. All vendors must provide the church with a current IRS form W-9 before any contract may be signed. Legal Services will then prepare the contract document.

1. Types of Contracts. Legal Services has a number of template contracts. Contracts regularly prepared include services for major construction jobs, architects, roofing jobs, lawn care, parking space use agreements, cleaning services, painting, and consulting services.

2. Dangers of Using Contractor’s Proposals. Frequently a contractor will attempt to use their proposal as the contract. While this may be faster procedurally, the proposal will generally not adequately protect the church’s interests, and may result in a lawsuit, the project not getting completed, or the project not meeting expectations. Terms frequently missing from proposals include termination language, insurance obligations, and indemnification obligations.

3. General Contract Requirements. Before drafting a contract, Legal Services will require specific information about the project. The more specific the information is, the less likely there will be a misunderstanding between the parties. Examples of information Legal requires include: a description of the nature of the services, or equipment to be provided, how will the provider be paid, and will the provider be able to submit a certificate of insurance naming the church as an additional insured meeting the church’s insurance requirements. For a complete list please see the Service Agreement Information form.

4. Contract Termination Problems. Legal Services should be consulted before contracts are terminated to determine if there are damage or penalty provisions which might adversely affect church interests. An improperly terminated contract can trigger escalation provisions, obligating the contracting church entity to a lump sum payment, and may create a cause of action by which the other party sues the church.

5. Signature Authority and Execution. No contract may be signed without review of Legal Services and approval of the congregation and mission center officers. Once approval is given by Legal Services, in many cases the contract can be signed by either the congregation's pastor or financial officer; however, for significant projects, a mission center officer may be required. Individuals signing a contract should always sign in the capacity of their office, i.e., “Joe Smith, Pastor.”

Leases

A Lease Agreement must be prepared each time a congregation, campground, or affiliated church entity leases property to another group or entity. In order to expedite the processing of the lease, please complete a Lease Information Request Form with as much detailed information as possible. The form and a copy of the business meeting minutes approving the lease should be faxed to Legal Services at (816) 521-3099. Legal Services will then prepare the Lease Agreement.

1. Types of Leases. Legal Services has a number of template lease agreements including leases allowing community groups to use Community of Christ church buildings and campgrounds, commercial leases, day care leases, residential leases, and one-time use agreements for weddings, receptions, reunions and other single-day events.

2. Unintended Consequences. Leasing a church facility to another entity may result in a number of negative unintended consequences which could affect the church, including jeopardizing the church’s 501(c)(3) tax-exempt status, generating taxable unrelated business income, increasing property taxes, and increasing the likelihood of an incident occurring on church property where the church would be a defendant.

3. General Lease Requirements. Before drafting a lease, Legal Services will require specific information about the lease. The more specific the information is, the less likely there will be a misunderstanding between the parties about the scope of the lease. Examples of the types of information Legal requires include the specific space the lessee will have access to, the hours the lessee will have access to the facility, responsibility for cleaning and maintenance, and the lessee’s ability to submit a certificate of insurance naming the church as an additional insured meeting the church’s insurance requirements. (Risk Management requires day care leases and leases where children may use the facility to have sexual misconduct insurance of not less than $1,000,000.) For a complete list please see the Lease Information Request Form.

4. Terminating a Lease May Result in Unintended Consequences. Legal Services should also be consulted before leases are terminated to determine if there are damage or penalty provisions which might adversely affect church interests. An improperly terminated lease can trigger escalation provisions, obligating the contracting church entity to a lump sum payment and may create a cause of action by which the other party sues the church.

5. Signature Authority and Execution. No lease may be signed without review of Legal Services and approval of the congregation and mission center officers. Once approval is given by Legal Services, in many cases the contract can be signed by either the congregation’s pastor or financial officer; however, for significant projects, a mission center officer signature may be required. Individuals signing a lease should always sign in the capacity of their office, i.e., “Joe Smith, Pastor.”