Ohio House Bill No. 1 (Ohio Property Protection Act)
Subject: Analysis of Proposed Legislation Restricting Foreign Ownership of Property in Ohio
1. Executive Summary:
Ohio House Bill No. 1 (HB1), the “Ohio Property Protection Act,” aims to modify existing Ohio law to prohibit certain governments, businesses, and individuals associated with “foreign adversaries” from acquiring specific types of real property in Ohio, particularly agricultural land, property near military installations, and property near critical infrastructure facilities (“protected property”). The bill also modifies requirements for real property conveyance filings.
2. Key Themes and Provisions:
- Restriction on Acquisition of “Protected Property”: The core of the bill focuses on preventing individuals and entities connected to “foreign adversaries” from purchasing or otherwise acquiring “protected property” in Ohio.
- “no person listed in the registry published by the secretary of state under division (H) of this section, and no agent, trustee, or fiduciary of such a personamendment, none of the following persons shall, directly or indirectly, purchase or otherwise acquire agricultural land in this state protected property:”
- Protected property is defined as:
- Agricultural land.
- Land within a 25-mile radius of military installations.
- Land within a 25-mile radius of critical infrastructure facilities.
- Definition of “Foreign Adversary”: The bill mandates the Secretary of State to compile and regularly update a registry of “foreign adversaries.”
- “The secretary of state shall compile and periodically update at least one time every six months a registry of foreign adversaries and other persons that, based on the best information available to the secretary of state, constitute a threat to the agricultural production, critical infrastructure, security, or military defense of this state, or the United States, if permitted to acquire agricultural land described in division (B)(1) of this section.”
- The registry will be based on federal lists, including those from the Department of Commerce, terrorist exclusion lists, and lists of countries supporting international terrorism. The Secretary of State “shall not include on the registry any person that does not appear on at least one of the federal lists.”
- Enforcement Mechanisms:
- County auditors are tasked with ensuring compliance during property conveyance. They are required to refer information to the county sheriff, who will then investigate and refer violations to the county prosecutor.
- “If the secretary of state a county auditor finds or has reason to believe that a person listed on the registry published under division (G) of this section, or an agent, trustee, or fiduciary thereof, subject to division (B) of this section has acquired, or holds title to, or interest in, agricultural land protected property in this state in violation of this section, the secretary of state auditor shall report the violation to the attorney generalnotify the county sheriff”
- The county prosecutor can initiate legal action in the court of common pleas to address violations. If the court finds a violation, the property will escheat to the state and be sold.
- The proceeds from the sale of escheated property will be distributed to cover court costs, bona fide lien holders, and to reimburse the person whose land escheated (up to the original purchase price), with any remaining funds going to the general fund of the county.
- Exceptions: The restrictions do not apply to:
- Property acquired by devise or descent (inheritance), but the recipient must divest themselves of the property within two years.
- Property acquired through debt collection, foreclosure, or enforcement of liens, but the property must be sold or disposed of within two years.
- Protected property directly or indirectly acquired by agent, fiduciary, or trustee of a person described in divisions (B)(1) to (5) of this section acting in the agent’s, fiduciary’s, or trustee’s personal capacity, if specific conditions are met.
- Protected property directly or indirectly acquired by an individual who is a United States citizen or national, unless that individual is purchasing or otherwise acquiring the property as an agent, fiduciary, or trustee of a person described in divisions (B)(1) to (5) of this section.
- Amendments to Conveyance Forms: The bill modifies section 319.202 of the Revised Code, requiring affirmations by the grantee and grantor on conveyance statements regarding whether they are prohibited from acquiring “protected property” under section 5301.256. The county auditor must not endorse a conveyance without these affirmations.
- Residential Rental Property: Modifies section 5323.02 to be consistent with changes to 319.202
3. Definitions:
- Agricultural Land: Land suitable for agriculture, including water, air space, and unsevered natural products.
- Control: The authority to direct the affairs and day-to-day operations of a business without the consent of another person.
- Own: Possession of more than fifty percent of the stock, equity, or other ownership interest of a business.
- Protected Property: Agricultural land, property within 25 miles of a military installation, and property within 25 miles of critical infrastructure.
4. Potential Issues and Considerations:
- Enforcement Challenges: Determining the ownership and control structures of businesses, especially those with international ties, could prove difficult.
- Impact on Foreign Investment: The bill could deter legitimate foreign investment in Ohio’s agricultural sector and other industries.
- Legal Challenges: The bill could face legal challenges based on constitutional grounds, such as equal protection or due process.
- Scope of “Foreign Adversary” Definition: The breadth of the definition of “foreign adversary” and the criteria used to compile the registry could be subject to debate.
- Practical Implications for Real Estate Transactions: The new requirements for conveyance statements could add complexity and potential delays to real estate transactions.
5. Next Steps:
- Monitor the bill’s progress through the Ohio legislature.
- Assess the potential economic and legal impacts of the bill.
- Consider potential amendments to address concerns raised by stakeholders.
This briefing document provides a summary of the key provisions of HB1. Further research and analysis may be necessary as the legislative process unfolds.