National Security Meets the Deed Book: The Rise of Foreign Adversary Restrictions in State Property Laws
A review of 23 U.S. state laws reveals a diverse array of ownership tracing strategies for prohibiting “foreign adversaries” from owning or holding interests in real estate.
Kenna Camper
By
Larry Sussman
October 9, 2025
A
cross the country, American state legislatures are moving to block Chinese ownership of U.S. land on national security grounds. So far, nineteen states have enacted restrictions, and nearly every other state has a proposal in the works.1 Only five states have yet to introduce legislation specifically restricting Chinese governmental, corporate, or individual ownership of private land.2
With the exception of West Virginia, which targets China exclusively, each law places China in the context of other countries labeled as “foreign adversaries” by reference to federal law, their own local authority, or some combination thereof. Next to West Virginia, many states are explicit about emphasizing China as their focus notwithstanding the other “foreign adversaries” they list. For example, Hawaii’s draft bill on this subject is entitled the “Chinese Communist Party and Other Hostile Foreign Influence Real Estate Transfer Ban Act.”3 State laws adopting the “foreign adversary” or more benign “property protection” terminology also tend to make explicit reference to the Chinese government and its Party structure in their operative provisions. The legislative history preceding these enactments focus on China as well. For example, the Texas version published in its analysis a number of conclusions about China, among them:
“
Beijing will continue to expand its coercive, subversive, and malignant influence activities to weaken the United States.4”
Modern “foreign adversary” property laws
The state of Arkansas distinguished itself as a first mover in this new wave of “foreign adversary” property laws, driven mostly by the circumstances of the Syngenta Seeds case. In 2022, the Arkansas authorities began examining agricultural R&D land located in Craighead County, in the northeast part of the state, following a referral from the US Department of Agriculture (USDA). Owned by a company called Northrup King Seed Co., the 160 acres of land under investigation was mainly used for soybean seed research, breeding, and regulatory trials. Northrup was traced to Syngenta Seeds LLC, which was in turn traced to a Switzerland parent entity called Syngenta AG. That entity was ultimately traced to the China National Chemical Corporation which in turn is ultimately owned by the Chinese government through its State Council. See The Wire China coverage on the Syngenta Seeds phenomenon.
WireScreen’s Pathfinder immediately reveals these connections by entering the company name at each side of the node.
Following the passage of the Arkansas Agricultural Land Ownership Disclosure and Restriction Act in April of 2023, Arkansas executed a forced divestment of the Northrup land to a third party and imposed a monetary fine of $280,000. There are additional cases like this in other states and the market perception or “word on the street” seems to suggest that many Chinese companies already have or are preparing to restructure their real estate holdings in the United States while maintaining some form of continued participation.
This blog explores the diverse ownership tracing strategies used across 23 states, as well as their varying approaches to defining foreign adversaries.
Alien land laws of the past
While Arkansas marks a frontrunner for these modern “foreign adversary” style statutes, state laws on these subjects have a longer history. In 1913, California was a different frontrunner of sorts in the period of state “alien land laws” in which it banned Chinese, as a race, from owning land in that state for decades. California did not repeal its law until 1956 well after it was incrementally weakened by the Supreme Court in Oyama v. California (1948).
Limited agricultural restrictions
Separately and well before the current movement, certain agricultural intensive states formulated policies to restrict foreign ownership of specified categories of agricultural land. For example, Minnesota’s Alien Farm Law of 1977 remains in force today and generally limits ownership (and leaseholds) to U.S. citizens, permanent residents, and entities with less than 20% foreign ownership. A handful of other states also restrict foreign ownership of agricultural land in some shape or form. But it is the modern statutes that are driving all the attention for more active enforcement and anticipatory corporate restructurings.
Foreign ownership of certain types of real estate in the US as reported by the USDA
Anatomy of the modern statutes
Each state’s legislative approach to the modern “foreign adversary” laws is distinct when it comes to their operative provisions. Notwithstanding this seemingly narrow field of law, versions enacted in states such as Florida and Texas go on for many pages and contain exhaustive technical qualifications. In contrast, a just as suitable starting point for illustrating the main elements of these regimes is the “one-pager” version enacted in Montana. A slightly edited version of their statute reads as follows:
A foreign adversary may not: (a) buy, lease, or rent critical infrastructure, land used for agricultural production, or real property or a residence that has a direct line of sight to any part of a military installation; or (b) enter into a contract that results in the foreign adversary's control of agricultural production land or critical infrastructure.
“Foreign adversary” means any foreign government or foreign nongovernment person determined by the Secretary of Commerce to have engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the United States or the security and safety of the people of the United States for the purposes of sections (3)(a) and (3)(b) of Executive Order No. 13873 of May 15, 2019,
Or a corporation, however constituted, domiciled or headquartered in a nation determined to be a foreign adversary, or a corporation over which a foreign adversary has a controlling interest.
