Foreign Ownership Law Violates the U.S. Constitution???

On February 1, 2024, the U.S. Court of Appeals for the Eleventh Circuit granted a partial injunction in favor of two individuals challenging a Florida law that restricts certain foreign investments in real property. In May 2023, a group of Chinese citizens living in Florida and a real estate brokerage firm filed a lawsuit (Shen v. Simpson, No. 4:23-cv-208 (N.D. Fla. 2023)) against the state of Florida alleging that the state’s newly enacted foreign ownership law violates the United States Constitution. Florida’s law restricts certain foreign investments in real property located within the boundaries of the state, particularly investments by individuals and entities “domiciled” in China. After the district court denied the plaintiff’s motion to prevent the state from implementing and enforcing their foreign ownership law, the plaintiffs appealed to the Eleventh Circuit which granted a partial preliminary injunction.

Although the Shen plaintiffs claim that the Florida law is unconstitutional for several reasons, the court’s order granting the partial injunction rests solely on the plaintiffs’ preemption argument. The plaintiffs argue Florida’s foreign ownership law violates the Supremacy Clause of the U.S. Constitution by conflicting with the federal government’s system of regulating land purchases by foreign investors. 

According to the Eleventh Circuit’s order, two of the Shen plaintiffs have shown a substantial likelihood that the federal government’s role in monitoring certain foreign acquisitions of real property located within the U.S. preempts Florida’s foreign ownership law. As a result, the state is currently restrained from prohibiting these two individual plaintiffs from completing their real property transactions within the state of Florida.

Importantly, this is merely a decision on the preliminary injunction.  The court did not rule on the merits of the case. Oral arguments for the Shen case are expected to be set for April 2024, at which time the appellate court will hear arguments on the merits of the case.

Brown, Micah. “Foreign Ownership Law violates the U.S. Constitution???Southern Ag Today 4(12.5). March 22, 2024. Permalink