Law Restricting Chinese People From Owning Property in Florida Doesn’t Pass Smell Test, Court Rules

A federal appeals court Thursday said a Florida law restricting people from China from owning property in the state likely is trumped by federal law and blocked its enforcement against two plaintiffs who have been in the midst of real-estate transactions.

A three-judge panel of the 11th U.S. Circuit Court of Appeals declined to issue a broader injunction, in part pointing to oral arguments that will be held in the case in April.

But the panel said the plaintiffs “have shown a substantial likelihood of success on their claim” that the Florida law is “preempted” by a federal law known as the Foreign Investment Risk Review Modernization Act of 2018. Generally, federal laws take precedence over state laws if there is a conflict.

The federal law includes what is known as the Committee on Foreign Investment in the United States, or CFIUS, which has power to review real-estate transactions involving certain people from other countries.

In a November brief, attorneys for the plaintiffs argued the state law “wrests control of foreign affairs from the federal government and replaces Congress’s carefully crafted approach with the far more draconian regime Florida prefers.”

Four individual plaintiffs and a real-estate broker filed the legal challenge last year after Gov. Ron DeSantis and the Republican-controlled Legislature approved the restrictions while citing a need to curb the influence of the Chinese government and the Chinese Communist Party in Florida.

The law (SB 264) affects people from what Florida calls “foreign countries of concern” — China, Russia, Iran, North Korea, Cuba, Venezuela and Syria. But the legal battle focuses on specific restrictions on people from China who are not U.S. citizens or permanent U.S. residents.

Those restrictions prevent people “domiciled” in China from purchasing property in Florida, with some exceptions. Such people each would be allowed to purchase one residential property up to two acres if the property is not within five miles of a military base and they have non-tourist visas. Three of the plaintiffs are in the United States on visas, while one is seeking asylum. The real-estate broker, Multi-Choice Realty, serves a large number of Chinese clients.

The lawsuit raised a series of arguments, including that the law violates equal-protection rights and the federal Fair Housing Act. But U.S. District Judge Allen Winsor in August denied a request from the plaintiffs for a preliminary injunction, saying they are unlikely to be able to show the law was motivated by discrimination or lacks a “rational basis.”

The plaintiffs took the case to the Atlanta-based appeals court. The panel Thursday approved a partial preliminary injunction that applies to plaintiffs Yifan Shen and Zhimeng Xu. The injunction will remain in place until the underlying issues in the appeal are decided.

“The balance of equities tips in their favor because their recent and pending transactions create the most imminent risk of irreparable harm in the absence of a stay,” said the ruling by Judges Adalberto Jordan, Kevin Newsom and Nancy Abudu.

The plaintiffs’ November brief said “Xu’s purchase of his new home was unable to close as scheduled in September and has been postponed due to SB 264, depriving him of a unique, irreplaceable property.” Also, it said “Shen is unable to close on her contract.”

–Jim Turner, News Service of Florida