A foreign adversary that violates this section shall divest from its interest in critical infrastructure or land used for agricultural production within 1 year, after which time the property may be sold at public auction by the county sheriff of any county where the critical infrastructure or land used for agricultural production is located.
The attorney general or county where the critical infrastructure or land used for agricultural production is located may bring a suit to enforce this section.
Each section of the above serves as a template of state-by-state variations to these principles, including:
All land versus specially designated categories of land: some states cover all real property (e.g., Oklahoma and others) regardless of its agricultural, infrastructure, or military significance while others define specific categories of land.
Leaseholds and other property rights: some states cover not only ownership but also leaseholds (e.g., see Montana above), while other states even seek to capture broad contractual arrangements involving various forms of attenuated property rights.
Retroactive versus prospective enforcement: some states allow for retroactive application (e.g., Georgia, Florida, and Nebraska) while others provide grandfathering rules or are silent on the issue.
Foreign adversary identification: states inconsistently select their own preferred federal precedents (and there are several to choose from), invent their own adversary list, or create some synthesis of the two. Montana selected the definition used by the federal ICTS supply chain rules. This method encapsulates Hong Kong and Macau into the identification of adversaries. See our ICTS supply chain blog for more details.
Ownership tracing strategy: perhaps the most important variation (discussed in the main section of this blog below), are the thresholds, control tests, and other methods for determining indirect ownership. These are bespoke to each state and raise myriad considerations as to the limits on creative structuring in a given state.
Penalties: these vary from escheat to divestment with various levels of additional fines and criminal penalties (including prison sentences).
Enforcement arm(s): some states name the attorney general, others list a slew of different authorities and agencies; some also mandate a registration reporting regime.
Ownership tracing strategies of the states
The table below summarizes the highly varied ownership tracing strategies adopted in each state. Some of the main themes include:
Emphasis on individual tracing: Individuals are most often used for tracing back to the specified foreign adversary nation, typically on a citizenship or resident basis.6
Control standards for business entities: Some measure of control or specified threshold is often used to trace entities, but some adopt a substantial interest as low as 10% (e.g., South Dakota) and others do not specify a threshold (e.g., Texas).
Indirect, de facto, and other arrangements: A number of states adopt indirect ownership rules, various de facto and other contractual control concepts aimed at circumvention tactics, and real estate concepts for agents, trustees, and fiduciaries.
Loopholes: Certain states seem to have intentionally or unintentionally left out categories of offshore holding company structures that would fall outside of the rules. Others have grandfathered certain U.S. companies (see North Dakota) or accepted U.S. companies that could also be subject to abuse.
Identified nations, their agents involved in espionage, their state-owned enterprises, entities directed or controlled by identified nations or their proxies, leaders of controlling political parties or government of identified nations (including subdivisions), and businesses or other entities headquartered or domiciled in identified nations and directly or indirectly held or controlled by them
30% substantial interest threshold for property holdings in addition to entity ownership test
Identified governments, their citizens and residents, entities organized under their laws, any other entity in which a significant interest/substantial control is directly or indirectly held or capable of being exercised by said parties, and EPCs.
Significant interest/substantial control reached at 33% in the aggregate (when acting in concert) and 50% or more (when not).
Covers agents, trustees, or other fiduciaries
Local FCOC list (and any agency of or any other entity of significant control of such FCOC)
Identified governments, their officials, their political party and their members, entities organized or having a principal place of business in the identified countries and their subsidiaries, persons domiciled in the identified countries, and entities a controlling interest of which is held by any combination of said parties.
Special rules for China concerning any land interest naming the CCP.
De minimis exception for public companies using a 5% ownership test and noncontrolling interests in private equity funds managed by US managers.
Identified governments, agents of identified governments meeting certain physical presence tests, and entities domiciled in identified countries or in the US but 25% owned by said entities
Apparent loophole for offshore holding company structures
Citizens of identified countries, business entities wholly owned by, or the majority of stock or other ownership interest is held or controlled by said citizens or business entities that are in turn owned or controlled by citizens of, or directly controlled by identified governments, or entities headquartered in identified countries.
