Some immigrants from seven countries will no longer be allowed to buy real estate, including houses and condominiums in certain cases, in Florida under a new law set to take effect at the end of this week.
The new law prohibits foreign nationals from China, Cuba, Iran, North Korea, Russia, Syria and Venezuela from owning agricultural land or any real estate in Florida near a military installation or critical infrastructure, such as airports, refineries, power plants and chemical manufacturing facilities. Florida Republican Gov. Ron DeSantis signed Senate Bill 264 into law on May 8.
There are more than a dozen military installations in Florida, many of which are within 5 miles of city centers like Orlando, Tampa, Jacksonville, Pensacola, Panama City and Key West. Several cities in Florida have been among the top in the nation for multifamily rent growth and development over the past year.
Florida's law seems to be the most strict toward any foreign national from the People’s Republic of China. A citizen or foreign national from China is prohibited from most forms of real estate ownership in Florida under the new law.
States across the country have been trying to pass similar legislation but Florida would be the first state to pass the law and have it take effect. A similar proposal made its way through the Texas legislature this year but never made it to the governor’s desk for signature.
A group of Chinese citizens and a real estate brokerage in Florida filed a federal lawsuit against the state at the end of May to block the law from taking effect July 1. The plaintiffs, which are represented by the American Civil Liberties Union, argue the discriminatory property law is unfair, unjustified and unconstitutional.
'Cloud of Suspicion'
The plaintiffs, including Multi-Choice Realty LLC, a real estate brokerage that mainly serves Chinese and Chinese-American clients, say the law will force them to cancel purchases of new homes and face the loss of significant business, according to the lawsuit.
"The law stigmatizes them and their communities, and casts a cloud of suspicion over anyone of Chinese descent who seeks to buy property in Florida," according to the lawsuit.
Those who are prohibited from acquiring real estate after the law takes effect but owned property in Florida prior to July 1 are allowed to hold onto their interests but must register with the Florida Department of Economic Opportunity, according to Nathan Adams IV, an attorney with the law firm of Holland & Knight, in a blog post.
There are some exceptions to the new law. A person may possess an ownership interest that "is the result of the person's or entity's ownership of registered equities in a publicly traded company owning the land and if the person's or entity's ownership interest in the company" is either less than 5% of any class of registered equities or less than 5% in the aggregate in multiple classes of registered equities, according to Adams.
Another exception is if the person has a noncontrolling interest in an entity controlled by a company that is registered with the Securities and Exchange Commission as an investment adviser and is not a foreign entity, Adams said.
A foreign national can still acquire real estate in Florida if it relates to enforcement of a debt collection or other security interest. The foreign national, however, must sell or otherwise dispose of that property within three years, Adams said.
Anyone violating the law would be subject to civil and criminal penalties, such as a daily monetary fine, potential lawsuit and felony or misdemeanor charges.
Florida's new law also prohibits the state from awarding economic development incentives or state contracts involving real estate ownership to foreign nationals from the seven countries.