Key point 7-20.3. Churches may be legally responsible for injuries occurring on their premises while being used by an outside group, if they maintain sufficient “control” over their premises during such use.

A New York court ruled that a church was not liable for injuries sustained by a minor on its premises during a concert since the church was not in control of the premises at the time. A church allowed one of its parishioners to use its fellowship hall for a concert in return for a $100 “donation.” Many of those attending the concert were minors, many of whom became intoxicated from consuming alcoholic beverages. One intoxicated attendee assaulted and injured another attendee, whose parents sued the church, claiming that its negligence in supervising the concert contributed to their child’s injuries.

A state court concluded that “although the church, as owner of the premises where the injured plaintiff was attacked, owed him a duty to keep its premises free of known dangerous conditions, which may include intoxicated guests, the church did not host the party at which such drinking took place, but merely permitted a 20-year-old parishioner to use its hall in exchange for a $100 donation. Under these circumstances, the church was not under a duty to supervise the party or otherwise retain control of its premises.”

What This Means For Churches:

Many churches allow community groups to use their facilities. Before doing so, there are a number of issues that church leaders should consider, including the following:

1. Have the outside group sign a “facilities use agreement” that (1) provides the group with a mere license to use the property; (2) contains a hold harmless and indemnification clause; and (3) states that the church provides no supervision or control over the property when being used by the group. This document should be prepared by an attorney. The agreement should clearly specify that it is a license agreement and not a lease. The church’s potential liability for injuries that occur during the use of its property by an outside group will depend to some extent on the nature of the relationship. A license exposes the church to less liability than a lease.

2. The church should be named as an additional insured under the group’s liability policy.

3. Review the group’s liability policy to ensure that it provides adequate coverage, and does not exclude sexual misconduct.

4. If the outside group’s use of the property will involve any participants who are minors (including minor children of participants), then the outside group should warrant that it has exercised a high degree of care in conducting background investigations on all persons who will have access to one or more minors to determine their suitability for working with, or being present with, minors during the outside group’s use of the property. The outside group also should warrant that it will use a high degree of care in supervising all activities involving minors during its use of the property under the terms of the agreement.

5. Check with the church insurer to determine coverage issues in the event the church is sued as a result of an accident or injury occurring during the group’s use of the property.

6. If you deny use of your property to any group because of its religious affiliation, be sure that you are legally permitted to do so under applicable federal, state, and local laws. Many jurisdictions permit religious organizations to discriminate on the basis of religion when allowing outside groups to use their properties. Check with an attorney regarding the application of such laws to your church.

7. The Americans with Disabilities Act prohibits places of public accommodation from discriminating against persons with a disability. The Act exempts religious organizations from this provision. Be sure to see if state and local law contains a similar exemption.

8. There are several potential violations of copyright law that may arise when an outside group is using the church, including the following: (1) An outside group that plays copyrighted music or shows copyrighted videos or images may be committing copyright infringement. (2) If the outside group makes audio or video recordings containing copyrighted music, this is another possible example of copyright infringement. (3) If a musical group performs a concert in which copyrighted music is performed, then this may result in copyright infringement. At a minimum, the agreement should include a statement making the outside group solely responsible for compliance with copyright law.

9. The fees received by the church may be subject to the federal “unrelated business income tax.” Generally, this tax will not apply unless the rented facilities are subject to an “acquisition indebtedness” (a mortgage loan).

10. The agreement should clarify that the outside group will be solely responsible for the collection of any sales taxes on the sale of any product during its use of the facilities, and that it will indemnify the church for any taxes it is assessed as a result of the outside group’s sales occurring on (or a result of) its use of the premises.

11. The outside group should agree to indemnify not only the church but also the church’s officers, agents, and employees from any and all claims or damages in connection with the use of the property by the outside group.

12. The agreement should contain a non-assignability clause.

13. The agreement should state that the church does not warrant or represent that the property is safe or suitable for the purposes for which it is permitted to be used under the terms of this agreement, and that the outside group (for itself and on behalf of all of its members, guests, or participants who will be using the property) acknowledges that the church is providing the property and all appliances on an “as is” basis.

14. The agreement should clarify that the church will bear no liability if the agreement is cancelled due to any legal or regulatory compliance issue, such as a zoning ordinance. Joseph R.C. v. Bronx Underground LLC, 2014 WL 2765971 (N.Y.A.D. 2014).