Foreign Ownership of U.S. Real Estate: Increased Government Scrutiny, Administrative Obligations, and Penalties

Description

The Department of the Treasury recently implemented a final rule expanding the authority of CFIUS to review real estate transactions involving foreign persons near certain military installations and other sensitive U.S. government facilities. The final rule, which impacts transactions entered into on or after Dec. 9, 2024, is part of a growing trend of federal and state legislation increasing regulatory scrutiny over foreign real estate investments in the U.S.

State legislators who want to limit U.S. real estate investments from "countries of concern" such as China, continue to propose and enact legislation that will increase scrutiny on real estate transactions involving foreign entities even if outside CFIUS' jurisdiction. States are imposing additional administrative obligations including registration, reporting, and affidavit requirements as well as costly civil and criminal penalties for violations.

Increased legislation will complicate transactions for companies and funds that operate in multiple states and could result in inadvertent violations. Given this increased scrutiny and potential for penalties, counsel to parties considering U.S. real estate transactions involving foreign entities should evaluate CFIUS' interest in the transaction and whether state regulations apply.

Listen as our expert panel discusses the implications that CFIUS' expanded authority and increased state legislation will have on foreign real estate transactions in the U.S. Our panel will also describe best practices for helping clients navigate the expanding maze of regulations and maintain compliance.