RESTRICTIONS ON AGRICULTURAL LAND OWNERSHIP
SB 264 creates §§ 692.202-204. The newly enacted § 692.202 provides that a foreign principal may not directly or indirectly own, control, or acquire agricultural land or any interest therein exceptat leastindirect interest. "Agricultural land" means land classified as agricultural in accordance with Florida Statutes § 193.461. Florida Statutes §193.461(b) states that "[s]ubject to the limitations set forth in this section, only lands used primarily for bona fide agricultural purposes shall be classified as agricultural. The term ``for bona fide agricultural purposes''" means the bona fide commercial agricultural use of land.'
The foreign principal has oneat leastindirect interest if any ownership arises from the foreign principal's ownership of registered shares in a listed company that owns land and if the foreign principal's interest in the corporation is (a) less than 5% of any class of registered shares or less than 5 % aggregated across multiple classes of registered shares; or (b) a minority interest in an entity managed by a corporation registered with the US Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940, as amended, which is not a foreign entity.
§ 692.202, subsection 1, repeals agricultural land owned before July 1, 2023, but creates a registration requirement for foreign principals who continue to own agricultural land after that date. Failure to timely register will subject the foreign principal to a civil penalty of $1,000 for each day of late registration and may result in the Florida Department of Agriculture and Consumer Services (Department of Agriculture) seizing the unregistered farmland for unpaid remaining late penalties. . § 692.202(5)(a) also provides that the purchaser of agricultural land must, at the time of purchase, make an affidavit under penalty of perjury certifying that the purchaser is not a foreign principal and meets the requirements of § 692.202. It is important to note that failure to comply with this legal requirement does not affect ownership or insurance of the land.
In addition, § 692.202(6) provides several consequences for holding agricultural land in violation of the section, including (1) forfeiture to the state, (2) civil action by the Department of Agriculture for forfeiture, (3) entry of pending litigation, (4) final judgment is given the right to confiscate land in the state, (5) sale of land previously subject to confiscation, and (6)ex partedecision on confiscation in cases of clear and real danger to the state. Furthermore, knowingly breaking the law is a misdemeanor of the second degree.
RESTRICTIONS ON PROPERTY OWNERSHIP NEAR MILITARY INSTALLATIONS AND CRITICAL INFRASTRUCTURE FACILITIES
SB 264 also creates § 692.203, which prohibits the purchase of real property around military installations and critical infrastructure facilities by foreign principal dealers. Pursuant to this provision, the foreign head office may not directly or indirectly own, have a controlling influence in or by purchase, transfer, design or origin acquire any interest (exceptat leastindirect interest) in real property on or within 10 miles of any military installation or critical infrastructure in Florida.
Despite the limitations in § 692.203, subsection 1, SB 264 also contains an exception - similar to that in § 692.202, subsection 2 - allowing a foreign principal to continue to own interests in such property if he directly or indirectly owned the property before July 1, 2023. Similarly, § 692.203 includes registration requirements (albeit with the Florida Department of Economic Opportunity, not the Department of Agriculture) and imposes civil and criminal penalties similar to those in §692.202.
RESTRICTION ON OWNERSHIP OF REAL ESTATE FOR THE PEOPLE'S REPUBLIC OF CHINA
SB 264 § 692.204 prohibits the purchase or acquisition of real property by the People's Republic of China and certain other enumerated persons and entities as defined below. In particular, the following persons or entities may not directly or indirectly own, have a controlling influence in or acquire by purchase, transfer, design or acquisition any interest (exceptat leastindirect interest) in Florida real estate:
- The People's Republic of China, the Communist Party of China, or any official or member of any group.
- Any other political party or member of a political party or branch of a political party in the People's Republic of China.
- A cooperative, association, company, organization or any other combination of persons organized under the law or having its principal place of business in the People's Republic of China or a subsidiary of such entity.
- Any person resident in the People's Republic of China who is not a citizen or lawful permanent resident of the United States.
- Any person, entity or group of persons or entities described in subsections 1 to 4 that has a controlling interest in a partnership, association, corporation, agency, trust or any other legal entity or subsidiary formed with the purpose of owning real estate in Florida.
IN "at leastindirect interest” is defined in the same way as the above statutes in SB 264. However, in contrast to the other newly created statutes in SB 264, it appears that §692.204(1)(a)5. expands the scope of SB 264 by including applicability to "an assembly of persons or entities . . . with participation control," as described in § 692.204(1)(a). This language suggests thatat leastThe interests, taken together, would not have a controlling interest in such entity that owns real property in Florida.
Notwithstanding the above property owner limitations, SB 264 § 692.204(2) permits a person described in (1)(a) to purchase real property up to two acres in size if (1) the lot is not located on or within five miles of any which military installation in this country; (2) the person has a validly endorsed United States visa permitting him/her to be lawfully present in this country. and (3) the purchase was made in the name of a person holding a visa or official documentation.
Additionally, as with § 692.202(3)(a) and §692.203(3)(a), §692.204 creates a requirement to register with the Department of Economic Opportunity. Similarly, § 692.204 provides that a purchaser of real property must file an affidavit certifying that the purchaser is not a person or entity specified in (1)(a) and that it complies with the requirements of this section. Failure to comply with this legal requirement does not affect ownership or insurance of the land. Section 692.204 also imposes civil and criminal penalties for violations of this provision, although the criminal penalties differ from those listed above. § 692.204(8) specifically states that a violation of this section is a felony of the third degree, while § 692.204(9) provides that a person who knowingly sells real property or any interest therein in violation of this section commits a misdemeanor of the first degree.
SB 264 presents many challenges to foreign nationals and entities seeking to own (or already own) real estate in Florida. McDermott Will & Emery has already begun advising clients on navigating the complexities of SB 264 and encourages anyone who believes they may be affected by the bill to immediately review their organizational structure and ownership, as well as the location of all real estate projects in Florida. . For assistance with this review, please contact the authors of this article.