by NALC staff
The U.S. Court of Appeals for the Eleventh Circuit recently issued a decision in Shen v. Simpson (Case No. 23-12737), a case challenging Florida’s foreign ownership law. This lawsuit originated in May 2023, when a group of Chinese citizens living in Florida filed a lawsuit against the state of Florida alleging that the state’s newly enacted foreign ownership law violates the United States Constitution. The Eleventh Circuit’s decision follows more than two years of litigation, including a federal district court’s denial of a preliminary injunction and the Eleventh Circuit’s grant of an injunction in early 2024 that prevented the state from enforcing its foreign ownership law against two individual Shen plaintiffs. NALC articles discussing Shen and previous court decisions are available here, here, here, here, and here.
In a 2-1 decision, the Eleventh Circuit ruled that the Shen plaintiffs lack standing and are unlikely to succeed on their constitutional and federal preemption claims.
Background
On May 8, 2023, Florida Governor Ron DeSantis signed into law Senate Bill 264 (“SB 264”) (codified under Fla. Stat. Ann. §§ 692.201 to 692.205), restricting certain foreign investments in real property located within the boundaries of the state. Specifically, the law restricts certain land investments from purchasers that are domiciled in China, Cuba, Iran, North Korea, Russia, and Venezuela. Further, the state law restricts, with some exception, entities and individuals “domiciled in” China who are non-U.S. citizens or lawfully permitted to reside in the U.S. from acquiring any interest in real property located within the state. Chinese investors that acquired an interest in real property before SB 264 went into effect on July 1, 2023, are permitted to continue holding that interest, but they are prohibited from acquiring additional real property within the state.
Chinese investors that hold or acquire an interest in Florida real property on or after July 1, 2023, are required to register this interest to the Florida Department of Economic Opportunity (“FDEO”). Foreign principals that hold or acquire an interest in agricultural land are required to report this interest to the Florida Department of Agriculture and Consumer Services (“FDACS”), and landholdings within 10 miles of a military installation or critical infrastructure are to be registered to FDEO. The law also requires all buyers of Florida real property to provide an affidavit signed under penalty of perjury attesting that they are not a prohibited buyer.
Shortly after SB 264 was signed into law, four Chinese citizens, holding nonimmigrant visas and residing in Florida, as well as a Florida-based real estate firm brough a lawsuit challenging the law. Specifically, the plaintiffs claim the state’s law is unconstitutional based on constitutional protections of equal protection and due process, as well as rights granted to them under the Fair Housing Act (“FHA”). Finally, they claimed that it was preempted by federal law.
After filing the lawsuit, the plaintiffs asked the court to issue a preliminary injunction to prevent the state from enforcing the restriction under the foreign ownership law. Before a case goes to trial, some litigants file a motion to a court asking the judge for a preliminary injunction. Essentially, a preliminary injunction, if granted by the judge, restrains a party from beginning or continuing an action. Preliminary injunction may be issued by a judge before or during trial, and these injunctions typically remain in effect until the case is fully resolved. The federal district court denied the plaintiffs’ request for injunctive relief, and the plaintiffs appealed this decision to the Eleventh Circuit, who granted a partial preliminary injunction pending appeal for only two of the individual plaintiffs named in the case.
Oral arguments for the Shen case took place in April 2024, at which time the Eleventh Circuit court heard arguments on the merits of the case. This means the court considers whether the plaintiffs will prevail on the case as a whole. On November 4, 2025, the Eleventh Circuit issued its opinion addressing the merits of the plaintiffs’ constitutional and statutory challenges, concluding that they were unlikely to succeed on the merits.
Eleventh Circuit’s Opinion
The court addressed three preliminary issues—standing, the scope of review, and the provisions actually at issue—before turning to the plaintiffs’ constitutional and statutory claims.
Standing
When bringing a lawsuit, plaintiffs must demonstrate they have standing. “Standing” is the legal right for a particular person to bring a claim in court, and plaintiffs that lack standing will have their case dismissed or remanded to a proper court. In general, plaintiffs establish standing by demonstrating an injury, a direct connection to the defendant, and a decision in the plaintiff’s favor will likely provide an adequate remedy for the injuries.
According to the Eleventh Circuit, the Shen plaintiffs lack standing to challenge SB 264’s restriction on real estate investments. Although the plaintiffs are Chinese citizens, the court found that each is domiciled in Florida, not China, because they have lived in the state for years and intend to stay indefinitely—even though their visas are temporary. Because the restriction under SB 264 applies only to investors domiciled in China, the plaintiffs fall outside the scope of the restriction. As a result, the court dismissed the plaintiffs’ challenge to the restriction on real estate purchases for lack of jurisdiction.
However, the court did determine that one of the plaintiffs, Xinxi Wang, who already owns property in Florida, has standing to challenge the registration requirement under SB 264. The law obligates certain Chinese owners to register existing interests in real estate, and the time and financial burdens associated with compliance are sufficient to constitute an injury in fact.
The Eleventh Circuit also found that Yongxin Liu—another Shen plaintiff—has standing to challenge the affidavit requirement because he intends to purchase additional real property in Florida. Because the affidavit is required in every real estate transaction in Florida, Liu will be required to complete the affidavit as part of the closing process. Thus, the court held Liu has standing because he faces imminent legal exposure under the regulatory burden of completing the affidavit.
Because the court determined the plaintiffs did not have standing to challenge SB 264’s restriction on real estate investments, the court’s ruling was narrowed to the two provisions the plaintiffs demonstrated standing—the registration and affidavit requirements.
Equal Protection Clause
The plaintiffs advance two theories under the Equal Protection Clause: (1) that SB 264 facially discriminates based on national origin and alienage, and (2) that the law was enacted with discriminatory intent under Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252 (1977).
