State-Level Foreign Land Ownership Bans Survive (For Now) as Circuit Courts Focus on Procedural Issues

While these developments may be unwelcome news to certain foreign-owned companies seeking to acquire land in Florida and Texas, neither court has fully addressed the constitutionality of the laws’ most controversial aspects—i.e., the outright prohibition on acquiring real property. Rather, each court has focused on the plaintiffs’ failure (to date) to show standing to sue. At least with regard to outright prohibitions on property acquisitions, the merits of overarching constitutional and federal preemption questions surrounding the state laws remain undecided.

Florida and Texas Real Estate Foreign Ownership Restrictions

The appellate cases consider Florida Senate Bill 264 (“SB 264”) and Texas Senate Bill 17 (“SB 17”).

Florida’s SB 264 prohibits most persons and entities from “foreign countries of concern”—defined under federal law to include China, Cuba, Iran, North Korea, Russia, Syria, and the Venezuelan regime of Nicolas Maduro—from owning, having a controlling interest in, or otherwise acquiring an interest in agricultural land or real property within ten miles of any military installation or critical infrastructure in Florida. The Florida law further prohibits PRC-owned businesses and individuals domiciled in China who are not U.S. citizens from directly or indirectly owning, having a controlling interest in, or otherwise acquiring any interest in any real property in Florida.¹

In addition to these purchase restrictions, SB 264 requires most persons and entities from “foreign countries of concern” to register any landholdings covered by the statute and obligates all future buyers of real estate in Florida to sign an affidavit attesting that their purchase complies with all of the provisions of SB 264.

Texas SB 17, for its part, prohibits individuals domiciled in China, Iran, North Korea, and Russia who are not U.S. citizens from purchasing or otherwise acquiring any interest in real property in Texas. The prohibition applies to a wide range of real property, including agricultural and commercial/industrial land, as well as oil, gas, and other mineral rights, and more. The Texas law applies not only to fee simple purchases but also to leaseholds of one year or more.

Plaintiffs Have Challenged Both Laws on Federal Preemption and Other Grounds

The plaintiffs challenging the Florida and Texas foreign land ownership restriction laws are doing so on similar grounds.

In the Florida suit, Shen v. Comm’r, Fla. Dep’t of Agric., filed in May 2023, the plaintiffs are four Chinese citizens who are in the United States on visas and reside in Florida as well as a Florida-based real estate brokerage firm that serves Chinese-speaking clients in the United States, China, and Canada. The plaintiffs brought suit in the U.S. District Court for the Northern District of Florida to enjoin enforcement of SB 264, arguing that it is unconstitutional because it violates the Equal Protection Clause and federal Fair Housing Act (the “FHA”), is unconstitutionally vague in violation of due process, and is preempted by the federal government’s foreign investment review regime administered by the Committee on Foreign Investment in the United States (“CFIUS”) pursuant to the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) and related authorities.

In the Texas suit, Wang v. Texas, filed in July 2025, the sole remaining plaintiff is Peng Wang, a seminary student and hopeful future pastor who has resided in Texas for the past 16 years and currently holds an F-1 student visa. Mr. Wang brought suit in the U.S. District Court for the Southern District of Texas to enjoin enforcement of SB 17, arguing (like the plaintiffs in Shen) that the Texas law discriminates on the basis of race and ethnicity in violation of the Equal Protection Clause and the FHA and is federally preempted by the federal government’s foreign investment review regime.² Of these claims, the federal preemption argument had the most traction in the Shen case when considered by the district court and circuit court in 2023 and 2024, and we focus on that argument here.

The plaintiffs in Shen argue that the federal government’s foreign investment review regime preempts the Florida land ownership restrictions, registration requirements, and affidavit requirements because those provisions disrupt the balance between foreign policy and national security considerations set by federal law. Because the federal government regulates foreign investment, including the purchase of real estate by foreign persons in the United States, the plaintiffs argue that SB 264 intrudes on the system of federal regulation created by Congress.

