 |
ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
landownership; foreign adversary; prohibition
Purpose
An emergency measure that expands the prohibition on a foreign adversary nation or a foreign adversary agent from directly or indirectly purchasing, owning, acquiring or otherwise obtaining a substantial interest in real property in Arizona to include leasing, obtaining a concession or otherwise obtaining a current or future substantial interest.
Background
Laws 2025, Chapter 253 prohibits a foreign adversary nation or agent from directly or indirectly purchasing, owning, acquiring or otherwise obtaining a substantial interest of 30 percent or more in real property in Arizona. A foreign adversary nation or agent may acquire real property or any interest in real property acquired by devise or descent, the enforcement of security interests or the collection of debt only if the nation or agent sells, transfers or otherwise divests from the real property within 120 days after acquisition. The Attorney General (AG) must enforce the prohibition and may not base the enforcement on a person's race or national origin. If the AG reasonably suspects a violation of the prohibition has occurred, the AG: 1) may commence an action in the superior court in the county in which the real property is located; and 2) must report the matter to the Committee on Foreign Investments in the United States (CFIUS) and to the Federal Bureau of Investigation for suspected espionage activity or other local, state and federal law enforcement agencies with the statutory authority to investigate. If the superior court finds that title or a substantial interest in real property was obtained in violation of the prohibition, the court must enter an order stating the court's findings, divesting the person's interest and directing the county board of supervisors to sell the property.
A title insurer, title or escrow agent or real estate licensee may not be held liable for a violation of the prohibition and prescribed enforcement requirements. A violation of the prohibition and prescribed enforcement requirements may not be used as the basis for a title insurance claim for any title insurance policy issued for property in Arizona. A foreign adversary nation or agent may only acquire real property or any interest in real property by devise or descent, enforcement of security interests or collection of debt if the foreign adversary or agent, within 120 days of acquiring the real property, sells, transfers or otherwise divests from the real property. Knowingly making a false, fraudulent or unfounded report or statement regarding an alleged violation of a foreign adversary or agent obtaining a substantial interest in real property to a law enforcement agency or political subdivision is classified as a class 1 misdemeanor.
A foreign adversary agent means: 1) an agent of a foreign adversary nation involved in espionage; 2) a state-owned enterprise of a foreign adversary nation; 3) an entity that is directed or controlled by a foreign adversary nation or the proxies of that foreign adversary nation; 4) a leader of a controlling political party or government or any administrative subdivision of a foreign adversary nation; or 5) any business or other entity that is headquartered or domiciled in a foreign adversary nation and directly or indirectly held or controlled by a foreign adversary nation.
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Prohibits a foreign adversary nation or a foreign adversary agent from directly or indirectly leasing or obtaining a concession for a current or future substantial interest in real property in Arizona.
2. Redefines substantial interest to mean a 5 percent interest or more and that is calculated as if all contingent interests that are held by the foreign adversary nation or agent have been converted or exercised, rather than only 30 percent.
3. Prohibits any transaction that results in the acquisition of property rights, whether or not the transaction involves a transfer of title, including:
a) a purchase, lease or concession of real property by or to a foreign adversary nation or foreign adversary agent;
b) a change in property rights resulting from a covered real estate transaction that allows a foreign adversary nation or agent to:
i. physically access the real property;
ii. exclude others from physical access to the real property;
iii. improve or develop the real property; or
iv. attach fixed or immovable structures or objects to the real property;
c) the acquisition of any option, warrant, right of first refusal or future interest, including a remainder or reversionary interest that provides a right to acquire real property or the property rights; or
d) any convertible note, bond or other debt instrument that provides a right to acquire an equity interest or property rights on conversion or the occurrence of a contingency.
4. Prohibits a foreign adversary nation or agent from installing, maintaining or having access to the data of, or operating any equipment on, any real property in Arizona that includes uncrewed or autonomous systems, antennas, communications systems, surveillance devices or sensors, whether or not the installation, maintenance, access or operation is:
a) permanent or temporary;
b) physical or embedded within other structures; or
c) authorized by contract, license, concession or informal arrangement.
