Recently, the Florida Legislature approved Senate Bill 264 (SB 264), and on 8 May 2023, Governor Ron DeSantis signed it into law. This law prohibits individuals and entities from various foreign countries from directly or indirectly owning various categories of real estate.  

Starting 1 July 2023, the new ownership restrictions and reporting requirements will apply to “foreign principals,” as defined by statute, which includes several people and corporate entities “from foreign countries of concern,” including China, Russia, Iran, North Korea, Cuba, Venezuela and Syria. The law also places a particular emphasis on various Chinese parties, with tighter regulations and stricter penalties.  

Before we go into details and discuss the key points of the law, let us have a quick overview of the data on real estate sales to foreign buyers in Florida. 

Foreign buyers in Florida  

Florida Realtor’s 2022 Profile of International Residential Real Estate Activity report states that non-commercial residential purchases increased 5 per cent between August 2021 and July 2022 compared to the previous 12 months. The dollar volume increased due to higher sales and greater prices, reaching $15.3 billion, or 20 per cent more than $12.3 billion in 2021. Meanwhile, foreign buyers purchased 23,700 homes in Florida, accounting for 5 per cent of existing home sales.   

How does the law affect buyers?  

Foreigners from the listed seven foreign countries of concern mentioned at the beginning of the blog can only buy a single piece of Florida land or a residence of up to two acres, provided it is more than 10 miles away from military facilities or critical infrastructure. Then, they must register the property with the state Department of Agriculture and Consumer Services and the state Department of Economic Opportunity.

Regardless of location, all existing Florida real estate owned by citizens of those countries may keep them. However, starting in January 2024, they must register with the state. Those who do not register will face a $1,000 fine per day.  

Owners of real estate from the designated countries who inherit a condo, townhouse, house or property within 10 miles of military facilities, critical infrastructure or agricultural land will have three years to sell.  

Any owner or real estate agent who sells land or a house close to one of these locations to a foreign national covered by the law may be subject to fines from $500 to $15,000.  

In addition, all foreign buyers of Florida real estate must disclose their identity and source of funds under the new law. Foreign buyers must also pay a 15 per cent documentary stamp tax on the price of the property.  

What are the criminal penalties? 

SB264 imposes the following penalties:  

• It is a first-degree misdemeanour to sell Prohibited Land to a foreign national from China knowingly.  
• It is a second-degree misdemeanour for a foreign national (other than from China) to buy or acquire any Prohibited Land and for a seller to sell it or any interest to a foreign national knowingly.  
• It is a third-degree felony for a foreign national from China to buy or acquire Prohibited Land.  

Relevant laws for money laundering in Florida  

Under the Florida Money Laundering Act, individuals who fail to disclose the source of money obtained through illicit means may face criminal charges. This state law that came into force in 2015 defined money laundering as engaging in a financial transaction while knowing that the property is the proceeds of some illegal activity.  

Florida Statute 896.101 outlines the possible money laundering penalties. The amount of money involved in the transactions and the severity of the charges against the defendant will determine the actual penalty.  

A person found guilty of money laundering faces the possibility of imprisonment and a fine of up to $250,000 or twice the value of the relevant financial transactions, whichever is higher.  

Why work with Bolder Group  

Bolder Group stays current on the latest regulatory regulations that our clients must understand and implement. With locations across the globe, including the US, our team has the knowledge and expertise regarding KYC policies, AML regulations and CDD procedures in various jurisdictions.  

Get in touch with our Bolder team today to learn more about your local KYC policies and our KYC and AML compliance services, or visit our offices in Florida.