US Circuit Court Finds that Florida Law Prohibiting Foreign Ownership of US Land Likely Preempted by CFIUS Statute

On February 1, the United States Court of Appeals for the Eleventh Circuit unanimously granted a preliminary injunction in Shen v. Simpson, enjoining enforcement of a Florida law regulating foreign ownership of U.S. land.

That law prohibits citizens of the People’s Republic of China who are not lawful permanent residents of the United States from purchasing certain real property in Florida.  The Eleventh Circuit’s ruling enjoined enforcement of the law against two individual plaintiffs, and the court held that those plaintiffs had shown a “substantial likelihood of success” on their claim that the Florida law was preempted by the Foreign Risk Review Modernization Act of 2018 (“FIRRMA”), the most recent federal statute expanding the authority of the Committee on Foreign Investment in the United States (“CFIUS”), including with respect to certain real estate transactions.  In concurrence with the majority, Judge Abudu wrote that the plaintiffs also showed a substantial likelihood of success on their argument that Florida’s law violates the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution.

Another Eleventh Circuit panel will consider the merits of plaintiffs’ challenges in the coming months, but until then, the Eleventh Circuit’s opinion could influence courts hearing challenges to similar state statutes.  In the first six months of 2023 alone, fifteen states enacted laws regulating foreign ownership of U.S. land.[1]  Those laws vary from requiring disclosure of information regarding foreign ownership of U.S. land to restrictions on foreign ownership of land within the state.  In addition to prohibiting most ownership of U.S. land by Chinese citizens, Florida’s law restricts ownership of U.S. land by citizens of several other countries and regulates foreign ownership of U.S. land in close proximity to military bases and “critical infrastructure.” 

[1] Congressional Research Service, State Regulation of Foreign Ownership of U.S. Land: January to June 2023, July 28, 2023, available at https://crsreports.congress.gov/product/pdf/LSB/LSB11013.