Rulemaking Begins to Interpret Florida Law Limiting Persons from Foreign Countries of Concern

Florida enacted Senate Bill (SB) 264 (Chapter 2023-33, Laws of Florida) in May 2023 to limit select persons from "foreign countries of concern" from owning, having a controlling interest in or acquiring an interest in certain Florida real property. Additionally, SB 264 forbids governmental entities from contracting with these persons if it would enable access to personal identifying information or involve economic incentives. Pursuant to SB 264, healthcare providers must ensure that health records are maintained in the U.S. or Canada and aver that they are not in a business relationship with the prohibited persons to be licensed or relicensed.

Rule Development

Rule development is beginning to answer a few key questions that companies have raised about SB 264, such as what "interests" in Florida real property are forbidden and how participation in the EB-5 Program impacts compliance with the act. On Dec. 15, 2023, the Florida Department of Commerce (DOC) certified final regulations interpreting the limitation on select persons from China, Russia, Iran, North Korea, Cuba, Venezuela (specifically, the Venezuelan regime of Nicolás Maduro) and Syria owning Florida real property near military installations and critical infrastructure facilities. (See R. 73C-60.001 et seq., F.A.C.)

The rule provides that a lease is not an interest in real property. (See R. 73C-60.001(3), (10), F.A.C.) "Individuals approved by the federal government to participate in the EB-5 Program" are not prohibited foreign persons. (See R. 73C-60.001(8), F.A.C.) Furthermore, the rule interprets the "de minimis indirect interest" exception to select foreign persons owning Florida real property. The rule extends the exception to include "[a]ny passive ownership interest of a foreign principal in an entity, provided that the foreign principal does not possess, by virtue of that ownership interest or otherwise, the power to direct or cause the direction of the management or policies of the entity with respect to the interest in real property." (See R. 73C-60.001(4)(b), F.A.C.)

The Florida Department of Agriculture and Consumer Services (DACS) has begun rulemaking concerning interests in agricultural land but without adopting the same language in DOC's regulations. (See R. 5J-27.001 et seq., F.A.C.) One more limitation contained in SB 264 on ownership of Florida real property pertaining exclusively to select persons from the People's Republic of China (China) is not yet the subject of any rulemaking by DOC. But the Florida Real Estate Commission (FREC) has adopted a form affidavit that buyers of Florida real property must complete averring compliance with SB 264. (See R. 61J2-10.200, F.A.C.)

"Controlling interest" is a defined term in SB 264, as well as in the implicated healthcare chapter 408. In SB 264, a "controlling interest" may also arise by virtue of possessing "the power to direct or cause the direction of the management or policies of a company" through securities and by contract or otherwise. (See § 287.138(1)(a), Fla. Stat.) The rule applicable to military installations and critical infrastructure narrows this to an interest giving the prohibited person the "right to improve or develop the real property" and "to attach fixed or immovable structures or objects." (See R. 73C-60.001(3), F.A.C.)

The limitation on owning real property and contracting applies to officials, party members and domiciliaries of foreign countries of concern, as well as "[a] partnership, an association, a corporation, an organization, or any other combination of persons organized under the laws of or having its principal place of business in" a foreign country of concern, "or a subsidiary of such entity." (See § 288.007(1)(d), Fla. Stat.)

Deadline to Register and Next Steps

The deadline to register Florida real property owned or acquired prior to July 1, 2023, or purchased afterward pursuant to certain exceptions in SB 264 is Dec. 31, 2023, to be "timely registered," and Jan. 31, 2024, to avoid being late. (See, e.g., R. 73C-60.003, F.A.C.) Serious civil and criminal penalties can be imposed for violating SB 264 and, technically by statute, not only on the offender by forfeiture. (See, e.g., § 692.203(7), Fla. Stat.) Meanwhile, in Shen v. Simpson, Case No. 23-12737, the U.S. Court of Appeals for the Eleventh Circuit is reviewing the decision of the U.S. District Court for the Northern District of Florida, denying a motion for preliminary injunction challenging the constitutionality of SB 264.

Regulations are beginning to answer key questions raised about SB 264, but others remain. If you have questions about interpreting SB 264 or would like assistance with commenting on rules, please contact the author or another member of the Florida Government Advocacy Team or Florida Real Estate Team.

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