On May 8, 2023, Gov. Ron DeSantis signed into law Senate Bill 264, creating Florida Statutes sections 692.201 through 692.205, which prohibits the direct or indirect ownership of various categories of real estate by individuals and companies (in addition to government and party officials) from a number of foreign nations.
Subject to limited exceptions, statutorily defined “foreign principals,” which includes a number of individuals and corporate structures, “from foreign countries of concern,” including China, Russia, Iran, North Korea, Cuba, Venezuela, and Syria, will be subject to the new ownership prohibitions and reporting requirements. Furthermore, the law puts a particular emphasis on various Chinese parties, with stricter restrictions and heightened penalties. A brief breakdown of the restrictions follows:
The established limited exemptions to the above limitations are:
- De minimis indirect ownership: Exception applies to ownership through a publicly traded company that is either less than 5% or is a non-controlling interest in an entity controlled by a non-foreign entity registered with the SEC as an investment adviser.
- Acquisition through probate or debt collection: A prohibited party may acquire interest by devise or descent, enforcement of security interests, or collection of debt on or after July 1, 2023, but must sell within three years.
The law also creates a number of registration, reporting, and affidavit requirements; imposes civil and criminal penalties; and introduces a procedure by which property can be forfeited to the state if a violation is discovered.
Registration and reporting requirements for existing affected property owners must be completed generally by December 31, 2023, while all new transactions that occur after July 1, 2023, must be registered and reported within 30 days of the transaction. The law provides no stated exemption for properties that go under contract before July 1, 2023, but will not close until after that date.
Given the highly technical nature of the new law combined with the complexities of real estate ownership, investment, and lending, this alert only provides highlights of the new law.
