Lew Sichelman
Florida recently enacted a bill that limits some foreigners from owning property in the state – a move that shocked some, likely because the Sunshine State is such a popular destination for visitors from other countries. But as it turns out, Florida is just one of 14 states that have passed such laws in 2023. A few have gone even further.
According to a new report from the American Land Title Association, about two dozen states specifically forbid or limit foreign ownership of farmland within their borders. But laws passed in six so far this year – Arkansas, Florida, Louisiana, North Dakota, Tennessee and Utah – impact all property in their states, not just farmland.
Uncle Sam, meanwhile, doesn’t restrict “foreign persons, entities or governments from acquiring or holding U.S. agricultural land,” reads the ALTA report, written by Vice President of Communications Jeremy Yohe. Rather, the federal government just monitors such activity. But that could soon change.
Congress Worried About Farms
Lawmakers in Washington are considering several bipartisan measures to restrict certain foreign purchases and acquisitions of American soil. And Yohe said limitations of one kind or another stand a good chance of becoming part of the next set of agricultural appropriations bills.
Between 2015 and 2021, according to the Department of Agriculture, foreign investment in farmland increased by some 2 million acres a year. As of 2021, the last year for which data is available, foreigners held an interest in more than 40 million farmland acres, according to the National Agricultural Law Center.
That’s a scant 3.1 percent of all privately held U.S. agricultural land, and a mere 1.8 percent of all U.S. land in total. But another 2021 report from USDA found that the Chinese have really stepped up their game.
The Chinese own about 384,000 acres of American farmland. “Of that,” said the ALTA report, “195,000 acres, worth almost $2 billion when purchased, are owned by 85 Chinese investors, which could be individuals, companies or the government.”
So far this year, the report said, the most common origin of foreign buyers is China, accounting for 13 percent of all foreign land purchases. Mexico and Canada came in second and third, with 11 percent and 10 percent, respectively.
It’s the Chinese activity that has spurred Congress into action, the ALTA report said. One proposal to prevent investors from not only China but also Russia, Iran and North Korea has made its way into the 2024 National Defense Authorization Act. The plan would block people from these four countries from buying farmland and agricultural companies.
Another legislative proposal would give the president the authority, for a five-year period, to take action to prohibit the purchase of both public and private real estate by any foreigner.
Sen. Sherrod Brown of Ohio, chair of the Senate Banking Committee, is quoted as saying, “We cannot allow foreign adversaries like China to buy up farmland around the country unchecked. It’s a threat to rural economies, and it’s a threat to our national security.”
States Worried About All Property
Back at the state level, more than 140 bills to restrict foreign purchases have been thrown into their respective hoppers, the ALTA report said. Most of these measures are aimed specifically at private farmland, but some extend to all types of property.
While the number of houses purchased by international buyers has fallen to a 14-year low, according to the National Association of Realtors, foreigners still bought some $59 billion worth of residential property between April 2021 and March 2022.
Prohibited buyers “vary by state,” said the ALTA report, “but encompass governments, entities and individuals from countries including China, Russia, Iran, North Korea, Cuba, Syria, Venezuela and others.” In other words: people and groups from places that are perceived as America’s enemies.
Some laws apply to all non-U.S. citizens; others, only to noncitizens from countries where Americans cannot acquire real estate.
Restrictions like these are not without their challengers. A group of Chinese citizens living in Florida, as well as a real estate firm working mostly with Asian and Asian American clients, questioned the law in the Sunshine State, claiming it was unconstitutional.
The Florida measure requires buyers of agricultural land within 10 miles of critical infrastructure or a military facility to affirm in writing that they are not a “foreign principal.” The American Civil Liberties Union maintains that this violates the Constitution’s guarantee of equal protection and due process, as well as the Fair Housing Act’s prohibition against discrimination based on race and national origin.
A federal judge said that because the law was based on citizenship, not race or national origin, it likely did not violate the Constitution. So, the law stands, at least for now.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
