Rising concerns over foreign ownership of U.S. land have driven more states to enact legislation restricting foreign ownership of real property. Between January 2023 and July 2024, at least 22 states implemented such laws.
A report released Aug. 28 by the Congressional Research Service, a public policy research institute of Congress, found that nearly half of the states in the country have regulated foreign ownership of land.
No states outright ban foreign ownership, but states’ respective laws forbid or limit nonresident aliens, foreign businesses or foreign governments from buying or owning an interest in private land. For ag land, each state defines “farming” and “agricultural land” differently.
As of the end of July, the following states had legislation in place: Alabama, Arkansas, Florida, Idaho, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Utah, Virginia and Wisconsin.
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Law specifics
State laws differ in their requirements, the Congressional Research Service said. Some laws apply only on ag land, while others apply on land near military installations, critical infrastructure or economically valuable sites. Other laws apply to all real property within a state. Some states enacted information-gathering laws that mandate the disclosure of, or studies on, foreign ownership. Other laws prohibit certain transactions and may require divestiture of foreign-owned land.
State laws also vary as to which groups are subject to restrictions. Some states have a list of restricted countries, others forbid purchases by all non-U.S. citizens. Several states ban purchases by individuals and entities identified on federal lists, such as the International Traffic in Arms Regulations, sanctions lists by the Office of Foreign Assets Control in the Department of the Treasury or countries of particular concern as designated by the U.S. secretary of state.
Legal challenge
One state’s foreign ownership law has been challenged in court. Florida’s Senate Bill 264 (enacted July 1, 2023) created two sets of land ownership restrictions.
The first set applies to foreign principals connected with foreign countries of concern (such as Russia, Iran or North Korea). This group cannot acquire or own ag land or real property in Florida within 10 miles of a military installation or critical infrastructure facility in the state. The second set applies to certain individuals and entities connected with the People’s Republic of China (PRC). These PRC-affiliated people or entities cannot purchase any real property in Florida, absent an exception. Both sets of restrictions exempt de minimis investments in some securities or companies registered with the Securities and Exchange Commission.
In May 2023, a group of PRC citizens and a Florida corporation (Multi-Choice Realty) challenged the law, alleging violations of the Equal Protection Clause and Due Process Clause of the Fourteenth Amendment. The plaintiffs also brought statutory claims under the Fair Housing Act, and said several fields of law preempt the legislation.
A federal district court initially denied the plaintiffs’ motion for a preliminary injunction seeking to ban enforcement of the law. The Court of Appeals for the 11th Circuit granted in part a motion for an injunction pending appeal, which prohibits the enforcement against two of the PRC citizen plaintiffs while the court further reviews the case. The 11th Circuit heard arguments in April and a decision is pending.
Congress considerations
Some members of Congress have called for increased federal scrutiny of foreign ownership of land due to national security and economic competitiveness concerns, along with the inability for U.S. citizens to purchase land in some foreign countries. Currently, no federal law regulates all foreign purchases of U.S. real property.
Several bills introduced in the 118th Congress would build on the authorities of the Agricultural Foreign Investment Disclosure Act of 1978 and Committee on Foreign Investment in the United States (CFIUS).
On Sept. 12, the House of Representatives passed the Protecting American Agriculture from Foreign Adversaries Act on a vote of 269-149. The bill adds the USDA secretary to CFIUS for transactions, including land, biotechnology, transportation, storage and processing. It also requires the secretary to report any transaction that could be considered a threat to national security.
“Congress could consider using its power to regulate foreign commerce to enact legislation that preempts state laws regulating foreign ownership of land in the United States,” the report concluded. “For example, the Preemption of Real Property Discrimination Act (H.R. 3697), introduced in the 118th Congress, would preempt state laws that restrict land purchases based on citizenship.”
More information about each state and their specific legislation regarding foreign ownership of land can be found at tinyurl.com/48w3rwnv. — Anna Miller, WLJ managing editor
