by NALC staff

In recent years, a growing number of states have enacted laws restricting foreign ownership of agricultural land and other real property. Indiana is among several states that have adopted such restrictions on certain foreign investments. Most recently, the Indiana state legislature enacted Senate Bill 256 (“SB 256”), which seeks to expand the state’s foreign ownership restriction. The new law, which becomes effective July 1, 2026, establishes a broader prohibition on the acquisition of real property in Indiana by certain individuals and business entities associated with foreign adversaries.

Background

Beginning in 2022, the Indiana state legislature enacted Senate Bill 338 (codified under Ind. Code Ann. §§ 32-22-3-0.5 to 6.5) which prohibits, with some exception, a foreign business entity from acquiring an interest in agricultural land used for crop farming or timber production. In 2024, the Indiana state legislature enacted House Bill 1183 (“HB 1183”) which extended the state’s foreign ownership law to include pastureland as a type of agricultural land subject to the restriction. HB 1183 also restricts certain individuals, business entities, and government entities owned or controlled by a country identified as a “foreign adversary” by the U.S. Secretary of Commerce (“SecCom”) from acquiring or leasing any agricultural land or real property located within a 10-mile radius of a military installation located within the state of Indiana. See 15 C.F.R. § 791.4(a). Currently, SecCom’s foreign adversary list includes China, Cuba, Iran, North Korea, Russia, and Venezuela’s Maduro Regime. Further, the legislation restricts these foreign investors from acquiring or leasing any mineral, water, or riparian rights on Indiana agricultural land.

While these provisions restrict foreign ownership of agricultural land and certain strategically located property, they did not broadly prohibit foreign adversary ownership of all real property located within the state. Nevertheless, SB 256 significantly expands these restrictions and further limits certain foreign investments in Indiana real property, particularly agricultural land.

New Restriction Created Under SB 256

SB 256 creates a new statutory framework by adding Indiana Code Chapter 32-22-3.5, restricting “prohibited persons” from acquiring an interest in any real property located within the state of Indiana. Unlike the existing law that focuses primarily on agricultural land, the new chapter applies broadly to all real property located in Indiana. Prohibited persons are also restricted from acquiring an interest, including a leasehold interest, in mineral, water, and riparian rights on any real property located within the state, not just agricultural land. SB 256 limits prohibited persons from leasing real property within the state unless the lease is for residential purposes and is less than two years.

In general, the definitions contained in any piece of legislation are important because they provide context to how the words or phrases are to be understood throughout the legislative text. This is especially true for legislation that seeks to restrict certain foreign investors from purchasing specific types of real estate within the state. Under SB 256, a “prohibited person” includes:

• Individuals who are citizens of or domiciled in a foreign adversary country
• Businesses organized or headquartered in a foreign adversary country
• Businesses that contain a controlling interest by an individual, business entity, or government of a foreign adversary country.

SB 256 adopts a state-specific definition of “foreign adversary” rather than incorporating the list maintained by the U.S. Secretary of Commerce. While the Indiana definition overlaps with much of the federal list, it is not identical. Under SB 256, a “foreign adversary” includes China, Iran, North Korea, Russia, and any country designated by the Indiana governor as a threat to critical infrastructure.

A person has a “controlling interest” in a business entity when they own at least 51% of the company, serve as an officer, director, or possess inside information about the entity, or have the ability to directly or indirectly affect a business entity’s management or policies. Thus, if an individual or business entity of a foreign adversary country holds a majority ownership interest in a U.S. business, that domestic entity would be considered a “foreign adversary” subject to Indiana’s foreign ownership restriction.

The law also applies to agents, trustees, or fiduciaries acting on behalf of a prohibited person, preventing individuals from circumventing the restriction through intermediary parties. However, the statute exempts from the restriction individuals who are U.S. citizens (including individuals with dual U.S. citizenship), lawful permanent residents of the U.S., and persons granted asylum in the U.S.

Further, SB 256 limits the type of real property that an individual who holds an unexpired nonimmigrant visa may purchase within the state. These individuals may only acquire real property if (i) they hold a visa that is valid for more than one year after the acquisition of real property, (ii) the real property is zoned for single family residential use, (iii) contains no more than half an acre, and (iv) has not been identified as an agent for a foreign adversary. While the restrictions created under SB 256 apply to prohibited persons of foreign adversary countries, this limitation applies to any individual holding a nonimmigrant visa regardless of the country they are citizens of.

