Finally, some good news about getting out from beneath suffocating unfunded pension liability – but only if you own a REIT. A real estate holding company was not liable for a commonly owned employer’s $1.8 million withdrawal liability judgment because the company’s primary purpose during the relevant time period was personal rather than profit-seeking.
Specifically, the holding company, jointly owned by the sole owner of the withdrawing employer and his ex-wife, had the primary purpose of managing personal real estate investments, including property intended to be occupied by the owners’ daughter. The owners performed brief background checks on tenants, negotiated leases by using standard forms purchased from an office supply store, and listed properties for sale with real estate brokers. Because there was insufficient evidence that any of these activities required a significant time commitment from the owners, the court determined that the company’s primary purpose was personal, rather than profit-seeking, and that such activities were not done with sufficient continuity and regularity.