The United States’ strong legal system and stable economy have attracted many international investors looking for real estate opportunities. However, recent legal developments are currently changing the way foreign ownership of real estate is regulated. A growing number of states are implementing laws that restrict or outright ban property ownership by foreign nationals, with an added emphasis towards those from countries considered national security threats.
In this article, these state-level restrictions are examined and compared to federal oversight, along with detailing what foreign investors should do to navigate this complex and shifting legal landscape.
By 2023, more than two dozen states had begun implementing laws that restrict foreign ownership of certain real estate. Although many focused on protecting agricultural land or property near military bases and critical infrastructure, some states took more expansive approaches.
Texas has recently implemented one of the most extensive restrictions with its Senate Bill 17, effectively banning nationals or entities linked to designated adversary countries from acquiring almost any kind of real estate or long-term leases within the state. According to the law, limited countries are China, Russia, Iran, and North Korea, but the list may expand. The prohibition also applies broadly to leasehold interests and all types of real property, including residential, commercial, industrial, agricultural, mining, mineral, and water rights. Any violation of this law includes various criminal penalties and civil fines. Only those who are U.S. citizens, lawful permanent residents, and entities owned by such individuals are exempt. Leases that are shorter than a year are also exempt. However, this measure only applies to acquisitions made on or after September 1, 2025. Any property acquired before this date is not subject to forced divestment.
Florida Senate Bill 264 bans individuals from a foreign country from acquiring land near military premises and critical infrastructure. This bill also consists of broad prohibitions against Chinese investors statewide, which has raised concerns over being a targeted approach. The bill mainly prohibits foreigners from owning agricultural land, holding any interest in property within 10 miles of any military installations or critical infrastructure, and limits individuals living in China who are not U.S. citizens or lawful permanent residents from purchasing any real estate within the state. While any properties owned before July 1, 2023, are exempt, they must be registered with the Florida Department of Commerce or the Department of Agriculture by a specified deadline. Any property that violates this bill is subject to forfeiture, with the potential of additional criminal penalties and fines. Furthermore, this bill requires that personal medical information be stored physically within the continental U.S., U.S. territories, or Canada. This requirement applies to all health care providers who use certified electronic health record (EHR) systems.
Arkansas's strict Act 636 states that a "prohibited foreign party" (“PFP”) is prohibited from agricultural land investments even if the PFP plans to use the land for non-farming purposes. Additionally, a “prohibited foreign-party-controlled business" ("PFPCB") is not allowed to acquire any interest in any real property located within the state. Most prominently, Arkansas stands out because of its lack of a grandfather clause. This exclusion may potentially lead to foreign landowners facing forced divestment of the legally acquired property they obtained before these restrictions. Arkansas went further to enforce these restrictions by creating harsh criminal penalties and an Office of Agricultural Intelligence within the state Department of Agriculture to investigate any of these potential violations. Potential violations include felony charges, up to two years in prison, and $15,000 fines.
North Dakota established House Bill 1135, which expanded existing law to include foreign governments and foreign government-controlled entities. Rather than placing limitations on only certain adversary countries, this law applies to all foreign governments and state-controlled enterprises globally. Yet, an included grandfather clause permits any past acquisition of agricultural land by a foreign government to remain valid. Further exemptions include any agricultural land purchased for the use of an industrial site, for inheritance, to enforce liens, or for rail service providers. Additionally, state-controlled enterprises are allowed up to 160 acres for agricultural research or experimental purposes. Any individuals or entities that qualify for these exemptions are required to provide regular reports of their holdings to the North Dakota agricultural commissioner. If a foreign government or entity acquires farmland in violation of this law, it must divest the land within 24 months. Overall, North Dakota HB 1135 establishes a broad prohibition on foreign governments from possessing any agricultural land within the state, making this state among the strictest regarding this issue.
Alabama instituted its Property Protection Act, which targets and prohibits “foreign principals” from acquiring title or a “controlling interest” in agricultural property or any real property within 10 miles of a military installation or critical infrastructure within the state. “Foreign principals” refers to specific countries’ governments, government officials, or political parties, along with their members. Any country or government sanctioned by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) is restricted and counted as a “foreign principal.” Unusually, private individuals from these countries are still allowed to acquire land; this law only applies to governments, officials, and political parties. Furthermore, it was detailed that only foreign principals are held liable and not involved settlement providers such as real estate brokers or attorneys. A grandfather clause was added to protect any foreign entity from having ownership of restricted property before August 1, 2023. However, the law remains unclear on whether the phrase “controlling interest” includes leases, which has allowed some foreign principals to continue leasing land. Furthermore, enforcement and penalties for any violations have not been defined clearly. All in all, Alabama holds one of the narrowest state-level foreign land ownership restrictions, as it only applies to foreign governments, their officials, and political parties from specific countries and does not impact targeted individuals.
