Equity Sharing between Church and Pastor

Synod of the Pacific can help churches participate in housing equity sharing arrangements with their pastors.    Our goal is to help your congregation call a pastor who may otherwise not be able to accept your call due to the cost of housing in your area, and to help you build equity in your local housing market, an investment that will always keep pace with future pastors’ housing needs.  Synod of the Pacific does not enter into equity sharing agreements with pastors, but rather loans money to congregations, so they may participate in such agreements. 

Briefly, to whatever degree you provide funds for the purchase of the property, you become the owner of that percentage of the property.  When the pastor sells the property or leaves the church, you will receive that percentage of the selling price, less expenses.  In other words, if the church helps with 20% of the purchase price of an average 3 bedroom 2 bath home in your town, no matter what happens to real estate values in the future, you will always own an asset equal to 20% of an average 3 bedroom 2 bath home. 

Think about how much this 20% investment would have cost if you had done it ten years ago.  How much would the investment be worth today?  How much easier would your search be, if you had this to offer as part of your call?

Your arrangement with the pastor will be documented by an Equity Sharing Agreement, which details all aspects of the arrangement, a Promissory Note from the pastor to the church, and a Deed of Trust that places a lien on the property, which is your security that you will get paid out of the proceeds of any sale.  Although the Synod cannot prepare legal documents on your behalf, we can provide samples of these three documents.

There are several types of loans available for churches wanting to fund equity sharing agreements.  If you have less than 250 members, you may qualify for a James M Muzzy loan, amortized for 15 years with below market interest rates fixed for 5 years at a time.  Larger churches can apply for a Line of Credit, or a Mortgage.  Lines of Credit require interest only payments but are more short term.  Mortgages have slightly lower rates and don’t need to be renewed as often, but require amortized payments.  Line of Credit and Mortgage interest rates both float with the Synod’s bank’s prime rate, but payments on Mortgages are fixed for 5 years at a time. 

If you have questions about how equity sharing works, call the Loan Coordinator at Synod of the Pacific at (800) 754-0669. 

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