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Brian Weimer is a partner in the firm's Washington, D.C. office and Leader of the firm's Telecom Team and Co-Leader of the CFIUS Team.

Key Takeaways:

  • What is CFIUS? The Committee on Foreign Investment in the United States, or CFIUS, is an interagency committee chaired by the Secretary of the Treasury which is authorized to review and approve transactions involving foreign investment in the United States that could impact U.S. national security.
  • Expanded Jurisdiction. The Treasury Department has issued a new proposed rule (Proposed Rule) conferring jurisdiction on CFIUS for specific real estate transactions in the U.S. subject to certain exceptions and carve-outs. While CFIUS previously considered real estate investments on an ad hoc basis, the new rule codifies CFIUS jurisdiction and the scope of its review for real estate transactions involving foreign buyers/investors.
  • Location, Location, Location. CFIUS review will focus on real estate near airports, maritime ports, U.S. military installations, and other facilities or properties of the U.S. Government.
  • Exceptions for Certain Real Properties. CFIUS generally will not review real estate transactions involving a single housing unit or real estate in “urbanized areas.”
  • To File or Not to File. The decision whether to file or not to file a notice with CFIUS for a real estate transaction will be voluntary. Thus, parties to a real estate transaction involving foreign buyers/investors cannot be found to violate the law for failure to file a CFIUS notice. However, if parties to a real estate transaction where CFIUS has jurisdiction do not file a notice and obtain clearance from CFIUS, they risk action by CFIUS at any time in the future, including a forced unwinding of the transaction. Accordingly, many parties may prefer the “safe harbor” of obtaining CFIUS clearance because CFIUS is precluded from re-examining a cleared transaction.
  • Public Comment Period Now Open. Members of the public can comment on the Proposed Rule now through October 17, 2019. Final regulations will become effective no later than February 13, 2020

Continue Reading Proposed Rule Expands CFIUS Jurisdiction to Real Estate Investments That Pose a National Security Risk; Could Have Major Impacts on Dealmaking