Florida’s limits on ownership of real property by Chinese citizens are overridden by federal law

From Shen v. Commissionerdecided yesterday by the Eleventh Circuit, in an opinion by Judges Adalberto Jordan, Kevin Newsom and Nancy Abudu:

In our opinion, plaintiffs/appellants have demonstrated a substantial likelihood of success in their claim that Florida Statutes §§ 692.201–692.204 are preempted by federal law, specifically 50 USC § 4565, the Foreign Investment Risk Review Modernization Act of 2018 (“SIGNATURE”), and 31 CFR § 802.701….

The defendants/appellants are preliminarily enjoined to enforce the provisions of the law contested against Ms. Shen and Mr. Xu. The motion for a preliminary injunction is otherwise denied.

Our decision, obviously, does not bind the jury of merit, which will hear the oral argument in April.

In 2023, Florida enacted SB 264 to limit land purchases by any “[f]foreign capital”, defined as “[a]any person domiciled in a foreign country of interest and who is not a citizen or lawful permanent resident of the United States.” The law designates China, among other countries, as “[f]foreign country of interest.” Subject to one narrow exception, the law prohibits a “foreign principal” from “directly or indirectly owning[ing] …any interest in real property within or within 10 miles of any military installation or critical infrastructure facility” within the state.

SB 264 specifically limits “[a]any person domiciled in the People’s Republic of China and who is not a citizen or lawful permanent resident of the United States” from possessing Anyone interest in real property in Florida, regardless of where the property is located. Although the law provides a narrow exception to this rule and an escape clause, any Chinese resident must register their properties to avoid civil penalties. Additionally, those who violate the statute by purchasing land risk being criminally prosecuted for a misdemeanor, while those who sell land could be criminally prosecuted for misdemeanors.

When Governor Ron DeSantis signed this bill into law, his office issued a press release, explaining that the bill was enacted to “counter the malignant influence of the Chinese Communist Party in the state of Florida” and that his endorsement demonstrated that “Florida is taking action to oppose the United States’ greatest geopolitical threat: the Chinese Communist Party,” and that the state was “moving forward [its] commitment to crack down on Communist China.” Then, after the district court denied the plaintiffs/appellants’ initial preliminary injunction, Governor DeSantis tweeted that the Department of Justice “sided with Communist China against Florida law prohibiting CCP-related entities from purchasing land in Florida…. Florida will continue to fight against the CCP’s influence in our state.”…

[The Equal protection Clause] protects both citizens and non-citizens, meaning both are entitled to equal protection by the laws of the states in which they reside. Despite the protections of the Fourteenth Amendment, one a hundred years ago, the Supreme Court held that “each State, in the absence of treaty provisions to the contrary, has the power to deny aliens the right to own land within its borders.” The Court explained that state laws restricting the acquisition and holding of land by noncitizens were reasonably based on congressional naturalization laws and that “the quality and faithfulness of those who own, occupy, and use the lands agricultural inside [a state’s] Borders are matters of the utmost importance and affect the security and power of the state itself.”

Such holdings may have received support in 1923, but it is now 2024 where “state classifications based on alienation are subject to ‘severe judicial scrutiny,'” in the absence of the government function exception, Ambach against Norwick (1979). Furthermore, although the Supreme Court did not completely strike down the rule Terrace cases, the Court itself has questioned the validity of those cases, and its most recent precedent is inconsistent with the Terrace the wealth of cases.

For example, in Graham v. Richardson (1971), the Supreme Court acknowledged that it had “upheld statutes which, in the absence of binding treaties, … deny aliens the right to acquire and own land,” but explained that its subsequent decision in Takahashi v. Fish & Game Commission (1948), had “questioned the continuing validity of the special public interest doctrine in all contexts.” Later, inside AmbachThe Court recognized that its decisions “concerning the permissibility of legal classifications involving aliens have not formed an unshakable line” and noted the Court’s gradual restriction of activities from which States “are free to exclude aliens “.

Not only has the Supreme Court recognized the continued degradation of the system Terrace cases, but so have other courts across the country. See Faruki vs. Rogers (DDC 1972) (noting that the Supreme Court Graham case “made clear” that “state laws limiting the power of aliens to own land…were based on obsolete premises”); blacksmith against South Dakota (DSD 2011) (“subsequent U.S. Supreme Court decisions expressly cast doubt on the [ ] validity of the special public interest doctrine” (internal quotation marks and citation omitted)); Fujii against State (Cal. 1952) (comparing the Terrace cases to subsequent Supreme Court cases)….

Because SB 264 was enacted for the specific purpose of targeting persons of Chinese descent, plaintiffs/appellants have demonstrated a substantial likelihood of success in their claim that Fla. Stat. §§ 692.201–692.204 violate the Equal Protection Clause. The language of the statute, anti-Chinese statements by Florida public officials, and the impact of SB 264 establish that the law prohibits Chinese non-citizens from purchasing land within the state. This ban clearly violates the protections against discrimination under the Fourteenth Amendment.

The district court denied the motion for preliminary injunction based, in large part, on s Terrace cases. However, as set forth above, the Supreme Court itself and courts across the country have recognized that “alien” state restrictions that were once legally upheld are no longer constitutionally valid. Therefore, the equal protection claim made by the Plaintiffs/Appellants should be examined with careful scrutiny. Under such scrutiny, as the district court also recognized, Plaintiffs/Appellants “easily meet their burden of demonstrating a substantial likelihood of success on the merits.” …

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