Parsonage Issue

At my previous church we moved into the church parsonage after it had been rented out for a period of about 4 years. The pastor before me had like you purchased a home in a surrounding area and wanted to move out of the parsonage. The church voted to rent out the parsonage and have an oversight committee that would essentially serve as the "landlords" for the parsonage. There was a very strict contract drawn up as part of the rental agreement that included a no alcohol and drug policy as well as a twice a year inspection of the home. How enforceable all this actually was I do not know. However, the renters they had, abided by those terms throughout. The problem came when the previous pastor left and the church then needed the parsonage for a new pastor. The family had been good renters and did not want to leave, and there was a great bit of difficulty as they worked this all out.

 

Nope it's not illegal but it is a bit complicated.
We have two renters on our properties and we have a missionary apartment.
There are some tax issues on the churches part.

Missionaries find it comforting to have a home-base, stocked and ready for them during various stop-overs.

But renting provides a reliable source of income.

Rob

 

The use of a parsonage could be a ministry in itself. For mssionaries, guests or helping families get on their feet. Especially in this economy.

 

It is not "legal" per se, for a non-profit entity to engage in a profit making endeavor. You'd have to have legal counsel, get an appraisal, and find out the fair market value of the house and then rent UNDER that FMV. There is likely tax consequences. However, we all know churches that do this under the table, and they do it all over. Several things can happen:

1. You rent out to a family inside the church, they love it and care for the house, and you're all happy.
2. You do #1 but the family doesn't care for the house and the church gets ticked;
3. You rent out to a family outside the church and you get good tennants.
4. You rent out to a family outside the church and you get beer bottles in the driveway and suddenly the church gets ticked
5. You rent out to either, and someone stiffs you for a month's rent, and won't leave (seen this in more than one setting).

I could go on....my point is this: be careful. If the church is in financial need, they could sell the house (Most churches that I know of who rented ended up eventually selling). That provides a one-time shot of cash. I know of a couple of churches who financed part of their building projects by selling off the parsonage.

Yes, renting brings a trickle of cash, but you end up being a landlord, like it or not. So when Jack and Jill, your renters, need a new heat pump, the church has to vote to buy a heat pump and now what...since it's January and you've already had your business meeting. And the income is as only good as the renters.

Back to selling the house. If you have a "poison pill", that is, a dissolution clause, there is likely a recipient of the property (an association, a charity, etc). They will have to sign off on the decision to sell. This has caused a couple of problems before.

 

Maybe you could use it for other staff instead of the pastor.

Maybe you could use it for missionaries.

Maybe you could use it for a crisis pregnancy center?

Maybe you could use it for people getting back on their feet.

Maybe you could use it for foster care families.

Maybe you could use it as a fellowship space.

 

At our previous church location, the parsonage was across the street. When we relocated and built a new building, we sold the parsonage. No legal problems with that at all.

That enabled us to lend the pastor enough for a down payment on a home (to be repaid when he left for another field), and gave him a housing allowance on top of his salary. It's a win-win. We don't have to maintain the house, he builds equity.

It's a sad thing when a preacher lives in a parsonage for all his ministry, then reaches retirement age with nothing to show for it.

That said, there are a number of uses for a vacant parsonage. But TomVols has given some excellent caveats. The church has a specific commission. I'm not sure the housing business is one of them.

 

not worth the headache, IMHO.

If it's a house for missionaries, but missionaries are seldom in it, then it's not worth the cost & trouble.

Is the house an effective meeting space for your church?

If not, why not sell it and then there are lots of options (give money to missions, etc.).

 

As one that spent five years on deputation and was VERY seldom offered even overnight accomadations, the missionary house sounds pretty good. :thumbs: (The only overnight spots were when I was at week long conferences - ONE pastor as I was loading to get to my next meeting told me he had planned for me to overnight with them but hadn't mentioned it to me till then - but had to be a nights journey away by morning soooooo.)

However if unused a lot probably not the best use of resources. Remodel a corner of the church with a room/bath or something.

 

My guess that you are going to run into a tax situation since the house is no longer being used for ministry purposes. Also, you need to find out about fair housing requirements in your area, there are things that can and can not be stipulated in a housing agreement. If you plan on being there awhile, I would say sell the house. It might also be used as the "salary" for a part time staff person..."we don't have a salary, but we can offer you a house to live in".

Parsonages are really an all or nothing situation, either you have one or you don't, trying to be a little pregnant seems to me to be a big ole box of headaches and regrets.