This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
The 2026 Florida real estate M&A story plays out the same way on almost every deal that involves a target holding Florida real property. A private-equity sponsor with a Miami office signs an LOI to buy a Florida operating company — a hotel platform, a self-storage roll-up, an industrial-services business, a healthcare group with owned clinical real estate. Diligence is running smoothly until someone in the sponsor’s Miami office asks whether any of the sponsor’s LPs are foreign principals under Chapter 692. The transaction team looks at each other. Nobody has scoped the § 692.213 analysis. The closing checklist has a title commitment, a survey, an environmental report, and a couple of assumption endorsements — but no buyer affidavit, no controlling-interest analysis, and no seller disclosure schedule addressing the foreign-principal question. Closing gets pushed. The deal restructures. The lender adds a condition precedent. None of it is a surprise on any Florida real estate M&A that started in 2024 or later — but plenty of counsel are still surprised by it.
Florida SB 264, enacted in 2023 and effective July 1, 2023, added Sections 692.201 through 692.205 and § 692.213 to the Florida Statutes. The framework restricts direct or indirect ownership of Florida real estate by “foreign principals” from a defined list of countries of concern and layers criminal penalties, civil forfeiture, and closing-side compliance mechanics on top of every real estate transfer. Two and a half years in, the statute is no longer new law. But it remains one of the most under-scoped items on Florida M&A checklists, and the operational mechanics — especially the buyer affidavit at closing and the controlling-interest test — still trip sophisticated deal teams.
What Chapter 692 actually restricts
The statute defines a “foreign principal” to include the governments of China, Russia, Iran, North Korea, Cuba, Venezuela (specifically the Maduro regime), and Syria; political parties in those countries; entities organized under the laws of or having a principal place of business in those countries; entities in which one or more of the foregoing hold a controlling interest; and individuals who are domiciled in those countries and are not U.S. citizens or lawful permanent residents. The definitional net is broad, and the “controlling interest” language is the piece that reaches through corporate structures.
The restrictions come in three tiers. First, § 692.202 broadly restricts foreign principals from acquiring any interest in agricultural land in Florida — the tightest of the three categories. Second, § 692.203 restricts foreign principals from acquiring real property within ten miles of a military installation or critical infrastructure facility (broadly defined to include airports, seaports, power plants, water treatment facilities, and telecommunications hubs). Third, § 692.204 imposes a particular near-total prohibition on the People’s Republic of China — PRC principals are restricted from acquiring any real property in Florida, not just the two narrower categories, subject to a narrow personal-residence exception for those with non-tourist U.S. visas.
The prohibitions apply to direct ownership and to indirect ownership. Indirect ownership is defined by reference to a controlling-interest test: a foreign principal holds an indirect interest if it owns, directly or beneficially, twenty-five percent or more of an entity that owns the property, or if it has the power to direct the management of that entity. That twenty-five-percent threshold is where every fund-of-funds sponsor, every parallel-vehicle structure, and every family office with international LPs has to run a look-through analysis before signing an LOI on Florida real estate.
The buyer affidavit at closing is now standard
Section 692.203(5) requires that any purchaser of real property covered by the ten-mile-from-military-or-critical-infrastructure restriction execute an affidavit at closing certifying that the purchaser is not a foreign principal and that no foreign principal holds an interest in the purchaser. The affidavit is recorded with the deed and becomes part of the chain of title. A knowingly false affidavit is a third-degree felony under § 692.203(6). Standard practice among Florida title companies is now to require the affidavit on every commercial real estate closing regardless of proximity to a covered facility, because the risk of getting the ten-mile analysis wrong outweighs the friction of running the affidavit.
The affidavit language matters more than most closing teams recognize. A generic “the buyer is not a foreign principal” affidavit is often insufficient because it does not walk through the indirect-ownership tests. A properly drafted affidavit recites the buyer’s ownership structure at least down to the twenty-five-percent-controlling-interest level, identifies each holder above that threshold, and confirms domicile or place of organization for each. On a private-equity structure with a Cayman feeder, a Delaware master fund, and forty-plus LPs, that recital requires a real look-through from the fund administrator. The recital is the compliance document; the closing certification is the enforcement anchor.
The grandfather clause and how it survives an M&A transfer
Section 692.204 and its companion sections grandfather ownership interests acquired before July 1, 2023. A foreign principal who owned Florida real property before that date is not required to divest, but the ownership must be registered with the Florida Department of Commerce (formerly the Department of Economic Opportunity) under the mechanics in § 692.204(3). The registration requirement is easy to miss and the failure-to-register penalties are meaningful — up to $1,000 per day.
