Bulletin: FL2023002

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Bulletin: FL2023002

Bulletin Document
V 11
Date: June 20, 2023
To: All Florida Issuing Offices
RE: LEGISLATIVE UPDATE - 2023 Conveyances to Foreign Entities [Revised 6-27-23; 1-29-24]

Dear Associates:

Florida enacted into law a series of statutes known as “Conveyances to Foreign Entities” under Part III of Chapter 692. These laws together with companion statutes (“Statutes”) are effective on July 1, 2023. This bulletin outlines key points and provides a brief explanation of the new law as it relates to title insurance and title agents.

What it does:

The Statutes generally prohibits a Foreign Principal of a Foreign Country of Concern (“FCC”), from having an interest in:

  • Agricultural Land.
  • Lands located within a 10-mile radius of a military installation or crucial infrastructure facility.
  • As to Foreign Principals from China, ownership of any land.

Key Terms:

  • Agricultural land is defined as:
    • Land designated by the county appraiser’s office under s. 193.461 F.S.
  • Critical infrastructure facility means any of the following, if it employs measures such as fences, barriers, or guard posts that are designed to exclude unauthorized persons:
    • A chemical manufacturing facility.
    • A refinery.
    • An electrical power plant as defined in s. 403.031(20).
    • A water treatment facility or wastewater treatment plant.
    • A liquid natural gas terminal.
    • A telecommunications central switching office.
    • A gas processing plant, including a plant used in the processing, treatment, or fractionation of natural gas.
    • A seaport as listed in s. 311.09.
    • A spaceport territory as defined in s. 331.303(18).
    • An airport as defined in s. 333.01.
  • Foreign Country of Concern (“FCC”) is defined as the following countries:
    • China, Russia, Iran, North Korea, Cuba, Venezuela, Syria.
  • Foreign Principal (“FP”) is defined to include ANY of the following:
    • A political party or member of a political party or any subdivision of a political party in an FCC;
    • Any individual person domiciled in an FCC and is NOT a citizen or lawful permanent resident of the U.S.;
    • Partnership, association, trust, corporation, or organization that is organized under an FCC or has its principal place of business in an FCC; or
    • An individual, partnership, association, trust, corporation, or other organization described above which has a controlling interest in a partnership, association, trust corporation or other organization.
  • Military Installation is defined as:
    • A base, camp, post, station, yard, or center encompassing at least 10 contiguous acres that is under jurisdiction of the Department of Defense or its affiliates.

Are there circumstances where these laws do not apply?

Yes, the Statutes include exemptions for the following circumstances:  

  • Lands owned by Foreign Principals prior to July 1, 2023, although registration with the state by the owner is required and violations for failing to register may result in fines, liens, and forfeiture action by the state.
  • Lands acquired after July 1, 2023, through creditor action/descent/devise, although registration is also required, and the parties must divest themselves of ownership within 3 years.
  • A Foreign Principal may own a “de minimus” indirect interest in such lands.
  • Except for Agricultural Lands to which this exception does NOT apply, a natural person who is a Foreign Principal may own one residential property up to 2 acres so long as all 4 conditions below are satisfied:  
  1. the land is not within 5 radius miles of a military installation;
  2. the person has a current verified U.S. Visa or official documentation confirming the person has been granted asylum in the U.S. (a tourist visa is insufficient);
  3. the visa or documentation authorizes the person to be legally present in Florida; and
  4. the purchase is in the name of the person who holds the visa or official documentation.

What do Title Agents Need to Know?

Of particular importance to Stewart agents is that the Statutes require buyers/lessees in a purchase transaction (“Purchaser”) to provide an affidavit to the closing agent at the time of purchase, stating that the Purchaser is: (a) not a “Foreign Principal or a foreign principal prohibited from purchasing the real property; and (b) in compliance with the Statutes, and (c) for any party attempting to use the residential exception for Chinese parties, that the buyer is authorized under the law to purchase the subject property.  

The Statutes required The Florida Real Estate Commission (“FREC”) to adopt rules to implement and establish the form of the affidavit. The rules and affidavit were adopted by FREC effective January 17, 2024. Attached are the affidavits for individual and entity buyers from FREC pursuant to F.A.C 61J2-10.200:

  1. Affidavit - Part III, Ch. 692 F.S. - Conveyances to Foreign Entities - By Individual Buyer
  2. Affidavit - Part III, Ch. 692 F.S. - Conveyances to Foreign Entities - By Entity Buyer

These affidavits are the statutory form prescribed by FREC and should be obtained from buyers at the time of closing. You should retain the executed affidavit in your closing file.

The Statutes further provide that the failure to obtain or maintain the affidavit does not:

  1. Affect the title or insurability of the title for the real property; or
  2. Subject the closing agent to civil or criminal penalties unless the closing agent has actual knowledge that the transaction will result in a violation.

The Statutes do not provide for specific penalties for a title agent handling a closing of affected property but do provide for criminal and civil liability for those who sell or acquire an interest in real property in violation of the Statutes.

At this time, Stewart is not requiring the inclusion of a general exception relating to the matters raised in the Statutes. However, if a notice, lien, lis pendens, order, or other recorded document indicates applicability of the Statutes, proper requirements need to be made to clear the item.

Given the uncertainty created by the broad provisions of the Statutes, determining whether a property, party or transaction is affected by the act is extremely difficult and given the potential for criminal/civil liability and insurability, the required affidavit should be obtained for all purchase transactions handled by STG agents.

Attached is a copy of the new Statutes for your reference. You should reach out to your local STG underwriter for any questions or additional guidance.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.


References

Bulletins Replaced:
  • None
Related Bulletins:
Underwriting Manual:
Exceptions Manual:
  • None
Forms:
  • None