Florida’s New Real Estate Laws: Restrictions on Property Ownership by Foreign Nationals

Understand the implications, legal challenges, and nationwide trends in real estate regulations in U.S. states targeting certain foreign buyers and sellers. 

 On 8 May, Governor Ron DeSantis signed SB 264 into law, which imposes significant restrictions on property ownership for individuals and entities originating from select “countries of concern,” including China, Cuba, North Korea, and Russia. The law generally prohibits property acquisitions by individuals or entities from these countries, but it includes certain exceptions.

While the bill’s scope encompasses individuals from various nations, it notably enforces stricter penalties on Chinese individuals. In transactions involving a “foreign principal of China,” Chinese buyers could potentially face up to five years of imprisonment and fines amounting to $5,000, while sellers might receive sentences of up to one year and fines of $1,000. Furthermore, Florida’s legislation prohibits individuals “domiciled” in China, lacking U.S. citizenship or permanent residency, from owning property within the state.

Advocates for these limitations argue that they are vital to safeguard the nation’s interests. Many proponents point to incidents like the launch of a surveillance balloon by China earlier this year as evidence of the need for such measures. Additionally, President Biden recently issued an executive order with the objective of restricting U.S. investments in a select group of Chinese companies.

“Florida is taking action to stand against the United States’ greatest geopolitical threat—the Chinese Communist Party,” remarked DeSantis in a statement following the bill’s signing on 8 May.

Florida State Representative Katherine Waldron (D), one of the bill’s co-sponsors, defended the legislation, asserting that it is not discriminatory. According to her, all buyers, regardless of their ethnicity, will be required to verify that they do not have affiliations with the Chinese Communist Party or foreign entities.

Here is everything you need to know about the ban.

An Overview of Florida’s Real Estate Ban

Starting from 1 July 2023, DeSantis approved Senate Bill 264, also known as “Interests of Foreign Countries.” This law includes rules that control and limit how certain properties in Florida can be bought, sold, and owned by people and groups from other countries. These rules are described in Part III of Chapter 692 in the Florida Statutes.

Three important parts of the bill have significant effects on the real estate business are outlined here, but note that some of the specific details about how the law will work are still being worked out and are not yet set in stone.

Florida Realtors has prepared a memorandum that explains the new law, aiming to provide stakeholders with a clearer understanding of its implications. For a comprehensive overview, you can visit their website. However, here’s a summary of the law:

The new law prevents foreign principals from buying agricultural land. To comply, buyers must provide a signed affidavit affirming they aren’t foreign principals. Violations, like knowingly purchasing or selling such land, are considered misdemeanors.

The law also regulates purchasing real estate within 10 miles of Florida’s military bases or critical infrastructure if the buyer is a foreign principal. Buyers must provide a signed document affirming they aren’t foreign principals.

Finally, the law restricts individuals and entities associated with the People’s Republic of China (PRC) in regard to property ownership or acquisition in Florida. Buyers must provide documentation confirming their lack of PRC affiliation, with the Florida Real Estate Commission (FREC) overseeing the operational details.

With this overview in mind, Global mobility professionals should consider recommending that all involved parties in real estate transactions seek legal counsel to fully understand how this law might affect their property purchases and other real estate transactions. For mobility departments, having a thorough understanding of real estate restrictions is important because Florida is just one of many states that have restrictions on foreign buyers.

Other States That Regulate Foreign Buyers

In recent months, Montana, Virginia, and North Dakota have enacted legislation aimed at restricting the property purchasing rights of Chinese nationals. Meanwhile, states like Georgia, Iowa, and Kansas are currently contemplating similar measures.

The concerns driving these initiatives trace back to North Dakota, where apprehensions first arose when a Chinese-owned company proposed establishing a corn mill processing plant in 2022. The U.S. Air Force raised national security concerns regarding the project’s location, which was only 12 miles away from Grand Forks Air Force Base, prompting the local city council to vote against it.

In 2021, Texas prohibited infrastructure deals involving individuals connected to hostile governments, including China, following a Chinese army veteran’s purchase of a wind farm near a U.S. Air Force base. Now, Texas lawmakers are considering broadening this ban to include land purchases by individuals and entities from hostile nations like China.