Altogether, it is clear that these state laws vary in severity. While most state restrictions against foreign entities and individuals only apply to agricultural land or land near military/critical infrastructures, Texas places a ban on all real estate. Enforcement of these limitations includes civil penalties, criminal charges, and forced divestment. While most states protect previous ownership with a grandfather clause, notable states such as Texas and Arkansas do not guarantee such protection. In 2025, this restrictive trend is collecting legislative momentum. As of August 4, 2025, six states are currently considering 22 bills that could result in increased limitations on foreigners from acquiring property. Yet, the focus is more on targeting foreign adversaries rather than general foreign ownership, due to escalating concerns for national security risks.
Lawmakers in many states have focused foreign land ownership restrictions on the need for national security measures. They tend to highlight concerns about espionage, agricultural control, and proximity to military bases to strengthen their stance. Economic nationalism is also an added point used to amplify opposition to foreign investment. While support for these restrictions tends to be bipartisan, most bills are sponsored and strongly backed by Republicans. However, criticism exists within these legislatures and often underlines constitutional, economic, or anti-discrimination concerns. It is a concern that these laws may be politically motivated and follow xenophobic or anti-immigrant narratives, especially when bans disproportionately target certain nationalities. For example, Florida Senate Bill 26 specifically targets Chinese investors rather than following a more risk-based approach. However, most states follow voter sentiment and respond to constituent pressure and electoral incentives. The legislative process also gains increased traction following heightened geopolitical tensions, particularly when U.S.-designated adversaries such as China and Russia are involved. Therefore, legislative movement on real estate restrictions tends to be supported by popular sentiment and support from state voters, rather than by politicians pushing xenophobic policies.
Public sentiment on these measures is often mixed and nuanced, varying from state to state. Some states, such as Florida and Texas, have seen a majority support for limitations on land purchases by foreign entities, especially near military bases or agricultural land. Yet, support seems to decline when laws are too broad and specifically target individuals based solely on national origin or visa status, rather than their relation to foreign governments. However, evidence reveals that the general public may not be fully aware of the legal implications of these laws, proving a critical gap between legislative action and informed public consensus. Opponents of these measures further express serious concerns about the discriminatory nature and potential economic harm of these laws, arguing that they unconstitutionally target individuals based on national origin and could be detrimental to state economies. Overall, there is mixed sentiment with one side demanding tighter restrictions and the other side protesting these bans as unjust and risky.
For the most part, both legislators and voters agree and support restrictive measures on foreign land ownership. There has been genuine public concern about foreign ownership of U.S. land, particularly land close to sensitive infrastructure. However, some argue that these laws are more legislatively driven, as their political momentum often outpaces public understanding or support. Thus, while these restrictions align with general concerns, their details tend to raise serious constitutional, economic, and human rights questions.
As states increasingly adopt restrictive laws on foreign ownership of real estate, there have been growing concerns over the economic consequences on these states’ economies. Although most of these measures intend to serve as national security protections, they can disrupt investment flows, land values, and local economies.
Texas Senate Bill 17 is one of the broadest laws that bans almost all property acquisitions by foreign entities linked to adversary countries. Although this measure aims to address national security risks, it may also discourage foreign investment in residential, commercial, agricultural, and industrial sectors. Foreign investments are crucial to Texas’s economy, so a lack of such would be detrimental to the state. Although this bill does not require divestment of properties previously acquired, the various criminal penalties and expansive range of this law may lead to foreign capital flight, depressing land values, and complicating real estate development financing. Therefore, Texas must carefully consider its national security priorities, along with the long-term economic costs and legal uncertainties these measures may bring.
Senate Bill 264 in Florida faces some notable consequences from their restrictions as well. A primary concern is the broad and vague language used in this law, with unclear definitions of “interest in real property” and what constitutes “ownership control.” This legal ambiguity contributes to the perception that investing in Florida is a risky and unpredictable environment for foreign investors, which may slow down transactions. Furthermore, an added demand for storing EHR data domestically could raise compliance costs for healthcare providers. While the bill also has a grandfather clause, the requirement to file any previously acquired properties could create additional compliance burdens. Altogether, these provisions may undermine investor confidence and place added strain on both the real estate and healthcare sectors, potentially making Florida a less attractive destination for foreign investment and innovation.
Arkansas law, Act 636, most notably lacks a grandfather clause. This exclusion puts existing foreign owners at risk of forced divestment, which creates legal uncertainty and may lead to reduced foreign investment, legal disputes, and declines in property values. The addition of criminal penalties and the creation of an Office of Agricultural Intelligence also suggest an aggressive enforcement process, which could further discourage legitimate foreign interest and create reputational risks for Arkansas land and its market.
While North Dakota House Bill 1135 broadly applies to all foreign governments and state-controlled enterprises, it includes clear exemptions to allow foreign parties to retain previously acquired land. While this more balanced approach may not completely deter foreign investors, the requirement to regularly report holdings undoubtedly adds to administrative overhead. Furthermore, the risk of enforcement burdens and some hesitation among investors remains. Overall, this bill is most likely to impact foreign government investment in agriculture, with added exemptions to help limit broad and detrimental effects on the real estate or industrial investments in North Dakota.
