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Organizing a Real Estate Investment for E-2 Visa Purposes

By: Santiago J. Padilla, Esq.

With the great influx today of foreign investment into the United States, many clients have asked me whether the purchase of real property is sufficient to obtain an E-2 treaty investor visa. The question is a good one, but the answer is not easy to decipher from the regulations.

First, the Immigration and Nationality Act provides for the possibility of obtaining nonimmigrant visa status for a citizen of a country with which the United States maintains a treaty of commerce and navigation who is coming to the United States to develop and direct the operations of an enterprise in which the national has invested, or is in the process of investing a substantial amount of capital. Specifically, the Code of Federal Regulations at 8 C.F.R. 214.2(e)(2) provides as follows:

(2) Treaty investor. An alien, if otherwise admissible, may be classified as a nonimmigrant treaty investor (E-2) under the provision of section 101(a)(15)(E)(ii) of the Act if the alien:

(i) Has invested or is actively in the process of investing a substantial amount of capital in a bona fide enterprise in the United States, as distinct from a relatively small amount of capital in a marginal enterprise solely for the purpose of earning a living;

(ii) Is seeking entry solely to develop and direct the enterprise; and

(iii) Intends to depart the United States upon the expiration or termination of treaty investor (E-2) status.

These requirements seem fairly straight-forward, but it is difficulty to glean from the plain language of these provisions whether or not the purchase of real estate would meet the enumerated requirements. However, Section 214.2(e)(13) gives us an indication because it provides as follows:

"The enterprise must be a real, active, and operating commercial or entrepreneurial undertaking which produces services or goods for profit. The enterprise must meet applicable legal requirements for doing business in the particular jurisdiction in the United States."

This provision has been interpreted to mean that the investor is expected to be actively engaged in developing and directing the investment; in other words, passive investments, such as non-committed funds in a bank account or speculative investments in stocks or undeveloped land, do not qualify because such investments do not require the investor to direct or develop a commercial enterprise.

Therefore, viewed in this light, a real estate investment whereby the investor simply holds title to one parcel of property would not constitute a "bona fide enterprise" as required by the regulations. However, if the enterprise involves purchasing and selling multiple real properties, or renovating multiple real properties, or managing multiple parcels of rental property, such as with an apartment building or a strip mall, such investment may very well qualify as a "bona fide enterprise."  The key is whether or not the activity constitutes a "bona fide enterprise" taking into account all of the circumstances.  For example, if the investor owns one rental property, it is clear that there is no "bona fide enterprise" because this is, essentially, a passive investment.  However, if the investor owns twenty-five separate condominium units which are being maintained, renovated and rented from time to time, then in that case, it would appear the investment is a "bona fide enterprise."

Yet, each investment must be viewed individually to determine whether or not it meets the other requirements of the law. For example, the enterprise cannot be a "marginal enterprise solely for the purpose of earning a living" for the investor. This means that the enterprise ought to employ several individuals in order to qualify. In short, the business must contribute to the U.S. economy by employing U.S. workers.

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If you have any questions regarding investor visas, real estate investments or any other immigration law issues, please do not hesitate to contact me, Santiago J. Padilla, Esq., either at 800-483-7197800-483-7197 FREE, at [email protected], or on the internet.

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