Foreign Interest in a Recent Real Estate Transaction: 
A Summary of Actions and a Personal Opinion

Back in September, the sale of 400 acres in Loudon County, to what appeared to be foreign investors, was brought to my attention.  My office reviewed the associated Covenants, Codes, and Restrictions (CCR’s) associated with the transaction with Representatives Lowell Russell (Vonore) and Jay Reedy (Erin).  The CCR’s contained restrictions that were troubling to us all. 

Specifically, there is a requirement that prohibits this property from being owned in the future by any ‘U.S. person’.  There is also a perpetuity clause in the CCR’s that is not based upon a defined period of time.  Instead, it uses language similar to ‘until the last living relative of [a highly recognized person] is deceased’.  We were also troubled by the fact that this transaction was executed in October 2022 but not filed with the Loudon County Registrar of Deeds for nearly 11 months.

I forwarded a copy of these CCR’s to the Tennessee Attorney General’s (AG) Office, along with a summary of our concerns.  After speaking with leadership within the AG’s Office, our concerns about the legality of prohibiting the property from being owned by a U.S. Person and about the way that the perpetuity clause was written have been somewhat assuaged, at least for now.

However, a recent discussion with the Walton Group, the investment firm headquartered in Arizona that currently owns the property and is seeking foreign investment in it, and their lobbyists, has created additional questions.  According to them, prohibiting future ownership by a ‘U.S. person’ was done for tax purposes.  There is, presumably, a tax advantage for non-residents of the United States, regardless of citizenship.  The Walton Group also said that their longer-range plan was to transfer ownership of the entire parcel to a domestic developer for residential construction.  However, they could provide no specific timeline as to when this would happen.  They also shared that they currently have 3 additional properties in Tennessee for which they are seeking foreign investment:  one near Chattanooga and two near Metro Nashville.

In my opinion, these types of real estate transactions are not beneficial to us as a State.  While I appreciate that investment in my District and our region provides needed capital for economic growth, I do not believe that this needs to be done by prohibiting ownership of land by U.S. persons in order to favor foreign firms or individuals.  My America-First/Tennessee-First mindset cannot make peace with this.  In a time of global corporation overreach that places our liberties and freedoms at risk, I cannot reconcile creating opportunities for such entities by preventing my neighbors from participating in those opportunities.  I will continue to take an interest in this matter and will work to prevent such exclusionary practices from becoming the norm.

Monty Fritts
32nd District State Representative