5. Classifies, as a class 5 felony, a violation of the prohibition on a foreign adversary nation or agent installing, maintaining or having access to the data of, or operating any equipment on, any real property in Arizona.
6. Applies the prescribed prohibition to any transaction, transfer, agreement or arrangement that is designed or intended to evade, avoid or circumvent that application, including;
a) the use of any intermediary, shell company, partnership or trust to obscure the identity of a foreign adversary nation or agent as the beneficial owner or controlling party; or
b) the restructuring of an existing interest to fall below the substantial interest threshold while maintaining functional control of the property rights.
7. Requires an entity that is a public service corporation, telecommunications provider, critical infrastructure owner or government agency in Arizona to notify the AG and the Arizona Corporation Commission if the entity has entered into or suspects a lease, license or colocation agreement has or may have allowed a foreign adversary nation or agent to install equipment on the entity's property or infrastructure.
8. Deems that any transaction that fails to comply with a CFIUS mitigation agreement or a presidential order of divestment is a violation of the prescribed prohibition.
9. Adds, to the AG's authority to enforce the prescribed prohibition, the ability for the AG to:
a) seek an immediate injunction to cease the operation of equipment and move for an order of forfeiture and removal of the prohibited devices at the violators expense; and
b) on the initiation of a CFIUS review of a transaction involving real property in Arizona, to petition the court for an automatic stay of any property development or equipment installation pending the federal outcome.
10. Requires, if a superior court finds that a title or substantial interest is in violation of the prescribed prohibitions, the court order to divest the interest of the foreign adversary nation or agent, rather than the person's interest.
11. Requires, if a superior court finds that a title or substantial interest is in violation of the prescribed prohibitions and if the substantial interest in real property is held through a certificate of purchase, lease, right-of-way or other instrument relating to land owned in trust by the state, the court order to declare that the substantial interest is extinguished and order that instrument canceled in accordance with its terms, subject to the rights of any registered mortgagee or other lienholder.
12. Applies the outlined prohibitions to:
a) transactions that are entered into on or after the effective date; and
b) a renewal, extension, modification or exercise of rights that is related to an existing real property interest that occurs on or after the effective date.
13. Modifies the definition of foreign adversary agent by adding:
a) a foreign person as defined by the U.S. Code of Federal Regulation when applied to a foreign adversary nation; and
b) an individual who is a member of or who acts in support of a designated foreign terrorist organization as defined by the federal Immigration and Nationality Act of 1952.
14. Defines antenna as communications equipment that transmits or receives electromagnetic radio frequency signals and that is used in providing wireless services.
15. Defines beneficial owner as any person or entity that, directly or indirectly through any contract, arrangement, relationship or otherwise, has or shares voting power or investment power over the property or the entity holding the property.
16. Defines communications system as any equipment at a fixed location that enables wireless or wireline communications between user equipment and a network.
17. Defines concession as a right to use real property, including ports and airports, for a specific purpose or for a specific period of time, pursuant to an agreement with a government entity or a private person.
18. Defines contingent interest as a financial instrument or contractual right that does not constitute an equity or property interest but is convertible into, or provides the right to acquire, an equity or property interest on the occurrence of a contingency or defined event.
19. Defines control as the power, direct or indirect, whether or not exercised, to determine, direct, or decide important matters affecting the real property, including the sale, lease, mortgage, or development of the real property.
20. Defines lease as a contract or arrangement, written or oral, for the possession and use of real property for a specified period of time.
21. Defines sensor as a high-sensitivity device that is designed to detect, measure or record physical stimuli, including seismic, thermal, acoustic or chemical data.
22. Defines surveillance device as a device or apparatus that can be used to intercept the contents of a communication or to conduct video or electronic monitoring.
23. Makes technical and conforming changes.
24. Becomes effective on signature of the Governor, if the emergency clause is enacted.
Prepared by Senate Research
February 12, 2026
AN/TR/ci