May 18, 2023
Foreign ownership of agricultural land has grown over the last decade. As a result, interest by federal and state lawmakers to restrict and monitor foreign ownership has increased significantly, according to the National Agriculture Law Center.
In a recent article, the center answered frequently asked questions related to this issue including state laws, Agricultural Foreign Investment Disclosure Act (AFIDA) and federal proposals. Farm Press, in this three-part series, begins with state laws.
Q: What is a “foreign ownership law”?
In general, a “foreign ownership law” is a law that restricts certain foreign individuals, foreign entities, or foreign governments from acquiring, transferring, holding, or investing in U.S. real estate, specifically including private agricultural land located within the U.S. For purposes of this resource, the following questions and accompanying answers focus on privately held agricultural land.
Q: Are there any states that ban foreign ownership of agricultural land?
There are no states with an absolute prohibition on foreign ownership, however, approximately 21 states specifically forbid or limit nonresident aliens, foreign business entities, or foreign governments from acquiring or owning an interest in private agricultural land within the boundaries of their state. To view states’ laws restricting foreign ownership of private agricultural land, see NALC’s Statutes Regulating Ownership of Agricultural Land here.
Some states, such as Arizona, Hawaii, Idaho and Oregon have laws that prohibit foreign ownership of public real estate and farmland; however, only Oregon specifically restricts foreign individuals from purchasing public lands within the state. See Or. Rev. Stat. Ann. § 273.255 which permits “[a]ny individual who…is a citizen of the United States, or has declared an intention to become a citizen, may apply to purchase state lands.” Mississippi has a law (Miss. Code Ann. § 29-1-75) restricting nonresident aliens and corporations from purchasing or owning public lands within the state, which is set to expire on July 1, 2026.
Q: How many states have foreign ownership laws?
Approximately 21 states have laws that seek to restrict to some degree foreign ownership or investments in private agricultural land within the boundaries of their state.
Q: What states have a foreign ownership law?
Currently, states that have a law prohibiting or restricting foreign ownership and investments in private farmland include: Arkansas, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Dakota, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Utah, Virginia, and Wisconsin.
Other states, such as Georgia, Maryland, and New Jersey have enacted statutes that permit foreign persons to purchase or hold real estate within their state to some degree. However, these states’ laws condition land ownership rights on certain factors. For example, New Jersey’s law expressly provide land ownership rights to “alien friends” who are domiciled and have a residency within the U.S. See N.J. Stat. Ann. § 46:3-18. Maryland provides real property rights to an “alien who is not an enemy.” See Md. Code Ann., Real Prop. § 14-101. Although these laws do not contain language that strictly prohibits foreign ownership of real property within their state, these statutes could be construed as a restriction on foreign investments that are not expressly permitted under these states’ laws.
To view a compilation of each states’ laws restricting foreign ownership of land, specifically farmland, click here.
Q: Do states have similar foreign ownership laws?
Even though approximately twenty-one states have foreign ownership laws, each state has taken its own approach to restricting foreign ownership of farmland within its borders. For example, some states define “agricultural land” and “farming” differently from other states, restrict only certain types of foreign investors, or allow foreign purchasers to acquire a certain acreage amount of farmland.
Q: Why do states’ foreign ownership laws vary?
State laws restricting foreign ownership vary widely and without a generalized or uniform approach likely because many of these states’ laws developed at different “political flashpoints” in our nation’s history. These flashpoints include:
Colonial Period/Signing of the Declaration of Independence
Late 1880’s through the turn of the century, including the enactment of the Territorial Land Act of 1887 (e., westward expansion of the U.S.)
Early 20th century through post-WWII
1970s, which resulted in the enactment of the federal reporting statute known as the Agricultural Foreign Investment Disclosure Act (“AFIDA”) of 1978
2021 – Present
Q: What type of foreign investors are restricted under these state laws?
Because each state has taken its own approach to its foreign ownership law, many states restrict different types of foreign investors, such as foreign individuals or nonresident aliens, foreign businesses and corporations, or foreign governments. Additionally, some states restrict certain parties associated with a restricted foreign investor, such as an agent or trustee. For example, Indiana’s foreign ownership law restricts only foreign business entities from purchasing agricultural land while Oklahoma’s law restricts nonresident individuals and foreign businesses and corporations.
Q: How are states’ foreign ownership laws enforced? What are the penalties for noncompliance?
Some states’ foreign ownership laws contain provisions that assign enforcement authority to the state’s attorney general or “a district attorney of the county where the foreign-owned land is located.” Other states provide private enforcement of its foreign ownership law, meaning a resident of the state in which the farmland is located can file a lawsuit to enforce the restriction against a foreign party. These enforcement provisions generally direct the enforcing parties to file an escheat or forfeiture action against a foreign party suspected of violating a state’s foreign ownership law. If the land escheats or forfeits to the state, meaning the state takes title of the land, the foreign party is penalized by losing their legal interest in the agricultural land. Other states prescribe civil (monetary) penalties for noncompliance of its foreign ownership law.
