Fort Lauderdale, Fla. (April 2, 2024) – This month, the U.S. Court of Appeals for the Eleventh Circuit will hear a challenge to a recently-enacted Florida law, Senate Bill 264, which restricts foreign ownership or investment in Florida real property from specific countries and imposes a near ban on property purchases by Chinese, Russian and other foreign nationals.

On July 1, 2023, Senate Bill 264 [codified under Fla. Stat. Ann. §§ 692.201 to 692.205] took effect. The bill, titled “Interests of Foreign Countries,” prohibits Chinese nationals and nationals from other countries, including Russia, from buying real property unless they are American citizens or permanent residents.

Prior to the new law’s effective date, on May 22, 2023, four Chinese citizens who hold nonimmigrant visas and reside in Florida, along with a Florida-based real estate firm, sued the state of Florida in federal district court, alleging that the new law is unconstitutional and discriminatory, and that it violates the Fair Housing Act [Shen v. Simpson, Case No. 4:23-cv-208].

This Update follows a May 19, 2023, Lewis Brisbois alert analyzing Florida’s new law, and a July 5, 2023, alert discussing the federal lawsuit.

On February 1, 2024, the U.S. Court of Appeals for the Eleventh Circuit granted a partial injunction in favor of two of the plaintiffs who are challenging tthe new law. After the U.S. District Court for the Northern District of Florida initially denied the plaintiffs’ (i) request for injunctive relief and (ii) motion to prevent the state from implementing and enforcing its foreign ownership law, the plaintiffs appealed to the Eleventh Circuit. As a result of the appeals court’s grant of a partial injunction, the state of Florida currently cannot enforce its restriction against the two individual plaintiffs.

As stated in the Eleventh Circuit’s decision, although the plaintiffs claim that Senate Bill 264 is unconstitutional for several reasons, the court’s order granting the partial injunction rests solely on the plaintiffs’ preemption argument. According to the Eleventh Circuit’s order, two of the individual plaintiffs have shown a substantial likelihood that the federal government’s role in monitoring certain foreign acquisitions of real property located within the United States preempts Florida’s new foreign ownership law.

The Eleventh Circuit’s order granting a partial preliminary injunction means that Florida’s new law cannot be enforced against the two individual plaintiffs. However, the court injunction is not binding on other appellate courts and, since it is limited to two individuals, the state of Florida may continue to enforce its restriction against all other investors and/or owners subject to its foreign ownership law – including other plaintiffs in the case. Oral arguments on the merits are set for April 19.

Currently, 20 states have passed or introduced legislation restricting foreign private investment in real property, which includes agricultural land, residential and commercial property. The decision from the Eleventh Circuit will have substantial impacts on state legislation governing foreign private ownership in real property.

In conclusion, pending the result of the above-referenced case, all foreign owners and investors of agricultural land and residential and commercial properties in any transaction must take steps to conduct a rigorous compliance check to ensure there is no violation of any existing laws or regulations.