U.S. Appeals Court grants partial injunction against foreign land ownership limitations

by | Feb 2, 2024

The U.S. Court of Appeals for the Eleventh Circuit partially granted an injunction against a Florida law restricting land purchases by individuals from “foreign countries of concern,” finding federal law preempts state restrictions and highlighting potential constitutional violations concerning equal protection.

The U.S. Court of Appeals for the Eleventh Circuit partially granted a motion for an injunction, pending appeal, related to a Florida law that places restrictions on land purchases by “foreign principals,” specifically targeting individuals domiciled in countries identified as “foreign countries of concern,” including China.

The court found that the plaintiffs, a group comprising individuals and a real estate firm, have a substantial likelihood of success in their claim that Florida’s statutes are preempted by federal law, specifically the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), indicating that federal regulations concerning foreign investments in real estate supersede state laws.

The court granted the injunction solely for two plaintiffs, Yifan Shen and Zhiming Xu, due to the immediate risk of irreparable harm their pending real estate transactions posed. The ruling effectively prevents the enforcement of Senate Bill 264 against Shen and Xu, while leaving the broader enforcement of the law untouched until a final decision is made.

“In our view, the plaintiffs/appellants have shown a substantial likelihood of success on their claim,” the ruling reads. “In exercising that discretion, we grant the plaintiffs/appellants’ motion for an injunction pending appeal only as to Ms. Yifan Shen and Mr. Zhiming Xu. The balance of equities tips in their favor because their recent and pending transactions create the most imminent risk of irreparable harm in the absence of a stay.”

Separately, Circuit Judge Nancy G. Abudu concurred with the partial grant but further argued that the plaintiffs also showed a substantial likelihood of success on the grounds that SB 264 violates the Equal Protection Clause of the Fourteenth Amendment. Abudu criticized the law for explicitly targeting individuals of Chinese descent, supported by the language of the statute, public statements from Florida officials, and the impact of the law itself.

The judge further contended that the district court’s reliance on “outdated precedents,” which previously allowed states to deny land ownership rights to non-citizens, fails to “withstand current constitutional scrutiny,” particularly against the backdrop of Supreme Court decisions that have evolved towards stringent scrutiny of state laws discriminating based on nationality or alienage.

“Notwithstanding the Fourteenth Amendment’s protections, one hundred years ago, the Supreme Court held that, “each state, in the absence of any treaty provision to the contrary, has power to deny to aliens the right to own land within its borders,” she wrote. “Those holdings may have had support in 1923, but it is now 2024.”

A federal judge initially denied a request in August that sought a preliminary injunction on Senate Bill 264. In issuing the order, U.S. District Judge Allen Winsor asserted that plaintiffs were unable to present a substantive enough argument to show that the law violates the Fourteenth Amendment’s equal protection guarantee. Moreover, Winsor opined that the plaintiff’s secondary argument that the measure violates the Fair Housing Act (FHA) falls apart because the bill’s language makes no mention of “race, color, religion, sex, familial status, or national origin,” rather, imposing regulations based on permanent resident status.

The legislation establishes restrictions on citizens of China, Cuba, Venezuela, Syria, Iran, Russia, and North Korea. Chinese residents in Florida, alongside a real estate brokerage catering predominantly to Chinese clientele, jointly filed a lawsuit (Shen v. Simpson) against the state earlier this year under the assertion that the law would place an unjustified burden of suspicion on anyone with an Asian, Russian, Iranian, Cuban, Venezuelan, or Syrian-sounding name seeking to purchase property.

The challenge further argues that the measure will, in practice, institutionalize and broaden housing discrimination against Asian individuals, thereby violating both the Constitution and the Fair Housing Act. In late June, the United States Department of Justice filed a Statement of Interest in support of the suit.

Attorneys representing the state of Florida filed a memorandum of law in July in opposition to the lawsuit. The document attempted to prove the legislation’s constitutionality on the grounds that the ruling upholds Florida’s “fundamental sovereign prerogative” to regulate the land within its own borders. The attorneys added that the state possesses the broad constitutional authority to regulate the acquisition of its own land and has not acted here based on national origin or race.

State leaders, including Gov. Ron DeSantis and Commissioner of Agriculture Wilton Simpson, previously vowed to “crack down” on countries like China in response to foreign businesses reportedly buying up large tracts of farmland.

Conversely, the United States Department of Justice filed a Statement of Interest last year in support of the broader lawsuit against Senate Bill 264, arguing that provisions within the legislation violate the Fair Housing Act, as well as the Equal Protection Clause within the Constitution.


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