Lease and License Agreements

Leases and License Agreements are legal agreements between a church and an outside group that uses all or part of a church’s facility for a determined period of time. Leases are used when you are giving another group exclusive use of a building or portion of a building for an extended period of time. A license is a revocable privilege to perform an act or a series of acts on the property of another, like the use of a parish hall for a wedding reception or regular AA meetings. It can also be used if you are sharing space with a group (e.g., a pre-school sharing rooms with the Sunday School). Remember that a lease gives the user tenant rights and is not easily revoked while a license sets parameters for a user but can be revoked quite easily. So consider which makes sense in your situation — and feel free to call Canon Grenz if you want to consult with someone.

How much should we charge? If you are looking at a multi-year lease, it is best to have a realtor provide a fair market value assessment so you can change a reasonable amount. Checking the websites or calling neighboring churches, other faith communities and other places the offer comparable space will give you an idea of what the market is for space rental in your community.

If you want to support a group that is doing work consistent with your mission, it is still wise to set the fair market value as the “rent” and then grant the group the amount you wish to provide as a “discount.” That means that the renting group clearly understands the value of space they are using and the congregation understands the value of what they are giving the group. It also allows the group to do fundraising since they can show the true cost to potential donors. This is important if you anticipate that you will need to raise the rent over time.