How DeSantis’ ban on Chinese homeownership has affected buyers and real estate agents 3 months in

Three months after Florida banned many Chinese citizens from owning property, some real estate agents say they are losing business as families across the state are walking away from deals.

Longtime Florida resident Kristen Zhang was thrilled when last year her parents in China decided to buy a new house nearby, built from the ground up, in Orlando. After being separated during the pandemic, they’d finally be able to spend time with their grandkids.

But in May Republican Gov. Ron DeSantis signed a bipartisan law, SB 264, banning certain Chinese nationals from buying property in the state to counter “the malign influence of the Chinese Communist Party in the state of Florida.”

Zhang’s parents had to abandon their plans this summer, finally canceling the contract last month. Fortunately, the project was still at an early-enough stage to secure a refund on their deposit from the developer, but Zhang said the decision was wrenching.

“This is racist,” she said. “After I told my parents about the bill, they feel like America doesn’t welcome us. They don’t want to come here anymore.”

A group of Chinese immigrants, backed by the American Civil Liberties Union and other civil rights groups, have been pushing to invalidate the new law. The Justice Department backed their effort in a filing this summer, saying the measure is unconstitutional, but a judge ruled against the challenge in August, teeing up an appeal. A spokesperson for DeSantis — who is currently running for the 2024 GOP presidential nomination — said in an email that the restrictions are aimed to protect the state’s security interests.

“Florida continues to take these threats to our state sovereignty seriously, and we will continue to take action where it’s necessary to protect Floridians,” he said.

Chinese buyers and Florida real estate agents say the law is ambiguous and has introduced confusion and a growing risk of discrimination. Sellers who knowingly violate the restrictions could face up to one year in prison and $1,000 in fines, and Chinese nationals who buy property in Florida face even higher potential fines and up to five years in prison.

Frank Lin, a veteran Florida real estate agent who works mainly with Chinese buyers in both the United States and overseas, said his business has already been cut in half as he turns down clients and tries to comply with the law.

In addition to limits on new homebuyers, Chinese nationals who already own property in Florida are required by the new law to register with the state’s Commerce Department, “but they don’t even have a form yet or place or website, so that’s confused everyone,” Lin said. Failure to register by 2024 could trigger fines of up to $1,000 a day.

A spokesperson for Florida’s Commerce Department said a hearing is set for Tuesday over a proposed rule on the registration requirement, adding that the agency “is dedicated to implementing SB 264 as outlined in law.”

The measure comes as part of a wave of restrictions on Chinese commercial activity in the U.S.

Lawmakers in both parties at the city, state and federal levels have targeted major tech companies based in China, including TikTok, over concerns about data privacy and national security. The Biden administration has walked a tightrope in its efforts to repair frayed trade ties with the world’s second-largest economy, where Western businesses face mounting risks from vague yet sweeping anti-espionage laws. The White House is especially concerned about keeping technology, like advanced chips, out of the hands of Chinese firms that may be within reach of Beijing officials.

But many in the Asian American community see the Florida law in a different context, arguing that it resembles xenophobic “alien land laws” of the early 20th century that were later deemed unconstitutional. Enacted in the decades following the Chinese Exclusion Act of 1882, the measures — passed in places from California to Texas and Wyoming — were tailored to keep Asian immigrants in particular from owning land. Florida didn’t repeal its own version, from 1926, until 2018, a decade after an earlier attempt failed.

The state’s new restrictions cover both commercial and residential property. They apply to Chinese nationals who aren’t U.S. citizens or permanent residents and already have primary homes in China. There are exceptions for those on nontourist visas or have been granted asylum — but only to buy property on less than two acres situated at least five miles from military sites or infrastructure, like water treatment plants or oil refineries.

The law also restricts buyers from a handful of other “foreign countries of concern,” including Cuba and Venezuela, but doesn’t outright ban them. The penalties for both buyers and sellers from those two countries are lower: 60 days in prison and a $500 fine.

Some Florida real estate agents say the law compels them to vet potential clients in unrealistic and uncomfortable ways.

“If somebody comes in and is Asian-looking, you’re automatically going to start asking questions about where you’re from, which never used to happen,” said Khalid Muneer, founder of Jupiter Properties in Central Florida and president of the Greater Orlando chapter of the Asian American Realtors Association.

“Is this racism? Is this stereotyping? We are very well aware of the fact that we can have issues. We can be accused of discrimination,” Muneer said. Some of his associates with heavily Chinese or Venezuelan clienteles have seen a “major, major drop in business,” he said.

In recent months, Muneer continued, “some of the realtors are afraid to deal with [Chinese nationals] because they are looking at getting prosecuted for ‘not doing their job.’ But then again, are we supposed to be FBI agents investigating people and asking them all kinds of questions?”

Like many American buyers, plenty of Chinese house hunters are interested in a Florida vacation home, drawn by the state’s famed theme parks or by nearby family members. Others are looking for property for children they expect will attend college in the U.S. or are simply seeking a return on real estate investments.

Florida received 23% of all foreign buyers nationwide, a higher share than any other state, according to the National Association of Realtors. And five percent of Florida’s closed sales were to foreign buyers, according to a separate report from Florida Realtors. However, the bulk of Florida’s foreign buyers are Latin American, at 46%, and Canadian, at 24%. Among Chinese buyers, California is the most popular destination, drawing 33% of Chinese buyers to Florida’s 16%.

“When you get a situation like this,” Muneer continued, “where your main cash buyers are not allowed to buy, it does start hurting the market as well as sales agents who will depend on those sales for their living.”

Katherine Frazier, chair of the Real Property Probate and Trust Law Section of the Florida Bar, said her organization is monitoring the state’s rulemaking process and the implementation of the law, and is hoping for more guidance. In the meantime, the group is offering industry professionals as much technical assistance as it can.

Gregory Burge, a University of Oklahoma economist who has studied housing, said ownership bans like Florida’s “don’t make a lot of sense from an economic standpoint.” International investment and property ownership can help prop up the economy in a downturn, he said, as happened in Florida during the housing crash of the late 2000s.

In addition, “Top talent coming from these nations would certainly involve families wanting to retain their citizenship in their home countries, and then facing the barrier of buying in Florida under the new law,” he said. “That could act as a negative factor for slowing economic growth.”

That concern appeared to be a factor for Ken Griffin, the billionaire CEO of Citadel, who successfully lobbied to soften the bill, SB 264, as he prepared to move his hedge fund from Chicago to Miami last year, Bloomberg reported this summer.

After losing their case in August, the group of Chinese immigrants, backed by the American Civil Liberties Union and other civil rights groups, that had sued to block the law filed an appeal, arguing that the measure uses “obvious proxies” to discriminate.

“The law is upending peoples’ lives,” said Patrick Toomey, deputy director of the ACLU National Security Project, “and making it far more challenging for immigrants to prosper economically in the state.”

CORRECTION (Oct. 18, 2023, 2:30 p.m. ET): A previous version of this article mischaracterized the share of foreign buyers buying real estate in Florida. Florida receives 23% of all foreign buyers in the United States, more than any other state; foreign buyers do not make up 23% of all residential real estate purchases in Florida.

This article was originally published on NBCNews.com