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Legislation Spotlight:
SB 814 - Easements Affecting Real Property Owned by the Same Owner and Florida’s Foreign Investment in Real Property Act
SB 814 permits an owner to create easements, servitudes and other interests over the owner’s own real property. The legislation was drafted in response to AFP 103 Corp. v. Common Wealth Trust Services, LLC (2023 WL 7013226 (Fla 3d. DCA 2023)), wherein Florida’s Third District Court of Appeal found that easements created in a declaration encumbering properties owned by a single developer were void ab initio. The bill applies retroactively, except to the extent a court has previously invalidated an easement, servitude or other interest prior to the effective date of the law, thus excluding AFP 103 and its progeny from the bill’s application.
On February 20, Senator Clay Yarborough (R, D-4) filed an amendment to SB 814 incorporating modifications to Florida’s Foreign Investment in Real Property Act. During the 2023 legislative session the Florida Legislature passed SB 264 (codified in Chapter 692, Florida Statutes), which among other things, prohibits individuals and entities who meet the definition of “foreign principal” from purchasing certain real property within the State of Florida. Amended SB 814 adds additional definitions to the statute, clarifies the ownership interests that subject a party to relevant portions of Chapter 692 and provides a carve out for foreign principals who intend to develop property for residential use.
In January 2024, the Florida Department of Commerce adopted rules implementing Section 692.203, Florida Statutes (purchase of real property on or around military installations or critical infrastructure facilities by foreign principals prohibited). The rules do not apply to any other subsections of Chapter 692, resulting in uncertainty regarding the implementation of other parts of Chapter 692. Amended SB 814 clarifies terms that were undefined in SB 264, including defining the term “controlling interest” to mean the power to control access to a property or management authority of a property. The draft bill also contemplates the presumption of a controlling interest where an entity or person directly or indirectly owns a 25% or greater interest in a piece of real property. If adopted, the definitions included in amended SB 814 will apply to all subsections of Chapter 692, providing clarity to property owners, lenders and investors who fall within the purview of Subsections 692.202 and 692.204, for which there are not yet adopted rules.
Amended SB 814 also allows ownership of agricultural land by foreign principals, ownership of land within 10 miles of a military installation or critical infrastructure by foreign principals, and ownership of land by foreign principals of the People’s Republic of China where ownership is for the primary purpose of development and sale of residential units as shown on a final plat. Developers who qualify as foreign principals must provide an affidavit to the Department of Commerce attesting that the purchase is primarily for the purpose of development and sale of residential units.
The House version of SB 814, HB 799 filed by Representative Will Robinson, does not currently align with its Senate companion. On February 28, HB 799’s House sponsor filed a strike-all amendment only including the easement language. The House is scheduled to hear HB 799 on the floor on March 1, 2024. However, due to the misalignment between the two bills, in addition Governor DeSantis’ public opposition to the Yarborough amendment, it is unclear at the time of this alert whether the final bill will contain the amendment addressing controlling interest.
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