Florida’s New Foreign Ownership Restrictions Upheld Despite Controversy
By John Bonk, Partner, National Co-Leader - State & Local Tax
Florida’s groundbreaking legislation (Chapter 2023-33, L.O.F.) restricting foreign principals from certain countries from acquiring substantial economic interests has faced backlash, but it has managed to withstand legal scrutiny. The bill, which specifically targets individuals and entities affiliated with countries of concern such as China, Russia, Iran, North Korea, Cuba, Venezuela, and Syria, represents a significant shift in Florida’s approach to foreign investment.
The legislation imposes restrictions on the ownership or acquisition of agricultural land in Florida by foreign principals. Furthermore, it bars these principals from owning or acquiring any property within 10 miles of any military installation or critical infrastructure in the state. Chinese officials or members of the Chinese Communist Party, Chinese business organizations, and persons domiciled in China who are not U.S. citizens or lawful permanent residents face a complete ban from purchasing any real property interest in Florida, with some exceptions.
The American Civil Liberties Union (ACLU) challenged the law, arguing that it discriminated against foreign nationals based on their country of origin, violating the U.S. Constitution. However, a federal district court refused to halt the enforcement of the law, allowing it to come into effect on July 1, 2023.
Despite the controversy surrounding the legislation, Governor Ron DeSantis and other state officials have lauded it as a necessary measure to protect Florida’s national security and economic interests. The Governor announced the launch of the SecureFlorida Portal as a tool to enforce the new regulations, requiring foreign principals to register any property as mandated by the law.
The legislation also extends its scope to data security, amending the Florida Electronic Health Records Act and the Health Care Licensing Procedures Act to stipulate that offsite storage of personal medical information and all patient information stored by licensees must be physically maintained within the continental U.S., U.S. territories, or Canada.
Foreign principals who owned or acquired an interest in real property before July 1, 2023, are required to register the property by December 31, 2023. Those who fail to do so will face a civil penalty of $1,000 each day the registration is late.
Despite the criticism from civil liberties organizations, Florida’s legislation has set a robust precedent in the ongoing debate surrounding foreign influence and investment in U.S. real estate.
Clients should contact their real estate attorney to complete the required documents. Should clients not have an attorney or have specific questions, please discuss with your Marcum tax professional; they will help guide you to a solution.
