Florida law limiting foreign real estate investors ‘borders on redlining’, experts say

Some foreign nationals will find it harder to buy a home or land in Florida after new state law takes effect this month, a move that experts say could set a discriminatory precedent.

The bill signed by Governor Ron DeSantis in May prohibits citizens of Cuba, Venezuela, Iran, Russia, China, North Korea and Syria from buying farmland in the state. It would also prevent foreigners from those countries from buying real estate within 20 miles of airports, US military installations, or other so-called “critical” infrastructure facilities.

Chinese citizens who buy land in restricted areas would face the harshest penalties compared to other groups.

The law threatens to violate the Constitution and the Fair Housing Act, civil liberty and real estate experts said, the latter protecting home buyers from discrimination based on race or national origin . Many unknowns also surround its implementation.

The law is “too broad,” Luis Padilla, CEO of Florida’s Oceanside Realty & Investment Inc./Padilla Team, told Yahoo Finance.

“In my opinion, this is more of a political statement than a real estate game. To say that citizens of certain countries cannot buy within 20 miles of an airport, I think is a little beyond the real estate professional’s pay to really play national security officers,” Padilla added. “As a real estate agent, I think this is a law that hurts and borders on highlighting citizens simply because of their ethnicity or citizenship. If I have to be on one side, I am not for.”

A house for sale in Coral Gables, Florida. (Alan Diaz, AP Photo)

A house for sale in Coral Gables, Florida. (Alan Diaz, AP Photo)

Chinese immigrants sue

A real estate agency that primarily serves Chinese clients, along with a group of Chinese citizens residing in Florida, are suing the new property law.

Plaintiffs are represented by the American Civil Liberties Union, ACLU of Florida, DeHeng Law Offices PC, and the Asian American Legal Defense and Education Fund, in coordination with the Chinese American Legal Defense Alliance.

According to the ACLU, the new law is “reminiscent of similar efforts over the past century to weaponize bogus national security claims” against Asian immigrants and other marginalized communities. Proponents further noted that politicians across the United States used similar tactics to pass “foreign land laws” in the early 1900s, which prohibited Chinese and Japanese immigrants from becoming landowners.

The policies have increased violence and discrimination against Asian communities in the United States, the ACLU wrote in a statement. These laws have since been repealed by state legislatures because they violated the Constitution’s equal protection guarantees.

According to DeSantis, however, this new law continues his commitment to “suppress communist China” as he says it poses a “great geopolitical threat.”

Commissioner Wilton Simpson added that the new law – which would prohibit certain foreign nationals from buying farmland – “would ensure Floridians have access to a safe, affordable and plentiful food supply.”

In Florida, foreign citizens own 6.3% of all private farmland, according to an analysis of the bill. The Florida House of Representatives also noted that the bill would have a significant impact on land ownership because it would allow the state to “seize and sell illegally held property.”

The law would “codify and expand housing discrimination against people of Asian descent in violation of the Constitution and the Fair Housing Act,” the ACLU of Florida said in a press release. “It will also cast an undue burden of suspicion on anyone looking to purchase property that sounds remotely Asian, Russian, Iranian, Cuban, Venezuelan or Syrian in name.”

Florida Governor Ron DeSantis speaks during a fundraising picnic for U.S. Representative Randy Feenstra, R-Iowa, Saturday, May 13, 2023, at Sioux Center, Iowa.  (Credit: Charlie Neibergall, AP Photo)

Florida Governor Ron DeSantis speaks during a fundraising picnic for U.S. Representative Randy Feenstra, R-Iowa, Saturday, May 13, 2023, at Sioux Center, Iowa. (Credit: Charlie Neibergall, AP Photo)

Significant loss of investors

The law could also slow real estate investment in the state.

Chinese investors bought $6.1 billion worth of real estate in the United States between April 2021 and April 2022, according to the National Association of Realtors (NAR). And overall, Florida was the top destination for foreign shoppers, accounting for 24% of all international purchases, according to NAR.

The analysis revealed that the other top destinations for foreign buyers were California, Texas, Arizona, New York and North Carolina.

Under the law, which took effect July 1, those who have bought or are looking to buy in certain areas could face stiff penalties or fines. According to the bill, Chinese people who buy property in restricted areas could face felony charges, while those from other countries could face misdemeanor punishment for both buyers and sellers.

Those who already own property in restricted areas must also register with the state or face fines of up to $1,000 per day. If landlords don’t comply, their property or land could be seized, lawmakers said.

“The new law (SB 264) still contains elements that have not yet been determined,” Marla Martin, senior manager of media relations and communications for Florida Realtors, told Yahoo Finance. “The Florida Real Estate Commission (FREC), Department of Agriculture and Consumer Services (DACS), and Department of Economic Opportunity (DEO) are required to implement specific portions of the bill.”

For example, the FREC is responsible for creating an affidavit that the buyer must sign stating that the buyer complies with the requirements of the new law. But FREC’s affidavit isn’t ready yet, Florida Realtors said.

“Until FREC creates an affidavit for statewide use, buyers should expect to sign an affidavit provided by their closing agent,” the group said.

There is also no easy way to determine if a property is subject to the law. There is no official list or map of military installations or any other way to determine if a property is near critical infrastructure, Florida Realtors said.

“So much is still unknown right now,” Marin said, “any comment would be speculative.”

Gabriella Cruz-Martinez is a personal finance reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.

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