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Exceptions - Self-Dealing by Private Foundations: Certain leases with disqualified persons

The leasing of property by a disqualified person to a private foundation is not an act of self-dealing if the lease is without charge.  The lease will be considered without charge even though the foundation agrees to pay for janitorial expenses, utilities or other maintenance costs it incurs as long as payment is not made directly or indirectly to a disqualified person.

The leasing of office space by a disqualified person to a private foundation in a building with other tenants who are not disqualified persons is not an act of self-dealing if:

  1. The lease is pursuant to a binding contract in effect on October 9, 1969 (or renewals thereof),
  2. The lease was not a prohibited transaction under section 503(b) or any corresponding provision of prior law at the time of execution, and
  3. The terms of the lease (or any renewal) reflect an arm's length transaction.


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Page Last Reviewed or Updated: 29-Apr-2014