SB1109 - 571R - Senate Fact Sheet

ARIZONA STATE SENATE

Fifty-Seventh Legislature, First Regular Session

FACT SHEET FOR S.B. 1109

designated countries; land ownership; prohibition

Purpose

Prohibits a foreign principal from a designated country from purchasing, owning, leasing, acquiring by grant or devise or having a substantial interest in real property in Arizona, except as specified.

Background

Every deed or conveyance of real property must be signed by the grantor and must be duly acknowledged before an officer is authorized to take acknowledgments (A.R.S. § 33-401).

The U.S. Director of National Intelligence must post an Annual Threat Assessment of the U.S. Intelligence Community (Annual Threat Assessment) that focuses on the most direct and serious threats to the United States during the following year. The 2022, 2023 and 2024 Annual Threat Assessments identified China, Russia, Iran and North Korea as countries that pose a risk to the national security of the United States (U.S. DNI).

A public entity may not enter into or renew a contract with a company to acquire or dispose of services, supplies, information technology, goods or construction unless the contract includes a written certification that the company does not currently, and agrees for the duration of the contract that it will not, use: 1) the forced labor of ethnic Uyghurs in the People's Republic of China; 2) any goods or services produced by the forced labor of ethnic Uyghurs in the People's Republic of China; or 3) any contractors, subcontractors or suppliers that use any goods or services produced by, the forced labor of ethnic Uyghurs in the People's Republic of China (A.R.S. § 35-394).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Prohibits a foreign principal from a designated country from directly or indirectly purchasing, owning, acquiring by grant or devise or having a substantial interest in real property in the State of Arizona.

2. Specifies that a substantial interest is an interest of 30 percent or more.

3. Requires the Attorney General (AG) to commence an action in superior court in the county in which the real property is located if the AG reasonably suspects a violation of the prohibition has occurred.

4. Requires the superior court, if a violation of the prohibition is found, to enter an order stating the court's findings, divesting the person's interest and directing the country board of supervisors (county BOS) to sell the real property.

5. Instructs the county BOS to distribute the remaining proceeds, after paying taxes, interests, penalties, fees and costs in the following order of priority:

a) to any valid lienholder for the value of the lienholder's outstanding lien that is attached to the real property;

b) to the appropriate county treasurer and the AG to reimburse the AG and the appropriate county BOS for expenses incurred in the prosecution of a violation; and

c) to the property owner in an amount equal to the remaining proceeds of the sale, if any.

6. Precludes a violation of the prohibition from being used as the basis for a title insurance claim for a title insurance policy issued for property in Arizona.

7. Allows a foreign principal to purchase, own, lease, acquire by grant or devise or have an interest in land in the State of Arizona if:

a) the parcel is residential real property of two acres or less;

b) the foreign principal is a natural person;

c) the parcel the foreign principal owns or is purchasing or acquiring an interest in is the foreign principal's sole real property interest in the State of Arizona;

d) the parcel is located 50 miles or more from any military installation, critical infrastructure or a known vector route in the State of Arizona;

e) the parcel is located 25 miles or more from an air force range with a total land area between 0.5 and 2.5 million acres; and

f) the foreign principal possesses a current verified U.S. visa that is not limited to tourist-based travel or official documentation that the U.S. government has granted the foreign principal asylum in the United States.

8. Allows a foreign principal to acquire real property or any interest in real property in the State of Arizona if the foreign principal sells, transfers or otherwise divests from the real property within three years after acquisition.

9. Determines that a foreign principal that indirectly or directly owns or holds real property in Arizona acquired on or before the general effective date:

a) may continue to hold or own such real property; and

b) may not purchase or acquire any additional real property in the State of Arizona.

10. Precludes a foreign principal from, directly or indirectly, purchasing or acquiring any additional real property in the State of Arizona.

11. Defines a designated country as a country that is identified by the U.S. Director of National Intelligence as a country that poses a risk to the national security of the United States in each of the three most recent Annual Threat Assessment.

12. Defines a foreign principal as:

a) the government or any official of the government from a designated country;

b) a political party or member of a political party from a designated country;

c) any person who is domiciled in a designated country and who is 31 years old and not a citizen or lawful permanent resident of the United States;

d) any business or other entity that is domiciled in a designated country;

e) any business or other entity in which more than the majority of the business's or entity's ownership belongs to an entity domiciled in a designated country; and

f) any business or other entity in which the majority of the board of directors is controlled by an entity domiciled in a designated country.

13. Defines critical infrastructure and military installation.

14. Contains a statement of legislative findings.

15. Becomes effective on the general effective date.

Prepared by Senate Research

January 30, 2025

KJA/NRG/ci