Is it Time for Your Church to Make a Move?

By Raul Rivera

In the book of Ecclesiastes, Solomon tells us that “there is a time for everything, a season for every activity under heaven.” 

Many churches today are experiencing a season of growth. These churches are not only growing in numbers, but they are also growing spiritually. As a result of this season of growth, many churches are beginning to look for a larger facility to host their worship services. 

Most pastors dream of outgrowing their current worship space, but many do not know what steps to take once that happens.

What about you? Is your church experiencing a season of growth and in need of a larger space to hold worship services? 

One of the things we love about what we do here at StartCHURCH is being able to partner with pastors in their journey and seeing the promises of God come to fruition. In today’s blog, I want to provide you with some guidance so when it is time for you to sign a rental lease for your church, you will be able to do so in confidence.

Growing your church beyond the four walls of your home

The goal of most churches is to hold worship services in their own facility or church building. The fact is that meeting in a public location, as opposed to a private space like a home, is more inviting to the public and safer for both the homeowner and attendees.

For this reason, most churches will seek to rent space that is easily accessible, and to some degree more welcoming, to those in the community.

There are a few pitfalls to avoid when it comes to renting space for the church. However, with a little planning and forethought, finding a rental space can be easy.

Let us review some key factors to look at when searching for a place to hold worship services.

The first thing to consider when looking for a church facility

When considering your options, you will want to make sure that the location is ideal for reaching and meeting the needs of your community.

Sure, the affordability of a place for your church to meet is important, and it is true that traditional options like an independent church building or commercial property can be expensive.

We have found, however, that most churches can find an affordable place to rent in their community if they just think outside the box.

Are you willing to think outside the box? 

Let us look at the following “nontraditional” church facility options that you should consider: 

• Schools,
• Daycares,
• Movie theaters,
• Other churches,
• Community or civic centers,
• Hotel conference rooms, and
• Libraries.

The availability and pricing of venues in your community will vary. 

Do not be afraid to ask local churches if they are willing to share their space when it is not in use. This is often overlooked by many pastors and church leaders. Who knows, you may find a church that is willing to let you use its space free of charge.

(Recommended reading: "6 Fundraising Ideas for Churches That Work")

5 things to know before you sign a lease for your church

Once you have decided on a location, make sure that you establish a written contract with the landlord. Even if you are renting from another church, it is important for your church’s protection that the terms are clearly outlined and agreed upon in a written contract.

The following are a few things to think about before signing a lease:

1. Make sure the terms and agreement are clear.

It is important that the lease outlines the determined length of time and any requirements to maintain the lease. A clear definition of time and requirements provide the church with stability. 

The following are some things to consider:

• Are the utilities included in the rent?
• Who is responsible for the maintenance and repairs?
• Is your church able to sublease? (This question is important in the instance that your church outgrows the space before the lease has expired.)

2. Make sure protective language is in the lease agreement. 

The lease should be explicit about when and how the contract can be terminated. It should state the notice and conditions needed if either party wants to terminate the lease. This language prevents the church from being evicted unduly and without notice.

3. Make sure you know when the rent is due and whether your rent is fixed or percentage based. 

Most leases have a set monthly, weekly, or per-use rent amount. However, I occasionally run across a church whose rent is based upon a percentage of their income. In this instance, it is important that the terms are clear and that the percentage has a reasonable cap, up to a specified amount.

4. Make sure the lease is in the church’s name.

Once the church is incorporated at the state level and has its own Federal Employer Identification Number (FEIN), any contract made should be in the church’s corporate name using the church’s FEIN. Using an individual’s name or social security number opens that individual up to personal liability and overall is not a good business practice.

5. Make sure your church gets renters insurance. 

Lease agreements often require the tenants to obtain renters insurance in case of damage to the building or property. Whether or not the lease requires it, carrying insurance is always a wise choice. In addition, do not forget to look into liability insurance.

Since churches are nonprofit organizations, some venues may allow churches to use their space free of charge or at a lower rate. Please note that although churches are nonprofit organizations, landlords cannot receive a charitable deduction on a reduction in rent. 

One last thing before you sign a lease for your church

The type of landlord your church chooses to rent from also has tax implications for your church. If your church rents space from an individual, as opposed to a leasing company or corporation, your church will have some additional requirements to meet.

Churches that pay rent directly to an individual need to request and maintain on file a Form W-9 from the landlord at the outset. This form will help the church prepare a Form 1099-MISC for the landlord at the end of the year. 

The landlord will need the Form 1099-MISC because he/she will be responsible to pay taxes on the rental income. 

Under IRS guidelines, if your church does not acquire the needed information to provide the landlord with a Form 1099-MISC, the church will then be responsible to withhold and pay 28% of the total rent amount to the IRS. Failure to do so may result in penalties.

If your church pays rent to another corporation, such as another church or hotel, there is no need to ask for a Form W-9 or provide a Form 1099-MISC. The receiving corporation will be paying income taxes as a business.

(Recommended reading: "10 Tax Forms You Need to Know About")

Rejoice in your season of growth

Church growth is good! 

Do not let the enemy rob you of the joy and celebration that this milestone should bring. It is our desire at StartCHURCH to provide you with resources and knowledge to help you lead your church as it continues to grow.

If you have not yet done so, I encourage you to attend one of our Ultimate Church Structure Conferences to learn about other strategic methods to empower your church or ministry as it continues to grow and fulfill the will of God.

Handpicked articles for you:

• “Is Your Next Mission Field the Marketplace?”
• “Do You Know How to Pay Guest Speakers?”
• “How to Create a Healthy Church Budget”

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