The M&A question is whether the grandfather clause survives a change of control at the entity level. The statute is not perfectly clear on this point, and Florida deal counsel are running two readings. The narrower reading is that any transfer of a controlling interest in a pre-July 1, 2023 owner entity is a new acquisition of an indirect interest by the transferee, which loses the grandfather protection. The broader reading is that the grandfather protects the property itself so long as the pre-2023 ownership chain remains intact somewhere in the structure. Until the Department of Commerce or an appellate court resolves the point, the conservative course on any M&A transaction that involves a grandfathered structure is to assume the narrower reading and either restructure the transfer to preserve the grandfather or accept that the acquired entity may need to divest post-closing.
The M&A implications when the target owns Florida real property
When a Florida M&A target owns real property covered by Chapter 692, five items need to hit the diligence workstream at LOI.
First, an ownership look-through on the buyer’s side down to the twenty-five-percent controlling-interest level, and a determination of whether any resulting holder is a foreign principal. This is the piece that determines whether the deal can close at all under the current buyer structure. If a covered principal holds twenty-five percent or more of the ultimate buyer, the deal has to either restructure the buyer’s cap table below the threshold, exclude the covered principal from the deal, or exclude the covered property from the deal.
Second, a categorization of each parcel the target owns: agricultural, within ten miles of a covered facility, PRC-restricted, or unrestricted. The categorization determines which restriction applies and which affidavit language is required. Florida has no central database that maps parcels against military-and-critical-infrastructure buffer zones, so counsel typically layers the target’s parcel list against publicly available maps of covered facilities plus the ten-mile buffer.
Third, a seller disclosure schedule addressing the seller’s own foreign-principal status pre-closing (relevant for reps and warranties and for confirming that the seller’s pre-transaction ownership was not itself unlawful), and the seller’s compliance with the registration requirements under § 692.204(3) for any grandfathered ownership.
Fourth, an affidavit workflow with the title company that identifies which affidavit template applies to each parcel, who signs on behalf of the buyer, and how the recital of ownership is populated. This is not a fill-in-the-blank exercise. The affidavit represents the buyer’s ownership structure to the state under criminal penalty; it has to be right.
Fifth, a post-closing compliance covenant that requires the buyer to notify the seller and update the affidavit if the buyer’s ownership structure changes such that a foreign principal acquires a twenty-five-percent interest post-closing. The statute reaches ongoing indirect ownership, not just acquisition-date ownership, and the deal documents need a mechanism for continuing compliance.
The criminal-penalty structure that changes the drafting calculus
Chapter 692 backs the ownership restrictions with real criminal penalties. Knowingly acquiring restricted property is a second-degree misdemeanor under § 692.203(6) for the ten-mile category and a third-degree felony under § 692.204(6) for the PRC category. Selling to a restricted principal with knowledge of the restricted status is a third-degree felony. A knowingly false affidavit is a third-degree felony. Attorney’s fees and civil forfeiture of the property are additional remedies under § 692.205.
The criminal-penalty overlay changes the drafting calculus in a way most Florida M&A counsel are still absorbing. Standard M&A reps and warranties allocate civil risk; they do not resolve criminal exposure. A seller who accepts a foreign-principal rep from a buyer that turns out to be false may still face a criminal-knowledge inquiry, and the seller’s due-diligence file (or absence of one) becomes the record on which that inquiry runs. The right practice is not to rely on the buyer’s rep alone but to independently review the buyer’s structure chart and require the affidavit before closing.
Where this fits in the Florida deal architecture
Chapter 692 has moved fast from “new statute nobody has focused on” to “standard-item closing checklist” on Florida commercial real estate M&A. The transactions that still get tripped are the ones where the target is an operating company that happens to own real property, not a real estate entity, and the deal team scopes the transaction as a corporate M&A deal rather than a real estate deal. Every operating-company transaction that touches Florida real estate is now a real estate deal for Chapter 692 purposes. For the broader Florida M&A framework that surrounds this workstream, see the treatment at montague.law/business-law/m-a-mergers-and-acquisitions and the deal-term primer at seller-friendly-vs-buyer-friendly deal terms.
The current statutory text is available at the Florida Senate’s official statutes portal at . The Department of Commerce rulemaking history and any current guidance documents are worth reviewing alongside the statute, particularly on the twenty-five-percent controlling-interest look-through mechanics.
The pattern that quietly costs Florida deal parties real time and money on real estate M&A is not the statute itself — the statute is straightforward. It is the failure to scope the § 692.213 workstream at LOI, so that by the time the affidavit shows up on the closing agenda, the buyer’s ownership structure is fixed and the restructuring cost is trapped. The workstream belongs at term-sheet stage, not at signing.
If you are structuring a Florida M&A deal that involves a target holding real property and want to walk through the Chapter 692 diligence and affidavit workflow before the LOI is signed, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
— John
