Effective as of July 1, 2023 the Commonwealth of Virginia Restricts Foreign Ownership of Agricultural Land

Seyfarth Synopsis: Earlier this year, the General Assembly of the Commonwealth of Virginia passed a bill preventing foreign adversaries from owing agricultural land in the Commonwealth. The Governor signed the bill into law on April 12, 2023 to be effective as of July 1, 2023. The new law prohibits China, Cuba, Iran, North Korea, Russia, and Venezuelan politician Nicolás Maduro from owing agricultural land in the Commonwealth. Virginia joins 15 other states that have enacted laws in the last 18 months restricting foreign investment in real estate.

In Governor Youngkin’s State of the Commonwealth address in January 2023, the Governor asked the General Assembly to send him a bill that would “prohibit dangerous foreign entities tied to the CCP [the Chinese Communist Party] from purchasing Virginia Farmland.” The law resulting from this request is a new chapter of the Code of Virginia entitled “Foreign Entities and Property Ownership.” Va. Code § 55.1—507, et. seq. 

Effective as of July 1, 2023, the new chapter prevents foreign adversaries from acquiring any interest in agricultural land in the Commonwealth. For the purposes of the new law, a “foreign adversary” means any foreign government or any non-government person determined by the U.S. Secretary of Commerce to have engaged in a long-term pattern of serious instances of conduct significantly adverse to the national security of the United States and the safety of U.S. persons. As of the date of this update, the U.S. Secretary of Commerce has designated five nations and one individual as “foreign adversaries” – China, Cuba, Iran, North Korea, Russia, and Venezuelan politician Nicolás Maduro. In addition, “agricultural land” means any real estate in the Commonwealth currently used for an agricultural operation, as defined in the new law, or that is zoned in a manner that would permit the use of the real estate for an agricultural operation.

Any purported acquisition of an interest in agricultural land by a foreign adversary shall be void and title to such interest will be deemed to have vested in the name of the Commonwealth as of the date of such purported acquisition without the payment of consideration of any kind by the Commonwealth. Any lien that attached to such interest during the foreign adversary’s purported acquisition may remain, but is not subject to foreclosure during the period of the Commonwealth’s ownership.

The new law bars foreign adversaries from seeking restitution of the purchase price paid by a foreign adversary for any such agricultural land and from making any other claim for payment related to their loss of title to the land. Notwithstanding the prohibition of ownership of agricultural land by a foreign adversary, if the foreign adversary acquires title to agricultural land and subsequently sells or otherwise transfers such interest to a person or entity that is not a foreign adversary, title shall vest in such non-foreign adversary purchaser and shall be considered valid.

The new law also requires the Commonwealth’s Department of Agriculture and Consumer Services to publish an annual report on the foreign ownership of agricultural land in the Commonwealth by July 1st of each Year. The report must set forth the total amount of agricultural land in the Commonwealth that is under foreign ownership and the purpose for which such foreign-owned agricultural land is being used, among other matters. Note that this report does not address only foreign adversaries, but discloses all foreign ownership of agricultural land. The first such report was published as of July 1, 2023 and discloses that as of December 31, 2021, there were 254,494 acres of agricultural land in the Commonwealth held by foreign owners, representing approximately 1.2% of all privately-held agricultural land in the Commonwealth.