Agricultural Foreign Investment Disclosure Act: Reporting Requirements, Avoiding Unintentional Violations

Description

Foreign ownership of U.S. real estate has increasingly come under government scrutiny and is the focus of much federal and state legislation. While many practitioners are familiar with CFIUS' requirements, AFIDA, an often-overlooked federal law, has reporting requirements related to the foreign ownership of agricultural land with steep penalties for noncompliance. AFIDA requires a foreign person or entity to disclose the acquisition or transfer of any interest in U.S. agricultural land to the U.S. Secretary of Agriculture and to report when the land subsequently becomes or ceases to be agricultural land or any owner subsequently becomes or ceases to be a foreign person.

The statute has a low threshold of who constitutes a "foreign person" including domestically organized entities if a significant interest or substantial control of such entity--with as little as a 10 percent ownership stake--is directly or indirectly held by foreign persons. The statute also has a broad definition of what constitutes "agricultural land" including land purchased for non-agricultural purposes that may still be subject to AFIDA's reporting requirements.

Therefore, counsel should understand AFIDA's coverage so they can advise their clients who may unknowingly be considered foreign owners of agricultural land under the statute's broad scope. Counsel should also understand AFIDA's interaction with other federal and state laws--especially since over half of U.S. states have some level of restriction on foreign interest in agricultural land.

Listen as our expert panel guides real estate practitioners through AFIDA including who is subject to its reporting requirements, the reporting process, penalties, and best practices for compliance. The panel will also address AFIDA's interaction with other federal and state laws requiring the disclosure of foreign ownership interest in U.S. real estate.