Can a ROBS Company Lease Owner-Owned Property?

A ROBS arrangement starts with a qualified retirement plan buying stock of the sponsoring C corporation. After that stock purchase, the corporation owns corporate cash and business assets. If the corporation later signs a lease with the owner as landlord and pays rent from corporate operating funds, that fact alone does not mean the qualified plan leased property or spent plan trust assets.^{[S1][S3][S4][S7]}

The answer is still bounded. The owner can be a party in interest under ERISA and a disqualified person under IRC section 4975 depending on fiduciary, ownership and family facts. ERISA section 406 and IRC section 4975 specifically reach sale or leasing of property, furnishing goods, services or facilities, lending or extension of credit, transfer or use of plan assets, and fiduciary self-dealing. A lease that is only corporate on paper can still create indirect plan, fiduciary, tax or state-law risk if it moves value from the corporation to the owner or uses plan assets as support.^{[S2][S4][S7][S10]}

Do not use arm's-length rent as a safe harbor. Market evidence, a written lease and conflict process are necessary evidence. They do not approve a plan lease from the owner, cure fiduciary self-dealing, override state landlord law, or decide tax character.^{[S3][S8][S11][S15]}

The map separates corporation assets from qualified-plan assets. If the corporation is the tenant, the analysis focuses on business purpose, fair rent evidence, conflict control, tax reporting and whether the lease harms the plan's employer-stock investment. If the plan is tenant, landlord, guarantor or collateral provider, stop and analyze a direct prohibited transaction question before signing.^{[S3][S4][S7][S10]}

Corporate cash raised through the ROBS stock purchase belongs to the C corporation. The plan's asset is employer stock, plus any other plan trust assets. A corporate lease can affect plan value indirectly because excessive rent, poor default terms or unreimbursed improvements can reduce corporate value. That indirect economic effect does not let the owner use plan assets for rent, deposits, guarantees or lease collateral.^{[S1][S3][S4][S7]}

Employer real-property and employer-security exceptions should not be stretched. ERISA section 407 and section 408, together with 29 CFR 2550.408e, address qualifying employer real property or employer securities held by a plan under specific conditions. They do not create a general permission for the owner to lease personal property to the corporation, and they do not approve the plan itself leasing owner property without satisfying exact exemption conditions.^[S5][S6][S9]

The reasonable-arrangement regulation at 29 CFR 2550.408b-2 addresses necessary office space or services for a plan under conditions including reasonable compensation. It may matter if the plan itself buys office space or services. It is not a safe harbor for all owner-landlord payments by the corporation.^[S6][S8]

The file should include a signed lease, board or conflict minutes, market rent support, square footage, term, renewal rights, sublease rights, late fees, default cure periods, security deposit source, property taxes, CAM charges, repair responsibility, casualty, condemnation, fixtures, improvements, parking, signage, personal use, related property-manager fees and termination rights. Treat lender consent, zoning, occupancy permits, insurance endorsements, state corporate law, landlord-tenant rules, franchise restrictions and local transfer or use limits as diligence questions for the actual lender, insurer, local counsel or agency, not as conclusions supplied by the federal ROBS sources.

Appraisal, broker opinions and comparable leases support the reasonableness of rent, but the documents also need to show why the space fits the corporation's business. A high rent can transfer value to the owner. A low rent can create tax and transfer-pricing questions in the other direction. Section 482 gives the IRS allocation authority where related-party pricing fails to clearly reflect income.^[S11][S15]

Personal use and sale-leaseback facts change the risk. If the property is a home, vacation property or mixed-use space, review section 280A, insurance, zoning, occupancy, state landlord-tenant law and whether the corporation is paying personal living costs. If the owner buys property and immediately leases it to the ROBS corporation, document financing, title, appraisal, lender covenants and why the corporation did not overpay for owner liquidity.^{[S12][S13][S15]}

For the C corporation, section 162 is the starting point for rent as an ordinary and necessary business expense. That does not decide amount, timing, capitalization, depreciation, personal use or related-party adjustments. Section 267 can affect related-party timing or losses. Section 482 can reallocate income or deductions among related parties. Section 280A matters for dwelling units. Section 469 can matter to the owner-landlord's passive activity analysis. Section 109 can matter when tenant improvements revert to the lessor and are not rent.^{[S11][S12][S13][S14][S15][S16]}

These tax sections are not ROBS approvals. They are bounded screens for entity, relationship and use. A C corporation deduction can be challenged even if the plan rules are satisfied, and a plan problem can exist even if the tax return reports rent consistently.

Collect the lease, amendments, rent ledger, bank records, security-deposit records, board minutes, appraisal or broker support, CAM reconciliations, insurance policies, tax returns, Form 5500 support, valuation reports and communications among owner, corporation, plan fiduciary and landlord. Stop new or changed payments that appear unsupported until counsel, CPA and plan administrator review the file.

If the plan signed the lease or provided support, analyze ERISA section 406 and IRC section 4975 correction before trying to relabel the lease as corporate. IRC section 4975 includes excise tax and correction concepts. DOL materials describe prohibited transaction and correction principles for fiduciaries. A correction may require undoing the transaction, restoring losses, paying excise taxes, amending records, updating valuation support and changing governance so the same conflict does not repeat.^{[S4][S7][S10]}

These examples are hypothetical screens. They do not determine fair market rent, tax treatment, prohibited transaction status, fiduciary compliance, state-law enforceability, lender consent, zoning or permit status, insurance coverage, franchise compliance or appraisal value; those remain file- and jurisdiction-specific review questions.