The plaintiff in Wang argues that SB 17 is preempted on similar grounds. The plaintiff argues that the federal government created CFIUS to enforce the President’s foreign policy objectives, balancing the government’s interest with promoting investment in the United States against national security considerations. By contrast, the Wang plaintiff asserts that Texas’s SB 17 conflicts with, and improperly attempts to override, the federal government’s authority by creating more extensive and onerous real estate prohibitions for Chinese persons, disrupting the federal government’s primary role in protecting national security while balancing a national interest in foreign investment. The plaintiff asserts that SB 17 acts as “state-level foreign policy,” which is in direct conflict with the federal government’s exclusive authority to oversee foreign policy and national security. Moreover, the Wang plaintiff argues that the field of nonimmigrant alien land ownership is entirely regulated by Congress and any state-level law attempting to regulate the area is per se preempted.

Eleventh Circuit Holds That Plaintiffs Lack Standing to Challenge the Purchase Restriction, and Affirms Merits Rejection of Challenges to the Registration and Affidavit Requirements

On November 4, a three-judge panel of the Eleventh Circuit issued a ruling in Shen that upheld the district court’s denial of the plaintiffs’ preliminary injunction motion, permitting the continued enforcement of SB 267 while the lower court considers the merits of the plaintiffs’ claims. The circuit court found that the plaintiffs likely did not have standing to challenge SB 264’s purchase restriction. The panel majority concluded that the individual plaintiffs had not shown that they “intend to engage in conduct that the purchase restriction arguably proscribe[d],” as they were either domiciled in Florida, did not intend to imminently acquire specific property in Florida, or both. The court ruled that the corporate plaintiff failed to demonstrate an injury in fact despite the real estate brokerage firm’s assertions that it would lose an estimated 25% of its business due to the law. The court reasoned that the brokerage did not establish that its clients generally were domiciled in China and did not establish that a particular client domiciled in China had an intention to acquire a property interest in Florida after the law’s effective date.

The court did find, however, that at least one plaintiff had standing to challenge the registration and affidavit requirements. The appellate court nonetheless found no abuse of discretion in the lower court’s denial of the plaintiffs’ preliminary injunction motion. In a comprehensive review of the merits of the plaintiffs’ claims as to the registration and affidavit requirements only (not the purchase restriction), the circuit court concluded that the plaintiffs were not substantially likely to succeed on any of their claims, including those related to federal preemption arguments.

Ultimately, the court also concluded that SB 264 likely did not violate the Equal Protection Clause, the FHA, or due process.³ As to the federal preemption arguments, in particular, the majority found that rather than interfering with the federal government’s foreign investment review regime as administered by CFIUS, the registration and affidavit requirements complement these procedures because “the information they require property purchasers and owners to report would assist the federal government’s … review.” The majority further found that singling out the countries covered by SB 264 does not infringe on the federal government’s foreign affairs power because it is inherently tied to the “foreign countries of concern” designation that is made by the federal government.

Interestingly, the majority ruling did note that unlike “affirmative restrictions [on property ownership] . . . the registration and affidavit requirements do not prohibit or otherwise restrict anyone from completing transactions that the federal foreign investment review regime would otherwise allow.” The appellate court’s comment may suggest that a plaintiff with standing may have more success in challenging the purchase restriction on the merits. This may be further supported by the vigorous dissenting opinion in Shen, which wrote separately to address what it called “the majority’s dubious equal protection and preemption analyses,” arguing that the plaintiffs would be likely to succeed on the merits of both claims. As to the federal preemption claims, in particular, the dissent viewed SB 264 as a blunt and inflexible tool compared to the more nuanced, balanced approach seen in the CFIUS process and that enforcement of SB 264 was contrary to long-standing principles of federalism.

Oral Arguments in the Fifth Circuit Suggest Forthcoming Dismissal for Lack of Standing in Challenge to Texas Statute

The same day as the Eleventh Circuit issued its decision, a three-judge panel of the Fifth Circuit heard oral arguments in Wang, on appeal from the U.S. District Court for the Southern District of Texas, which had dismissed the plaintiff’s case for lack of standing.

Although the briefing and prepared remarks focused on a range of issues related to SB 17, the appellate judges’ questions were more narrowly focused on questions related to standing. The Fifth Circuit judges spent nearly half of the 28-minute hearing engaged in a lengthy exchange with the plaintiff’s counsel on Mr. Wang’s place of domicile as applicable to the Texas law. The court also questioned counsel as to why the plaintiff’s case was not moot given the government’s representations, on brief, that the Texas Office of the Attorney General would not enforce SB 17 against this particular plaintiff.

