Indiana Restricts Real Property Investments By Foreign Adversaries

Highlights

• The Indiana General Assembly has passed Senate Enrolled Act 256 (SEA 256) to limit the ownership of real property for businesses and citizens from countries deemed adversarial by the United States of America.
• Indiana's SEA 256 prohibits citizens and businesses of adversarial countries listed under 15 CFR 791.4 (China, Russia, Cuba, Iran, North Korea, and Venezuela) from purchasing and renting residential or commercial real property within the state of Indiana, except for certain limited exemptions for purchase and rental of residential real property.
• Beginning July 1, 2026, the Indiana Attorney General (AG) will be given powers to identify and enforce the law against agents of adversarial countries in possession of Indiana property.
• Civil penalties may be imposed, and real property may be subject to forced pestiture, with proceeds from forced sales transferred to the Indiana general fund. National Security Unease

Growing concerns over adversarial country's owning U.S. land near military installations in recent years has developed into many states passing various levels of restrictions on all categories of land purchasing. Indiana previously passed House Enrolled Act 1183 (HEA 1183) in 2024 to prevent citizens and businesses of foreign adversarial countries, or "prohibited persons," from purchasing agricultural land. This year, SEA 256 expands state statute to limit prohibited persons from investing in residential or commercial real property beginning July 1, 2026. This legislation also creates the "agent of a foreign adversary" classification.

Over 30 other states have passed some level of restrictions with respect to foreign ownership of real property within the last five years. Records show recent litigation has failed in successfully challenging state statutes on restrictions for adversarial citizen ownership of land. See, Wang et al v. Paxton, for a motion to dismiss in Texas and details on a challenge in Florida, Shen v. Simpson.

Those Affected by Indiana SEA 256

The following details define who will be subject to Indiana SEA 256.

"Prohibited persons" are defined as:

• An inpidual who is a citizen of a foreign adversary.
• An inpidual who is domiciled in a foreign adversary.
• A business entity organized under the laws of a foreign adversary.
• A business entity headquartered in a foreign adversary.
• A business entity with a controlling person that is one of the following:
  • An inpidual who is a citizen of a foreign adversary.
  • An inpidual who is domiciled in a foreign adversary.
  • A business entity or other entity, including a governmental entity, that is owned or controlled by a citizen of a foreign adversary or is directly controlled by the government of a foreign adversary.

Agents of a foreign adversary are defined as a person who:

• Is an agent, a representative, an employee, or a servant; or
• Acts in any capacity at the order, request, or under the direction or control ; of the government of a foreign adversary; and whose activities are directly or indirectly financed in whole or in part by the government of a foreign adversary.

Exemptions to Indiana SEA 256

• Prohibited persons who are dual citizens, lawful permanent U.S. residents and those granted asylum in the U.S. are exempted from SEA 256's provisions.
• Prohibited persons are still permitted to lease residential property; however, lease agreements are restricted to a term of two (2) years or less.
• Any prohibited persons that own real property in Indiana prior to July 1, 2026 can continue to own such property, provided that the prohibited person is not an agent of a foreign adversary.
• The Indiana Attorney General (AG) can bring an action to require pestiture of real property if the AG proves that an inpidual or business is acting as an agent of a foreign adversary.
• Nonimmigrant visa holders who purchase land, if the following requirements are met:
  • The visa held by such holder is valid for more than 12 months after the land purchase.
  • The land is zoned for single family residential use and is no more than half an acre.
  • The visa holder is not an agent of a foreign adversary.

Penalties Under Indiana SEA 256

• The AG may bring an action to require pestiture of a prohibited person's real property interest only if the AG establishes, by clear and convincing evidence, that the prohibited person is acting as an agent of a foreign adversary.
• A court may not order pestiture unless the court enters written findings of fact and conclusions of law establishing that the AG has satisfied the burden required.
• Upon receipt of information that leads the AG to believe a prohibited person has violated the statute, the AG shall investigate the alleged violation and may issue subpoenas requiring the:
  • appearance of witnesses;
  • production of relevant records; and
  • giving of relevant testimony.
• Any excess proceeds of a pestiture are forfeited and shall be transferred to the state general fund. Landowning prohibited persons found as agents of an adversary are personally liable for a civil penalty in the amount of 10% of the market value of the real property, payable to the state general fund.

Property Ownership After July 1st, 2026

• A prohibited person owning residential or commercial property before the effective date of this bill can continue ownership but will not be able to purchase any further land after July 1, 2026, and are also subject to potential actions taken by the AG.
• A prohibited person leasing residential real property will not be permitted to renew a contract for more than 24 months after July 1, 2026.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.