The Property Protection Act in Alabama is particularly more narrowly focused, targeting only foreign governments and officials from adversary nations and not private individuals. This fixed approach significantly reduces economic risk in comparison to broader laws in states such as Texas and Florida. Additionally, the inclusion of a grandfather clause that protects prior ownership, along with unclear enforcement procedures, has led many to believe that this law will have a limited impact in the short term. Yet, the ambiguity around “controlling interest” and the lack of details on enforcement could also contribute to regulatory confusion. Although this law’s narrow approach may diminish many economic impacts, it still adds legal complexity for foreign investors intending to participate in Alabama real estate transactions.
Although national security may be the primary factor for these laws, they also risk economic consequences. These laws may deter foreign direct investments from countries beyond those that are targeted, due to a perceived regulatory hostility or uncertainty. Creating limitations on the buyer pool for land could reduce land values, especially in rural or border areas. New registration, reporting, and storage requirements may also increase legal costs, providing administrative burdens for businesses and investors. A lack of certainty regarding particular definitions, enforcement, and consistency across the states also discourages legitimate foreign investment. Therefore, while these laws aim to strengthen national security, they also introduce a significant range of economic, legal, and practical challenges that call for a careful review before broader implementation.
On the federal level, the Committee on Foreign Investment in the United States (CFIUS) is the primary interagency body responsible for evaluating foreign investments and real estate transactions for potential national security threats. Its review process is highly individualized and risk-based, focusing more on the specific nature of each transaction rather than on overall nationality or company type.
In comparison, many new state laws take a more expansive and proactive stance. These laws often prohibit ownership of entire categories of property by particular nationalities, governments, or entity types. There is a lack of case-by-case assessment and addressing any individualized security risk, which is the basis of the CFIUS review process. Some states even enacted laws that prohibit all types of property, beyond farmland or land in proximity to military bases/critical infrastructure, from being acquired by any individual belonging to any “countries of concern.” State bans tend to be broader and sometimes even target a person’s nationality, rather than assessing actual security threats on a case-by-case basis like CFIUS.
Therefore, these new state property restrictions have raised serious constitutional and legal questions. For example, Texas Senate Bill 17 is under review for violating the First Amendment and the Equal Protection Clause. Critics argue that this bill unconstitutionally bans particular individuals based on their nationality or political associations, preventing them from conducting business within Texas. Furthermore, Florida Senate Bill 262 is currently facing legal challenges within the U.S. Court of Appeals for the Eleventh Circuit. Arguments state that this bill violates both the Constitution and federal law, specifically the Fourteenth Amendment Equal Protection and Due Process Clauses, the Supremacy Clause, and the Fair Housing Act. Critics often cite the Equal Protection Clause as they protest that these types of laws discriminate based on national origin or citizenship without adequate justification, violating the Fourteenth Amendment. These laws are also criticized for being unconstitutionally vague or overly broad, potentially violating the Due Process Clause by failing to provide clear notice or a legal remedy for the impacted individuals or businesses. Another concern is that these state-level bans may interfere with the federal CFIUS process, potentially leading to legal conflicts with federal law and its regulations of foreign commerce and national security. Altogether, these measures raise numerous constitutional and legal complications, and their eventual outcomes will shape future legislation as well as the balance between state and federal authority and oversight.
Foreign investors should be aware that the legal arguments with the highest chance of success are the ones based on federal preemption and the Equal Protection Clause. If these state laws prove to overlap with CFIUS or discriminate based on nationality or ethnicity, then significant consequences will follow. Yet, the arguments based on Due Process are less likely to succeed as courts are less likely to strike down a law based on vagueness unless it is utterly extreme. It is critical to note the results of Texas SB 17 and Florida SB 264, as they have the potential to influence future legislation on strict, nationality-based prohibitions.
These developments for foreign investments are actively changing the guidelines on property ownership, calling for global investors to be more alert and cautious with their business in the United States. Individuals from foreign countries who intend to invest in the United States should begin by conducting thorough research on the state in which they want to invest. Investors may require additional information to acquire specific properties, such as those near military bases or critical infrastructures, or located in agricultural zones. Even after understanding current state laws, it is necessary to keep up with pending legislation and ongoing legal challenges that could directly impact personal investments. If there are pending lawsuits, foreign entities should have viable exit strategies to avoid facing penalties or enforced divestitures. To ensure easier compliance with regulations and secure legal protection, foreign individuals could participate in U.S.-based investment structures such as LLCs or C-Corporations. Foreign individuals should also determine their immigration or residency status, since lawful permanent residents or visa holders may qualify as exemptions under specific circumstances. An experienced U.S. attorney can help foreign nationals with these complicated foreign investment laws and should be consulted. By taking into consideration these additional and precautionary measures, foreign investors can continue their investments in the United States more securely and favorably.
The U.S. remains open to foreign investment, encouraging many to continue their business in various states. However, these new state regulations, intended to confront foreign adversary countries, have notable consequences that need to be considered. As global investors and state economies are impacted differently, they need to implement ways to adjust to these measures. Foreign investors should evaluate these new measures to ensure their investments comply and to avoid any unwanted penalties or forced divestment. States should ensure their measures are in alignment with their protective intentions and are not discriminatory or detrimental to their financial state.
By Emma Manaoat