The Texas measure aimed at restricting property ownership by Chinese residents was met with strong opposition, particularly from the Asian American community, and did not advance in the Texas House of Representatives.

 The ACLU and Others Speak Out Against Florida’s Real Estate Ban

The recent enactment of these laws has stirred painful memories for certain Chinese nationals and Chinese Americans, serving as a stark reminder of historical anti-Asian laws that once barred their immigration to the United States and the purchase of agricultural property in the country for many decades. This sentiment is shared by many Chinese residents in the United States, given the widespread proliferation of laws restricting foreign property acquisitions, particularly targeting the Chinese community, across the nation.

According to APA Justice, an advocacy group, 33 states have either proposed or implemented similar bans on real estate ownership based on specific national origins. In response to accusations of bigotry, some lawmakers have introduced provisions to exempt lawful permanent residents holding green cards.

Detractors have labeled these laws as discriminatory, and the U.S. Department of Justice has expressed its concerns about the Florida iteration of the law, stating: “These prohibited provisions will inflict substantial harm on individuals solely based on their national origin, violate federal civil rights statutes, erode constitutional rights, and will not further the State’s declared objective of enhancing public safety.”

In Florida, U.S. District Judge Allen Winsor in Tallahassee has declined to halt the state’s law that prohibits citizens of China and other “countries of concern” from possessing homes or land within the state. Judge Winsor reasoned that since the ban is grounded in citizenship rather than race or national origin, it is likely not in violation of the U.S. Constitution or housing discrimination laws.

This legal challenge was initiated by the American Civil Liberties Union (ACLU), representing Chinese citizens residing in Florida and a real estate brokerage firm in Florida. The ACLU argues that the law infringes upon the federal constitution’s equal protection clause and the Fair Housing Act, potentially leading to discrimination against U.S. citizens who may be mistaken for foreigners. The U.S. Department of Justice has recently become involved in the litigation.

The Impact of Real Estate Bans on Global Mobility

In a sweeping move with far-reaching consequences, stringent limitations on property ownership have been imposed upon individuals and entities hailing from a select group of “countries of concern.” Among these nations are China, Cuba, North Korea, and Russia, making this a matter of global significance. The ramifications are far-reaching, affecting organizations’ capacity to support relocations, notably into U.S. jurisdictions such as Florida, where similar laws have been enacted.

Global mobility professionals are now asking themselves how these regulations will influence the decisions of multinational corporations concerning their U.S. operations and staff relocations.

Denise Talboy, CRP, vice president of global relocation and corporate services at The Keyes Company and member of Worldwide ERC’s North American real Estate and mortgage policy forum, shared her insights in a recent interview with Worldwide ERC^®.

“Currently, the departments tasked with enforcing and putting the rules in place for these changes are working on them. The rule is still being interpreted and websites are being put together as resources from the government,” Talboy says.

“We believe with Florida Realtors’ involvement in this process, many items will become clear for future buyers and companies wanting to relocate to Florida. With policy change comes uncertainty, and we are looking forward to more answers,” she says.

Given the heightened penalties for Chinese nationals under these property ownership restrictions, mobility departments are considering strategies for their Chinese employees. Global mobility professionals are now wondering how to effectively navigate these new legal challenges and maintain seamless global workforce mobility. The key is to not go it alone.

“Once the rules, the forms, and the resources are put into place, we would recommend working with an expert in this field. Companies will want to ensure they are working with an attorney to ensure they are following protocol,” Talboy says.

“There may be some alternative ways to do business in Florida, and once the rules are put into place, we will actively be reaching out to our global partners as their resource,” Talboy says. “We understand from Florida Realtors that the requirement for reporting is not mandated until 1 January 2024, which gives the government time to iron out the details.”

Aside from the immediate restriction of property rights, these constraints have a significant impact on individual decisions to relocate to the United States. Their repercussions, however, are not limited to the human realm; they cast a wide net over corporations functioning throughout the country.

Certain companies might need to rethink where they operate because of these restrictions, especially in states where these policies make it harder for their global workforce to live and work. In essence, laws like these could seriously disrupt the smooth movement of people and businesses and have a significant impact on U.S. economic competitiveness.