Feds Eyeing Foreign Land Buys: PROTECT Act Mandates Security Reviews for Real Estate Deals Linked to Certain Countries

The PROTECT Act of 2025 proposes expanding the government's power to scrutinize certain real estate deals involving foreign entities. Specifically, it amends the Defense Production Act of 1950 to bring specific land purchases or leases under the review of the Committee on Foreign Investment in the United States (CFIUS) – the existing body that vets foreign investments for national security risks. This applies when foreign persons acquire or lease U.S. land to set up facilities like factories, especially if entities tied to 'foreign countries of concern' gain control or significant influence.

More Eyes on Who Buys What

So, what kind of deals are we talking about? The bill focuses on transactions where a foreign person buys or leases U.S. real estate, intending to build something like a factory or facility. The trigger for CFIUS review isn't just any foreign buyer, but specifically connections to governments labeled as 'foreign countries of concern' (a term defined in existing law, 42 U.S.C. 19221(a)). If such a deal happens, the parties involved must file a declaration with CFIUS, essentially flagging the transaction for scrutiny under Section 721(b)(1)(C)(v)(IV)(bb) of the Defense Production Act. The goal seems clear: add a layer of national security oversight to foreign-funded development on U.S. soil, particularly when potentially adversarial governments might have a hand in it.

Decoding 'Country of Concern' Connections

The bill casts a wide net regarding what constitutes a connection to a 'foreign country of concern'. It's not just direct government ownership. CFIUS review could be triggered if the foreign entity involved is controlled by, or acting for, such a government. Even an indirect interest matters: if a 'country of concern' government holds a 5% or greater stake (directly or indirectly) in the entity buying the land, that's enough. The look-back provision is also notable – if such a government had the power to appoint board members or officers in another entity that held a 5% stake in the purchasing entity within the last three years, that could also trigger review, according to the amendments to Section 721(a)(4). This broad definition means businesses might need to trace ownership structures quite carefully to see if they fall under these rules.

The Ripple Effect: Security vs. Investment

While the aim is boosting national security by preventing sensitive facilities or land access by potentially adversarial governments, this expansion could have real-world economic effects. The mandatory declaration process adds a bureaucratic step, potentially delaying projects. More significantly, the broad definitions and increased scrutiny might make some foreign investors hesitant, particularly those from or with complex ties to designated 'countries of concern'. This could impact U.S. real estate developers relying on foreign capital for projects, potentially slowing down development or increasing costs. The key challenge will be balancing the intended security benefits against the risk of deterring legitimate investment that supports local economies and jobs.