Bulletin: AL2023002

Dear Associates:

Alabama enacted into law an act known as “An Act Relating to Acquisition of Title to Real Property; to Prohibit Certain Governments or Governmental Entities from Acquiring Certain Real Property in the State.” This law (“Statute”) is effective on August 1, 2023. This bulletin outlines key points and provides a brief explanation of the new law as it relates to title insurance and title agents.

What it does:

The Statute generally prohibits real property acquisition and ownership by Foreign Principals of the following types of real property:

• Agricultural and Forest Property.
• Real Property on or within 10 miles of any Military Installation or Critical Infrastructure Facility.

Key Terms:

• Agricultural and Forest Property is defined as:

• Critical Infrastructure Facility is defined to include ANY of the following:
  • A chemical manufacturing facility;
  • A refinery;
  • A plant or facility producing electric energy no matter how generated or produced;
  • A water treatment facility or wastewater treatment plant;
  • A liquid natural gas terminal;
  • A telecommunications central switching office;
  • A gas processing plant, including any plant used in the processing, treatment, or fractionation of natural gas;
  • A seaport facility;
  • Aerospace or spaceport infrastructure;
  • An airport.
• Foreign Country of Concern includes China, Iran, North Korea, and Russia, but does not include Taiwan.
• Foreign Principal is defined to include ANY of the following:
  • The government or any official of the government of a Foreign Country of Concern;
  • A political party or member of a political party or any subdivision of a political party in a Foreign Country of Concern; or
  • A country or government identified on any sanctions list of the United States Department of the Treasury’s Office of Foreign Assets Controls (link to the current list of active sanctions).
• Military Installation means a base, camp, post, station, yard, or center that is under the jurisdiction of the Department of Defense or its affiliates, encompassing at least 10 contiguous acres.
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  • All real property used for raising, harvesting, and selling crops or for the feeding, breeding management, raising, sale of, or the production of livestock, or for the growing and sale of timber and forest products.

• Real Property means land, buildings, fixtures, and all other improvements to land.

Are there circumstances where these laws do not apply?

Yes, the Statute does not apply to transactions or acquisitions taking place prior to the effective date of the Act (August 1, 2023).

Penalties for Violations

While it is unclear as to specific penalties against or actions that may be taken against the acquiring party in violation of the Statute, subject conveyances should be treated as invalid conveyances given the plain language of the Statute.

What do Title Agents Need to Know?

The Statute specifically protects title insurers, title agents, real estate licensees, and other settlement providers from any liability relating to the violation of the Statute.

At this time, Stewart is not requiring the inclusion of a general exception relating to the matters raised in the Statute. However, if a notice, lien, lis pendens, order, or other recorded document indicates applicability of the Statute, proper requirements need to be made to clear the item.

Given the uncertainty created by the broad provisions of the Statute, determining whether a property, party or transaction is affected by the act is extremely difficult and given the potential for criminal/civil liability and insurability, STG agents should continue to closely review entity organizational structure, trust documents, and individual citizenship/identification.

Attached is a copy of the new Statute for your reference. You should reach out to your local STG underwriter for any questions or additional guidance.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.