The court’s questions suggest they may be inclined to agree with the Attorney General’s view that the plaintiff is not covered by SB 17 because he is domiciled in the United States, given his stated intent to permanently reside within the United States, irrespective of his temporary immigration status. Given that SB 17 only applies to individuals domiciled in certain foreign countries, including China, the Texas law would not apply to the plaintiff if he is domiciled in the United States.

Oral arguments also suggested the panel was open to the government’s arguments that the plaintiff faced no threat of imminent enforcement action, because the Attorney General has stated that he will not enforce the law against the plaintiff in light of the government’s position that he is domiciled in Texas. In order to bring a pre-enforcement lawsuit, such as this one, a plaintiff must generally face a credible threat of prosecution. It appeared from oral argument that the judges view the Attorney General’s commitment, in a legal brief, not to enforce the law against this specific plaintiff as undercutting the viability of a pre-enforcement challenge.

Although there is no specific deadline for the panel to rule, we expect the Fifth Circuit to issue a decision in Wang in the next few months. Based on the questioning at oral argument, it seems likely that the circuit court will uphold the lower district court’s dismissal of the action for lack of standing, similar to the decision in the Eleventh Circuit.

***

The actions by the Eleventh and Fifth Circuits last month underscore that any parties seeking to challenge state restrictions on foreign land ownership should pay close attention to threshold issues such as standing and the ripeness of a pre-enforcement challenge. And at least with regard to outright prohibitions on foreign landownership, the merits of federal preemption challenges are likely to remain open questions for the time being.

In terms of other litigation to watch, there is another appeal pending in the Fifth Circuit related to a district court’s dismissal of a claim that another Texas law, the Lone Star Infrastructure Protection Act, is preempted by CFIUS and FIRRMA. And separately, the Eighth Circuit is considering yet another pending appeal, related to a district court’s finding that the CFIUS regime likely preempts an Arkansas law that prohibits certain foreign parties (including citizens, residents, and entities from, inter alia, China) from owning agricultural lands and interests in any digital asset mining business in the state. Parties subject to the state laws at issue in these cases, or elsewhere, should monitor these developments in considering the legality and practical impacts of such laws.

* Elizabeth Ilyina-Orak is a law clerk in our Washington office.

¹ An exception permits natural persons with a valid non-tourist visa to purchase one residential property of less than two acres, so long as it is not within five miles of a military installation.

² Specifically, the Shen and Wang plaintiffs contend that these state laws violate the Equal Protection Clause because they facially classify on the basis of national origin and alienage, or, alternatively, even if they are facially neutral, they were enacted with the intent to discriminate on the basis of national origin, alienage, race, and ethnicity. They further argue that SB 264 and SB 17 violate the FHA, which bans discriminatory housing practices and invalidates state laws enabling them, on the grounds that the laws’ restrictions and requirements facially and intentionally discriminate based on national origin and have a disparate impact on minority groups. The Shen plaintiffs also assert that SB 264 violates the due process because its provisions are unconstitutionally vague and therefore fail to provide constitutionally sufficient notice.

³ With respect to the Equal Protection Clause and Fair Housing Act challenges, the court found that the domicile requirement is facially neutral because it does not reference any national origin, rejecting the plaintiffs’ argument that reference to Chinese domicile acts as proxy for Chinese national origin. The court also found that the affidavit requirement applies to both U.S. citizens and non‑citizens, so it does not discriminate based on national origin. Although it is undisputed that both the affidavit and registration requirements discriminate on the basis of alienage, the court held that the rationale for doing so is not “arbitrary, capricious, or unreasonable,” and is likely properly grounded in national‑security concerns. Further, the plaintiffs could not establish the necessary discriminatory impact, nor could they demonstrate that the law was enacted with discriminatory intent. Finally, in addressing the due process claim, the court held that the statutory definitions of the allegedly vague terms was adequately clear and provided sufficient notice of prohibited conduct, foreclosing the claim.