Compare a third-party commercial lease, shorter trial term, coworking or flex space, equipment storage lease, corporation-owned property purchase after plan and lender review, SBA or conventional real-estate financing, landlord tenant-improvement allowance, or delaying a move until revenue supports market rent. The right comparison weighs cash flow, control, conflict risk, retirement concentration, lender consent, appraisal support and exit flexibility.

Useful internal next reads include ROBS prohibited transactions, commercial real estate, personal expenses, fiduciary responsibilities and the funding calculator.

These answers prepare a file for professional review. They do not decide a particular lease, appraisal, tax return, plan correction, lender consent, zoning or permit status, insurance endorsement, franchise restriction or state/local law dispute.

These sources support the article's bounded distinctions. No source approves a specific owner-owned property lease, plan lease, rent amount, tax deduction, section 482 result, section 280A allocation, section 469 result, section 109 treatment, correction method, lender consent, zoning or permit status, insurance endorsement, franchise restriction, local use restriction or state-law enforceability conclusion.

1. S1. Internal Revenue Service: Rollovers as Business Start-Ups Compliance Project

   Used for: ROBS mechanics, C corporation stock purchase, ongoing plan operation issues, valuation concerns, prohibited transactions and failures that depleted retirement assets

   Limit: IRS page last reviewed 16-Nov-2025; not approval of a related-party lease

2. S2. Office of the Law Revision Counsel: ERISA section 3, 29 U.S.C. 1002

   Used for: party-in-interest definition including employer, fiduciary, service provider, owner and relatives

   Limit: Definitions must be applied to exact ownership, fiduciary and family facts

3. S3. Office of the Law Revision Counsel: ERISA section 404, 29 U.S.C. 1104

   Used for: fiduciary loyalty, prudence, exclusive-purpose and plan-document duties when lease terms affect plan-held employer stock

   Limit: Fiduciary process rule, not lease approval

4. S4. Office of the Law Revision Counsel: ERISA section 406, 29 U.S.C. 1106

   Used for: sale, exchange or leasing of property; lending or extension of credit; furnishing goods, services or facilities; transfer, use of plan assets; fiduciary self-dealing

   Limit: Exemptions and remedies require separate analysis

5. S5. Office of the Law Revision Counsel: ERISA section 407, 29 U.S.C. 1107

   Used for: employer real property and employer securities definitions and holding limits

   Limit: Employer real-property concepts concern plan investment rules, not an owner-landlord lease to the corporation

6. S6. Office of the Law Revision Counsel: ERISA section 408, 29 U.S.C. 1108

   Used for: statutory exemptions including reasonable arrangements for office space or services and qualifying employer securities or real property boundaries

   Limit: No blanket exemption for a plan lease from the owner; conditions must be met exactly

7. S7. Office of the Law Revision Counsel: IRC section 4975

   Used for: disqualified person status, prohibited sale or leasing of property, furnishing goods services or facilities, use of plan assets, self-dealing, excise tax and correction

   Limit: Tax excise lane is separate from ERISA remedies and state-law enforceability

8. S8. Electronic Code of Federal Regulations: 29 CFR 2550.408b-2

   Used for: DOL regulation for reasonable contracts or arrangements with parties in interest for office space, legal, accounting or other services necessary for plan operation

   Limit: Plan-service exemption does not convert owner rent from the corporation into a universal approval

9. S9. Electronic Code of Federal Regulations: 29 CFR 2550.408e

   Used for: qualifying employer real property and securities exemption conditions

   Limit: Only relevant if the plan holds qualifying employer real property or securities under the regulation

10. S10. U.S. Department of Labor EBSA: Meeting Your Fiduciary Responsibilities

    Used for: DOL fiduciary, party-in-interest, prohibited transaction and correction compliance assistance

    Limit: Compliance assistance publication, not ROBS-specific legal advice

11. S11. Office of the Law Revision Counsel: IRC section 162

    Used for: ordinary and necessary business expense boundary for corporate rent deductions

    Limit: Deduction amount and characterization depend on lease terms, use and reasonableness

12. S12. Office of the Law Revision Counsel: IRC section 267

    Used for: related-party matching, loss and deduction timing limits

    Limit: Applies only where relationship, taxpayer method and payment facts trigger the section

13. S13. Office of the Law Revision Counsel: IRC section 280A

    Used for: dwelling-unit and home-use restrictions when owner-owned property is a residence or mixed-use space

    Limit: Not relevant to ordinary commercial property with no dwelling-unit use

14. S14. Office of the Law Revision Counsel: IRC section 469

    Used for: passive activity and self-rental context for owner-landlord income or losses

    Limit: Owner tax result depends on participation, grouping, entity and regulations

15. S15. Office of the Law Revision Counsel: IRC section 482

    Used for: IRS allocation authority among commonly controlled or related businesses to prevent tax evasion or clearly reflect income

    Limit: Not a lease safe harbor; evidence supports pricing but does not prove compliance

16. S16. Office of the Law Revision Counsel: IRC section 109

    Used for: lessor exclusion for improvements that are not rent when lease ends

    Limit: Only relevant to improvements and lease characterization facts