Increasing Regulation on Foreign Ownership of United States Real Estate: Navigating the Rapidly Evolving Landscape
As we enter the new year, it is a good time to reflect on trends and developments from 2025. One such development is the legal framework governing foreign ownership of real property in the United States (US) which is a layered system of federal and state laws that has shifted dramatically in recent years. US states in particular have accelerated efforts to regulate foreign ownership of real property in order to protect national security and agricultural integrity. As of end of 2025, approximately 36 states[1] have enacted laws restricting or prohibiting foreign ownership of real property, with a focus on agricultural land, natural resources, critical infrastructure, and proximity to military bases. These measures often target countries designated as foreign adversaries or countries of concern, such as China, Russia, Iran, and North Korea.
Legal challenges to several of these laws remain pending. However, on November 4, 2025, the United States Court of Appeals for the Eleventh Circuit, in Shen v. Comm'r, Fla. Dep't of Agric. and Consumer Servs., issued a long-anticipated decision upholding the constitutionality of Florida law, Senate Bill 264, which prohibits foreign principals from China, Cuba, Iran, North Korea, Russia, Syria, and Venezuela from owning property within 10 miles of military installations or critical infrastructure.
With the current international climate and this notable upholding of state restriction, we anticipate that this area of law will continue to develop in 2026 with additional states being inspired to pass or amend their foreign land ownership laws.
Understanding State Laws & Variations
State laws differ significantly in scope, enforcement mechanisms, reporting requirements, and exemptions.
- The countries and persons impacted by these restrictions on land ownership vary largely along the following lines:
- States covering all foreign ownership of certain types of property;
- States identifying their own defined list of prohibited countries; and
- States utilizing lists maintained under federal law including Executive Order 13873, countries subject to sanctions by the Office of Foreign Assets Control, and countries of particular concern or state sponsors of terror as designated by the US Secretary of State.
- The type of land impacted by these restrictions range from outright bans on all in-state land ownership by foreign adversaries to laws that focus narrowly on agricultural land, critical infrastructure, or land near military installations and other sensitive sites.
- Enforcement mechanisms must also be ascertained on a state-by-state basis as certain jurisdictions authorize forced divestiture for non-compliance, whereas others rely on civil penalties or registration and reporting requirements. Exemptions often apply for US citizens, lawful permanent residents, and pre-existing ownership interests, but the definitions of these exemptions are narrowly tailored in each state.
Federal Considerations
Foreign sellers remain subject to the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980, which mandates a 15% withholding on gross sale proceeds to cover US capital gains tax. Transactions involving land near military installations, transportation hubs, or sensitive technological facilities may trigger Committee on Foreign Investment in the United States (CFIUS) review under the expanded Foreign Investment Risk Review Modernization Act (FIRRMA) provisions. Additionally, transactions involving interest in agricultural land may be subject to reporting requirements under the Agricultural Foreign Investment Disclosure Act (AFIDA).
Best Practices for Compliance
Given this complex and evolving landscape, proactive and tailored due diligence is indispensable. Prior to effecting any transaction, parties should ascertain (1) what federal and state restrictions apply, (2) whether the contemplated transaction involves a regulated entity or individual from a country of concern, (3) whether the subject real property falls within the scope of the regulation, and (4) what corresponding registration, reporting, or documentation is required.
Continuous monitoring of legislative and judicial developments in this area remains essential, as regulatory frameworks are expected to continue developing in the coming years.
[1] As of the date of this post, these states include: Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, and Wyoming.
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