New Restrictions on Foreign Ownership of Real Estate

On September 17, 2019, the U.S. Department of the Treasury issued proposed regulations to implement the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). The proposed regulations would expands the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to review foreign investments and mitigate any potential national security concerns regarding some technology and real estate

The proposed regulations extend CFIUS jurisdiction to cover the purchase or lease by, or a concession to, a foreign person of real estate in and/or around specific airports, maritime ports and military installations. The locations are listed in an annex to the proposed rules. 

The description of the rights given to the foreign person or entity under the definition of a real estate transaction reads like a law school class on property. The foreign person must be given three or more of the following property rights:

• the right to physically access,
• the right to exclude others from access,
• the right to improve or develop or
• the right to affix permanent structures or objects.  

The specific restricted areas are:

1. Within one mile of any of the 100 identified military installations
2. Within 99 miles of any of 32 identified military installations
3. Any county or other geographic area identified in connection with certain Air Force bases located in Colorado, Montana, Nebraska, North Dakota, and Wyoming;
4. Any part of 23 identified military installations and located within 12 nautical miles of the U.S. coast
5. Located within or will function as part of an airport or maritime port

Looking at my headquarters in New England, Hanscom Air Force Base is listed in Part 1, restricting subjecting any foreign ownership within 1 mile of the base to CFIUS oversight. I have to admit that I don’t know the exact boundaries of the base, just the general area. But just staring at the map, it looks like there is a whole lot of real estate, including a stretch of Interstate 95 that will fall into that review area.

Sources:

• Provisions Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States
• Treasury Releases New Proposed Regulations for Committee on Foreign Investment in the United States
• CFIUS RULES WOULD EXPAND JURISDICTION OVER INVESTMENTS RELATED TO TECHNOLOGY, INFRASTRUCTURE, PERSONAL DATA, AND REAL ESTATE