Existing Property Owners

SB 256 also addresses individuals or entities that already own Indiana property before the law takes effect. A prohibited person who owns real property in Indiana on July 1, 2026, is not automatically required to divest the property. Instead, the law provides that such individuals may not act as an agent of a foreign adversary with respect to the property. A person is “acting as an agent of a foreign adversary” when they knowingly engage in conduct under the direction or control of a foreign adversary that materially advances the foreign adversary’s strategic, intelligence, or military objectives. However, the law exempts business entities that engage in “ordinary commercial activities” that are not subject to the direction or control of a foreign adversary.

Enforcement and Penalties

Like most states’ foreign ownership laws, Indiana’s law contains enforcement and penalty provisions. Specifically, SB 256 repeals two existing statutory provisions that previously governed enforcement of certain agricultural land investments and consolidates enforcement mechanisms under a new enforcement and penalty framework. Like Indiana’s existing law, SB 256 authorizes the Indiana Attorney General to investigate potential violations of the state’s foreign ownership law.

For a prohibited person that owns an interest in real property located within the state on July 1, 2026, and the attorney general believes that person is acting as an agent for a foreign adversary, the attorney general may initiate a legal action to require divestiture of the property. However, the statute imposes a relatively high evidentiary standard, requiring the attorney general to demonstrate by clear and convincing evidence that a violation of the restriction is occurring or has occurred. For the attorney general to prove clear and convincing evidence, they must convince the court that it is highly and substantially more probable that a violation has occurred than not. If the attorney general satisfies this burden of proof, the court will order the property to be divested, and the property will be sold at a public auction or through a private sale.

If the attorney general believes a prohibition person has violated the state’s foreign ownership law after the effective date, the attorney general is required to investigate the potential violation. If the investigation leads the attorney general to believe a violation has occurred, they are required to bring an action to have the property sold. If the court determines a prohibited person has acquired an interest in Indiana real property in violation of the restriction, they will order the property to be sold privately or through a public auction. If such divestment occurs, the prohibited person does not receive any proceeds from the sale, and they are liable for a civil penalty equal to 10% of the property’s market value.

Other SB 256 Provisions

In addition to the expansion of foreign ownership restrictions on real property, SB 256 includes several provisions that extend beyond investments in Indiana real property and reflect a broader policy objective of limiting foreign adversary influence within the state. First, the legislation imposes new restrictions on state and local government contracting for certain technology-related products and services, including information systems, surveillance technology, and artificial intelligence. Under these provisions, government entities must ensure that contractors and their subcontractors are not “prohibited persons” before contracting with a provider.

Second, SB 256 also imposes new restrictions on foreign students from designated foreign adversary countries who seek to enroll in certain sensitive academic programs, such as engineering, artificial intelligence, and biological sciences. This legislation requires state educational institutions to conduct detailed security reviews and may deny or revoke enrollment where concerns about foreign influence or funding arise.

Third, SB 256 establishes a state-level foreign agent registration framework that is similar to the federal Foreign Agents Registration Act (codified under 22 U.S.C. § 611 et seq.). Individuals and organizations acting on behalf of certain foreign principals and engaging in political activity within Indiana must register with the state and disclose key information regarding their relationships and activities. The law also authorizes the state attorney general and governor to investigate and designate persons or entities as affiliates of foreign terrorist organizations. Individuals and entities that fail to report their activity within the required period are subject to a civil penalty of not more than $500, and if a violation is conducted intentionally, they may face a civil penalty up to $10,000. Persons and entities designated as having an affiliation with a foreign terrorist organization losses access to state funding, contracts, and other public benefits.

Conclusion

Indiana’s SB 256, which becomes effective on July 1, 2026, significantly expands of the state’s foreign ownership restrictions. While earlier legislation focused primarily on agricultural land or property located near military installations, the new law broadly prohibits certain foreign individuals and entities from acquiring any real property located within Indiana. At the same time, the law contains several safeguards, including exceptions for certain visa holders and a heightened evidentiary standard before requiring divestiture of property already owned before the statute’s effective date.

As more states continue to enact or expand similar laws, Indiana’s new statute continues the ongoing trend among state legislatures to regulate foreign ownership of land located within the boundaries of their state.

To read SB 256, click here.

To read NALC articles discussing foreign investments in U.S. agriculture, click here.

To learn more about foreign ownership of U.S. land, click here.

Subscribe to NALC’s bi-weekly newsletter The Feed for recent legal developments affecting agriculture, including foreign ownership of agricultural land here.

For previous issues of The Feed, click here.