Newly Expanded CFIUS Real Estate Jurisdiction: Implications for Foreign Investors, Businesses, and Developers

Description

On Nov. 7, 2024, the Office of Investment Security of the Department of the Treasury implemented a final rule expanding the authority of CFIUS to review real estate transactions involving foreign persons near certain military installations and other sensitive U.S. government facilities. The final rule, which impacts transactions entered into on or after Dec. 9, 2024, is part of a growing trend of recent state and local legislative changes and ongoing federal bills increasing regulatory scrutiny over foreign real estate investments in the U.S.

Although notifying CFIUS of foreign real estate investments is not mandatory, CFIUS has indicated its commitment to reviewing non-notified transactions as evidenced by the first ever divestment ordered by the President pursuant to the CFIUS real estate regulations. Also, CFIUS retains the discretion to review transactions under its jurisdiction at any time even after the transaction has closed. In some cases, a voluntary filing with CFIUS may be prudent to avoid potential required changes or mitigation measures, including even possible divestiture, after closing.

In light of the heightened scrutiny surrounding foreign ownership of U.S. real estate, counsel representing foreign investors, businesses, and developers must conduct thorough due diligence on potential transactions to ensure compliance with the expanding regulatory framework and guide their clients through an assessment of national security risks.

Listen as our authoritative panel discusses the heightened scrutiny of foreign investment in U.S. real estate and provides guidance and tips for ensuring compliance with the evolving regulatory landscape.