There are no blanket prohibitions on foreign ownership of US real estate, but various US laws impose restrictions and requirements applicable to foreign investors in certain cases, including:
- Foreign Assets Control Rules. The federal government imposes economic sanctions against and prohibits certain deals with various countries, entities, individuals and organizations. The Office of Foreign Assets Control at the US Department of the Treasury (OFAC) administers and enforces these sanctions, and all ‘US Persons’ (eg US citizens, permanent resident aliens, persons and entities within the US, and all US-incorporated entities and their foreign branches) are required to comply with these sanctions.
- CFIUS and FIRRMA. The Committee on Foreign Investment in the US (CFIUS) oversees enforcement of laws that allow certain foreign investment transactions to be blocked where they might impact US national security, and can cause divestiture of completed investments in certain circumstances. Foreign investors or other parties to such transaction may be required to make disclosures under these laws, which include the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). FIRRMA expanded the reach of CFIUS, including by giving it authority over certain transactions involving real estate (including undeveloped land) in close proximity to sensitive national security facilities, or connected to critical infrastructure, critical technologies, or sensitive personal data and expanding the reach to include not only foreign “control” of US businesses but also foreign “non-controlling” investments in US businesses. Broadly, the proposed regulations define covered real estate as real estate that is: a) located within or functioning as part of a "covered port" (either airport or maritime port), b) located within close proximity of military installations and other government facilities, c) located within an extended range of certain military installations or d) any part of certain military installations located within the territorial sea of the United States.
- The Patriot Act. Since September 2001, the federal government has regulated investment in the US through disclosure and other laws designed to identify terrorist organizations and individuals, under a statutory scheme known as the ‘Patriot Act’. Prospective buyers may be required to make certain disclosures under these laws.
- BEA Reporting Requirements. Foreign investment in a US business that results in a foreign person or entity owning 10% or more of the voting securities or equivalent interests in a US business enterprise may be subject to reporting requirements administered by the Bureau of Economic Analysis (BEA) of the US Department of Commerce.
Other US laws can affect ownership by foreigners. Foreign investors should also keep in mind:
- the Foreign Investment in Real Property Tax Act (FIRPTA);
- regulations passed by the Department of Defense (eg International Traffic in Arms Regulations),;
- the Agricultural Foreign Investment Disclosure Act of 1978;
- the Hart–Scott–Rodino Antitrust Improvement Act of 1976 and other antitrust and competition laws;
- export control rules and regulations;
- US antidumping and countervailing duty laws;
- US immigration laws;
- tax laws; and
- state and local laws.