Q: What states have recently proposed laws?
From 2021 through 2022, the following states have proposed legislation that seeks to restrict certain foreign investments in real property and agricultural land located within the boundaries of their state:
In 2023, the majority of states have proposed, or have plans to propose, at least one piece of legislation that seeks to prohibit or restrict foreign investments and landholdings in land—specifically private farmland—located within their state to some degree. Some states that are considering legislation do not have a law that restricts foreign ownership of land in their state while other states are considering proposals that would amend their current foreign ownership law. These proposed measures are available on your state legislature’s website by searching pending legislation. Generally, you can retrieve these proposals by searching “foreign ownership”. For a complete list of every proposal from each state, contact NALC Staff Attorney Micah Brown at [email protected].
Q: Were any of these proposals enacted into law?
In 2021, Arkansas’ SB 312 (enrolled version) was enacted into law, but the original version of the bill sought to restrict foreign investments in the state’s agricultural land. The original version of the bill included identical language and provisions contained in Missouri’s foreign ownership law, but this version is entirely different from the bill that was enacted. The version of SB 312 that was enacted is a reporting requirement law. Accordingly, this law simply requires certain foreign investors to submit to the Arkansas Department of Agriculture a copy of their federal Agricultural Foreign Investment Disclosure Act (“AFIDA”) report they submit to the U.S. Department of Agriculture (“USDA”). AFIDA, as discussed in detail below, is a federal reporting statute that requires certain foreign investors to disclose their U.S. agricultural landholdings.
In 2022, Indiana was the only state to enact a law restricting certain foreign investments in the state’s agricultural land. To read the statutory language of Indiana’s restriction law, click here. In the same year, both chambers of California’ state legislature unanimously passed a bill (SB 1084) that would restrict foreign governments from owning agricultural land within the state, but Governor Newsom vetoed the bill. To learn more on California’s SB 094, read NALC’s “California Attempt to Restrict Foreign Agricultural Land Investments” article here.
As of May 2023, Arkansas, Florida, Idaho, Montana, Tennessee, Utah, and Virginia have enacted a foreign ownership law during their legislative session. North Dakota (HB 1135) amended its foreign ownership law to extend their restriction to foreign governments and foreign government-controlled entities. A proposal in Tennessee (HB 40) has been passed by the legislature but is not yet fully enacted.
Q: Are there any states considering proposals to prevent foreign participation in farm programs?
Currently, Kentucky is the only state considering such a measure. Kentucky’s HB 500 seeks to restrict certain foreign individuals, business entities, and governments from obtaining an interest in the state’s farmland, but the proposal also seeks to restrict these foreign parties from participating in any program administered by the state’s Department of Agriculture, Agricultural Development Board, and the Kentucky Agricultural Finance Corporation.
Q: Are foreign ownership laws and corporate farming laws the same?
There are similarities in foreign ownership laws and corporate farming laws in that they both restrict certain corporations from acquiring, purchasing, or otherwise obtaining land that is used or usable for agricultural production. However, corporate farming laws restrict the power of foreign or domestic corporations from engaging in farming or agriculture. Proponents of corporate farming laws assert that these laws are aimed at protecting the economic viability of family farms from threats of competition with domestic and foreign corporate-owned or managed farms. Alternatively, proponents of foreign ownership laws generally assert these laws seek to restrict only foreign investments in agricultural land as a way to discourage or prevent foreign competition in agriculture, increased production costs, and possible threats to the agricultural supply chain. Like foreign ownership laws, corporate farming laws vary from state to state, but each establish a general prohibition on corporate farming activities. Currently, eleven states have statutes or constitutional amendments that prohibit or limit corporate farming: Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, South Dakota, Utah, and Wisconsin. For more information on corporate farming laws, visit NALC’s “Corporate Farming & Land Ownership Laws” Reading Room here.
The NALC’s “Statutes Regulating Ownership of Agricultural Land” chart, which is available here, identifies the states that have enacted corporate farming laws and provides the relevant state constitutional and statutory provisions. More resources on corporate farming laws are available on NALC’s website here and here.
The information provided by the National Agriculture Law Center is for educational purposes only. If you have concerns that go beyond the scope of what has been discussed in any of the questions below, the center encourages you to seek legal advice from a licensed attorney in your area. The questions are meant to provide general information only, and do not constitute any legal advice offered by the National Agricultural Law Center, nor act as a substitute for legal advice and counsel, according to the National Agriculture Law Center.
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