Apparent loophole for offshore holding company structures
Pre-existing law: all foreign governments, businesses, and non-resident aliens
Identified governments, identified individuals, businesses incorporated in identified countries, and businesses in which a majority interest is owned directly or indirectly by identified individuals
Identified governments and persons connected with them
Unique civil law concepts for connected persons: those having power to direct through any means; presumed where said persons directly or indirectly has the right to vote 50% or more of the relevant voting interests entitled to 50% or more of its profits
Identified individuals, governments, and entities domiciled in identified countries, domiciled in the U.S. but are wholly or in the majority owned by said entities
Apparent loophole for offshore holding company structures
Identified governments, corporations domiciled or headquartered in identified nations, and corporations over which said governments have a controlling interest
Makes reference to Executive Order that is the predecessor to the ICTS supply chain rules
Identified governments, business entities with principal places of business in identified countries, business entities owned more than 50% by the identified governments or are subject to de facto control by said parties
Possible stuffing loophole for business entities lawfully operating in the U.S. prior to August 1, 2023
Identified by the US Secretary of State as hostile or a Country of Particular Concern
Aliens, non-US citizens, identified governments and business entities, sovereign wealth funds, or state-backed investment funds in which an identified government adversary holds a controlling interest
Indirect ownership provision, sources of funds compliance and attestations requirements
Identified governments, nonresident aliens, foreign businesses incorporated in identified countries, and other entities the majority interest in which are owned directly or indirectly by identified nonresident aliens
Specifies anti-avoidance through trusts, holding companies, multiple corporations, and other business arrangements
Identified governmental entities, their individuals, their party members, individuals acting as agents of identified countries, companies headquartered in identified countries, companies directly or indirectly held or controlled by identified governments, companies owned by or the majority of stock or other ownership interest of which is held or controlled by identified individuals, companies designated by the Governor, companies owned by or the majority of stock or other ownership interest of which is held said companies
Special designation powers granted to the Governor
1260H companies, entities owned or directly controlled by identified countries, subsidiaries and holding companies of said entities, countries with a commercial or defense industrial base of which said entities are part, subdivisions and agencies of said countries, and any entity in which any of the above maintain at least a 51% ownership interest
Drafting of commercial or defense industrial base countries appears ambiguous.
Businesses in which a controlling interest is owned or operated, in whole or in part, by a prohibited foreign party defined to include the
identified government, its citizens, or entities in which a significant interest or substantial control is held directly or indirectly by said government or citizens
Special tie breaking vote granted to Governor to designate any government, entity or individual by majority vote of a special state committee
Hong Kong and Macau specifically included; Taiwan specifically excluded
Covers agents, trustees, or other fiduciaries
Cirrus Aircraft was blocked by Utah after attempting to purchase land near the Provo airport. Cirrus Aircraft is associated with the Aviation Industry Corporation of China which is in turn ultimately owned by the Chinese government
Federal law pre-emption, CFIUS, and forthcoming federal laws
As of this writing, the Florida, Texas, and Arkansas laws are being challenged in court inShen v. Simpson, Wang v. Paxton, and Jones Eagle LLC v Arkansas Department of Agriculture, respectively. Plaintiffs argue the Fair Housing Act (discrimination based on national origin), the Equal Protection Clause (restrictions not narrowly tailored to serve any compelling government interest), the Supremacy Clause (foreign commerce is preempted by federal authority), and Due Process Clause (depriving individuals of property rights without procedural fairness). The federal government has submitted a statement of interest in favor of the plaintiffs in the Shen case (primarily on Fair Housing Act grounds) and twelve states have submitted an amicus brief in favor of defendants (citing the state’s most basic function of exercising sovereignty over its soil).
Separately, more federal movement on these issues can be expected. CFIUS already has authority in 31 C.F.R. Part 802 to review certain real estate transactions co-located with ports, airports, and listed military installations. However, this authority was found to be deficient in the Fufeng Group case because the land in question was not within the defined proximity of Grand Forks Air Force Base and that base was not included in the guidance at the time of the case. While the USDA was temporarily added to CFIUS on March 9, 2024 and Treasury has since expanded the scope of its review for real estate transactions, CFIUS authority in this area remains fairly narrow due to proximity limitations.
Multiple legislative proposals are in circulation to build out more CFIUS authority over real estate. The current forerunner appears to be the Agricultural Risk Review Act of 2025. This act would make the USDA’s membership permanent, give it authority to refer transactions to CFIUS, and require CFIUS to make a finding on its covered transaction qualification. Yet, even this is a fairly slim piece of legislation and does not enhance indirect ownership rules that already exist for ordinary CFIUS analysis. In this sense, it seems likely that the state laws on this subject will endure, even if they are subject to certain modifications pursuant to the impending judicial reviews noted above.
WireScreen profile on the Fufeng Group and its associated risk attribution flags
1The 19 states are: Alabama, Arkansas, Arizona, Florida, Georgia, Indiana, Louisiana, Mississippi, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, and West Virginia. In addition, four other states (Idaho, Iowa, Minnesota, and Missouri) have pre-existing statutes regarding agricultural land that are not yet updated with modern national security definitions.
2The five states that do not appear to have any form of proposed legislation are Delaware, Nevada, New Mexico, Rhode Island, and Vermont. All other states have some form of proposed legislation in various stages of development from those subject to further deliberation to those shelved or discarded as of this writing.
5For a dramatic example of line of sight concerns see this WSJ article.
6Most states provide exceptions for dual US citizens, US citizens who are resident abroad, and permanent residents of the United States.
7Foreign Countries of Concern defined to be China, Iran, North Korea, and Russia.
8Entities of Particular Concern designated by the State Department.
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Larry is an experienced lawyer who worked for over 20 years as a partner and Head of China at O’Melveny & Myers in Beijing, and as a partner at Hogan Lovells.
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