In general, the Equal Protection Clause of the Fourteenth Amendment guarantees that the government must treat a person in the same manner as others in similar situations. While a state can enact laws that discriminate, it must have a legitimate governmental interest for drawing distinctions between individuals under the law. According to the plaintiffs, SB 264 discriminates against them on the basis of their race, ethnicity, color, alienage, and national origin—also known as a “suspect classification”—because it prohibits land purchases on the basis of the plaintiffs’ Chinese alienage.
When a law discriminates against individuals based on a suspect classification, a court generally uses strict scrutiny, which is the highest level of scrutiny, to review the law to determine its constitutionality. For a state law to survive strict scrutiny, the state must prove that the law advances a compelling state interest that is narrowly tailored to achieve that interest. In cases involving non-suspect classifications, court generally apply rational basis review. State laws survive rational basis review when the law is rationally related to a legitimate state purpose.
The Eleventh Circuit rejected the plaintiffs’ argument that the registration and affidavit requirements classify on the basis of national origin. The court points out that the registration requirement applies only to individuals domiciled in China, not individuals or Chinese ancestry or origin, and the affidavit requirement applies universally to all purchasers of Florida real property.
However, the court did agree with the plaintiffs that SB 264’s registration requirement constitutes an alienage classification because it exempts U.S. citizens and lawful permanent residents. However, the court declined to apply strict scrutiny, relying on the U.S. Supreme Court’s decision in Terrace v. Thompson, 263 U.S. 197 (1923), which held that laws which restrict investments in land and land-related reporting requirements may be reviewed under rational basis review. Accordingly, the Eleventh Circuit held that the state’s national security and property-tracking interests are rationally related to SB 264’s registration requirement. The court also held that the affidavit requirement is rationally related to a legitimate state interest and does not trigger a heightened level of scrutiny because it applies to all purchasers regardless of citizenship.
The court also rejected the plaintiffs’ claim that the state legislature enacted SB 264 with discriminatory intent, concluding the plaintiffs did not satisfy the factors derived from Arlington Heights. In Arlington Heights, the U.S. Supreme Court outlined certain factors that courts should consider when evaluating whether a law, while appears neutral on its face, was enacted with discriminatory intent. Relying on these factors, the Eleventh Circuit found that SB 264 was not enacted with discriminatory intent because the plaintiffs lack evidence of disparate impact on Chinese individuals, the state legislature narrowed the bill’s scope during the drafting process, and the plaintiffs did not present evidence demonstrating a less discriminatory alternative.
Due Process Clause
The plaintiffs argue SB 264 violates their right to due process guaranteed under the U.S. Constitution because terms such as “military installation,” “critical infrastructure facility,” and “domicile” do not provide adequate notice of who or what is regulated. The Due Process Clause of the Fourteenth Amendment guarantees due process of law before the government may deprive someone of life, liberty, or property, which usually consists of notice and an opportunity to contest the government’s action. The court again sided with the state, finding that SB 264 does not violate the plaintiffs’ due process rights. According to the Eleventh Circuit, statute defines the restricted zones with sufficient detail, and the meaning of “domicile” has a longstanding definition under Florida state law.
Fair Housing Act
The plaintiffs also assert SB 264 violates FHA, claiming the law permits sellers of real estate to discriminate against Chinese purchasers, creating a “discriminatory housing practice.” Under FHA, someone that has been or believes they will be injured by a discriminatory housing practice can make a claim under FHA. A person engages in an unlawful discriminatory housing practice when they refuse to sell, offer, or negotiate for the sale of residential real estate because of that person’s race, color, or national origin. 42 U.S.C. § 3604(a)-(b). The court also rejected this claim because the plaintiffs lack evidence that the law causes broader discriminatory impacts on protected classes. Without evidence of group-wide effects, the FHA claim fails.
Federal Preemption
Finally, the plaintiffs argued SB 264 is preempted by federal law because the U.S. Constitution designates the federal government to regulate foreign affairs (see U.S. Const., Art. I, Sec. 8, Cl. 3), and Congress has authorized the federal government to manage foreign investments and national security through the Committee on Foreign Investment in the United States (“CFIUS”). CFIUS is an interagency committee that is authorized by the Defense Production Act (50 U.S.C. § 4565) to serve the President in reviewing certain transactions involving foreign investments and acquisitions of American companies and real estate to determine whether a transaction presents a threat to U.S. national security. Disagreeing with the plaintiffs, the Eleventh Circuit finds that SB 264’s registration and affidavit requirements do not conflict with the federal government’s exclusive authority over foreign affairs. According to the court, the effect SB 264 has on foreign affairs is minor or incidental, insufficient to warrant preemption.
Conclusion
The Eleventh Circuit’s decision in Shen upholds the key provisions of Florida’s foreign ownership law and remands the case back to the district court. Because the plaintiffs in this case lack standing to challenge SB 264’s restriction on real estate investments, that provision remains intact. Likewise, the court determined the plaintiffs were unlikely to succeed on the merits of their equal protection, due process, FHA and preemption claims against the registration and affidavit requirements.
Accordingly, the two plaintiffs that have standing could continue to litigate this case, but their challenges are limited only to the registration and affidavit provisions of the law. They may also appeal the Eleventh Circuit’s decision to the U.S. Supreme Court; however, the Supreme Court is limited on the amount of cases they hear each year. An update to this article will be published if the Shen plaintiffs continue to litigate Florida’s foreign ownership law.
To read the Eleventh Circuit’s opinion, click here.
To read Florida’s foreign ownership law, click here.
To read NALC articles discussing foreign investments in U.S. agriculture, click here.
For more NALC resources on foreign ownership, click here