On May 8, 2023, Senate Bill 264 (“SB 264”), which restricts the ability of “foreign principals”from or domiciled in any “foreign country of concern” to directly or indirectly own any interest in “real property” in the state of Florida, went in effect as law.
While SB 264 has certain broad sweeping restrictions on foreign principals’s, the restriction on ownership of real estate is clearly focused on those by “PRC Investors”. Specifically, it provides in section 692.204 “Any person who is domiciled in the People’s Republic of China and who is not a citizen or lawful permanent resident of the United States” is prohibited to purchase real property except that those who has a visa “that is not limited to” visitor visa” and asylum approval notice or order can purchase not up to 2 acres residence that is not within 5 miles of any military installation.
Consequences of Violation
The most significant consequence of a violation of SB 264 is a civil action to cause the forfeiture of the real property. After forfeiture and upon the sale of such real property, the proceeds first will be used to repay lienholders, satisfy fines and judgments, and reimburse any costs associated with such civil action, with the balance being paid to the property owner. Other consequences include a potential third-degree felony and fines and penalties.
Application of SB 264
However, the implementation of SB264 has not yet been promulgated by the Florida Real Estate Commission along with other rules and regulations. Various material issues that have arisen in the context of interpreting SB 264 including the scope of the so-called “de minimus exception” (as discussed below), the definition of an “interest” in real property, and the applicability of SB 264 to leasehold and ground leasehold estates warrant interpretations.
It is also worth noting that, on May 22, 2023, the ACLU filed a complaint in the United States District Court for the Northern District of Florida on behalf of four Chinese citizens who reside in Florida and a real estate brokerage firm that principally services Chinese and Chinese American clients. The complaint challenges the constitutionality of SB 264 under the 14th Amendment, the Fair Housing Act, and the Supremacy Clause of the U.S. Constitution. The outcome of this challenge is pending.