January 19, 2021

Volume XI, Number 19

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January 18, 2021

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New Filing Fees in Connection with CFIUS Review of Foreign Participation in U.S. Real Estate Transactions

Real estate transactions subject to Committee on Foreign Investment in the United States (CFIUS) review, including those involving foreign participation through investment, acquisition, or management of U.S. real property or businesses, are now subject to filing fees effective May 1, 2020.

On April 27, 2020, the United States Department of the Treasury issued an interim rule (31 C.F.R. parts 800 and 202) establishing filing fees for certain transactions filing any formal written notice for review with CFIUS. Effective May 1, 2020, these filing fees cover all transactions filing for voluntary CFIUS review and will be used to offset associated costs. Concurrent to issuing and finalizing the rule, the Treasury Department established an additional comment period to run through June 1, 2020.

Effective as of May 1, 2020, the tiered filing fee structure (calculated on the transaction value) is as follows:

The filing fees apply to any formal written notice of a "covered transaction" or "covered real estate transaction" seeking CFIUS review and are generally due with the filing. In certain limited circumstances, CFIUS may waive the filing fees or issue refunds. CFIUS broadly defines a “covered transaction” to be any transaction that would be a potential threat to U.S. national security or critical infrastructure, including mergers, acquisitions, or takeovers by or with any foreign person that could result in foreign control of a U.S. business. Since "foreign control" is generally defined as the foreign person having the ability (after the covered transaction is consummated) to cause the U.S. business to either take an action, or refrain from taking an action, related to the (i) management, (ii) operations or (iii) disposition of business assets, certain real estate transactions involving foreign participation fall under CFIUS review and will be subject to the above filing fees.

According to the Treasury Department's announcement, for purposes of determining the amount of the fee, the value of a transaction will be the total value of all consideration paid by or on behalf of the foreign person that is a party to the transaction (e.g., cash, shares, or other in-kind consideration). Payments must be made at the time that a notice is formally filed with CFIUS (unless a waiver has been issued), and CFIUS generally will not commence its review unless and until the filing fee has been paid.

Real estate organizations seeking financing, investment or other participation of foreign sources in U.S. real estate transactions should determine whether their transaction falls under CFIUS review, and if so, take note of the current filing fees payable in connection with any such review.

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© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 133
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Paul Nash Real Estate Lawyer Allen Matkins
Partner

Paul Nash has a highly diverse real estate practice, allowing him to work on acquisitions, dispositions, financing, and leasing matters for different clients, often all in the same day. He uses a business-oriented approach to his transactional work representing buyers, sellers, borrowers, lenders, and landlords in all facets of commercial property acquisition, financing, development, leasing and management.

His background as a title officer, escrow officer, and mortgage broker prior to becoming an attorney gives Paul particular insight into his clients’ needs, making him a savvy...

415-273-7475
Andrew Demirchyan, Allen Matkins Law Firm, San Francisco, Real Estate Law Attorney
Associate

Andrew Demirchyan is an associate in the Real Estate group in San Francisco. Andrew represents developers, owners and financial institutions in a broad range of complex commercial real estate transactions, including secured lending, commercial leasing, acquisitions and dispositions.

Prior to joining Allen Matkins, Andrew was the Deputy White House Liaison for the U.S. Department of Housing and Urban Development, an appointed position by the White House where he was Senior Advisor to Secretary Julián Castro for presidential personnel and...

415-273-7466
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