That inspector then puts together a formal report for POL and they will then disburse the funds based on % of work completed.   

The ones with drama, either stop communicating or come clean upfront and tell me when I state a more formal background check will occur once they view the home and want to commit to renting. 

Normally I don't get formal inspection periods on my fix and flips and my earnest money is non-refundable.

We haven't had a formal sit down , but all he kept saying was he wants out.

Just make it is formal so you will not be too distracted.I am 59 years old and I have plenty to say.  

I just want to make sure I am understanding this right as we work towards a formal offer.

Following is how the ROBS 401k works: Because you directly rollover your IRA or former employer 401k, 403b, Keogh, SEP, SIMPLE, or other eligible account, to your new ROBS 401k  plan, which then funds your business, you incur no taxes or early distribution penalties.Unlike traditional 401k plans that allow for a 401k participant loan, that is, borrow up to 50% of the account balance not to exceed $50,000, the ROBS 401k for business financing plan allows you to use all of your retirement funds to fund your start-up business.The ROBS 401k funded corporation allows you to draw a reasonable salary from the business.ERISA 408(e), and ERISA Reg. 2550.408 list information regarding the use of 401k funds to invest in employer stock of the employer’s corporation.The IRS formally commented on the use of 401k business funds on Oct 1, 2008 by issuing IRS memo commenting that the use of retirement funds is not disallowed but continue to be reviewed by the IRS.The use of retirement funds for business funding entails the 401k purchasing stock shares in a C-Corporation.

Do I need to spend cycles focusing on formally structuring my business at this point?

There are countless ways to structure the deal but make sure you have a formal contract written up with an attorney bc I AM NOT A LAWYER NOR GIVE LEGAL ADVICE.

I told her already that the lease is binding and that only made things worse and she is now "formally intent on not renting the house".