Briefs Illuminate Florida Law Limiting Foreign Persons from Acquiring Real Property

Briefing on a motion for preliminary injunction is complete in the lawsuit filed to strike Florida Senate Bill 264, Chapter No. 2023-33, Laws of Florida (the Act), which limits select persons from "foreign countries of concern" (subject to various exceptions) from directly or indirectly owning, having a controlling interest in or acquiring by purchase, grant, devise or descent any interest in any real property in Florida. For more information about the law, see Holland & Knight's previous alert, "Florida Law Limits Persons from Foreign Countries of Concern from Acquiring Real Property," May 23, 2023.

Case Insight

The case is styled Shen v. Simpson, Case No. 4:23-cv-208-AW-MAF, before the Honorable Allen Winsor in the U.S. District Court for the Northern District of Florida. A hearing is set on the motion for preliminary injunction for July 18, 2023. For those looking for guidance now before the hearing and before rulemaking commences as required by the Act, the briefs relating to the motion for preliminary injunction provide a few insights into how preliminarily to interpret the Act.

First, the defendants (the State) confirm their understanding that a key motivator for the Act is a Chinese food manufacturer's purchase of 300 acres of agricultural land 12 miles from Grand Forks Air Force Base in North Dakota, a military drone base. If there was any question, it is clear that acquisition of real estate located near military installations and critical infrastructure is a special concern of the Act due to cybersecurity, espionage and national security threats. Expect this to be an enforcement priority. Two plaintiffs claim contracts for residential properties located near these kinds of facilities.

Second, the State takes the position that the general limitation on acquiring real estate particular to persons linked to the People's Republic of China (PRC) "applies only to those 'domiciled' in China or companies controlled by such individuals." § 692.201(4)(d), (e), Fla. Stat. The State adds that the term "domicile" should be interpreted in light of Florida's common law: "One is domiciled where he is physically present and intends to remain permanently or indefinitely." In particular, the State focuses on the second of these prongs to distinguish the standard for homestead exemption: "Domicile under Florida law does not require the person to be present permanently or even legally, just indefinitely." Furthermore, the State insists that federal law is not pertinent. This includes a visa requirement that the holder maintain residence in a foreign country. Plaintiffs disagree.

Based on its understanding of the term "domicile," the State argues that none of the individual plaintiffs who filed the lawsuit is subject to the Act. Two are H-1B visa holders who "plan to apply for permanent residency in the United States." One began the process of obtaining a permanent labor certification. Both have lived in Florida for several years and have "stable jobs." A third has a tourist visa, applied for asylum, has no "plans to ever return to China" because of persecution and hopes to "obtain permanent status in the United States." He owns a business and has a wife and house in Florida. A fourth, an F-1 student visa holder, has "continuously lived" in Florida since 2017, owns a home in Florida and is currently pursuing a doctorate at a Florida university to advance her "goal" of "help[ing] residents of coastal regions, especially people in Florida." She lives with her 1-year-old daughter, who is a U.S. citizen.

In reply, the plaintiffs characterize as "welcome news" the State's position that the individual plaintiffs are not subject to the Act, but insist the State's brief is not binding on the State, prosecutors or judges and disagree with the brief in defense of the plaintiffs' standing, arguing that the State's interpretation draws into question the need for the statutory safe harbor allowing PRC-linked persons who hold non-tourist visas to purchase a single residential property not within five miles of a military installation. § 692.204(2)(b), Fla. Stat. The parties also disagree whether a Florida realty company that primarily represents Chinese buyers has standing. A concession is important. The plaintiffs state in a footnote that they are no longer looking to preliminarily enjoin SB 264's agricultural land provisions. § 692.202, Fla. Stat. Put otherwise, the limitation on foreign principals acquiring agricultural land will not be enjoined as a result of this lawsuit. The lawsuit does not address other aspects of the Act either, such as public contracting, economic incentives, healthcare records and licensure, or extortion.

Third, the State affirmatively identifies examples of persons who are subject to the Act. In particular, the law "targets agents of the Chinese government and members of the Chinese Communist Party." § 692.204(1)(a)(1)-(2). The brief refers to them as "China and its principals." These include persons "'domiciled' in China or companies controlled by such individuals." § 692.201(4)(d), (e), Fla. Stat. In defense of the claim this is discriminatory, the State responds, "The people potentially subject to ... restrictions encompass a wide range of ethnicities and national origins – from white, British-born, Dutch citizens who are domiciled in Hong Kong, to individuals born in China who remain domiciled there."

Last, the Act contains a registration requirement. In light of the effective date of the Act, the State confirms that "[r]eal estate transactions completed prior to July 1 are unaffected." § 692.203(2), Fla. Stat. "Principals of China may continue to own property in Florida acquired prior to July 1, subject to the submission of a one-time registration by the end of the year." § 692.203(3), (4), Fla. Stat. So, as far as the State is concerned, registration under the Act is a one-time event.

Considerations and Next Steps

If you have questions about interpreting the Act or would like to comment on rulemaking, please contact the author or another member of the Florida Government Advocacy Team. Bear in mind, we are likely to gain more insight into the Act from the district court's order on the motion for preliminary injunction, subsequent proceedings and rulemaking.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.