Update regarding Minors as Primary EB-5 Applicants


This article should be read together with the blog co-authored with Catherine DeBono Holmes, Esquire, a top securities Lawyer, “Suggested Procedures and Possible Options for Accepting Minors as Investors in EB-5 Investment Funds.”

With the waiting line for Chinese EB-5 investors getting longer every month (presently almost 2 ½ years) many Chinese investor parents are concerned their derivative beneficiary children will turn 21 before an EB-5 visa number will be available and that the child may therefore “age out.”  Unfortunately, the Child Status Protection Act only allows for subtraction of the number of days the Form I-526 petition was pending (usually about 1-1 ½ years) from child’s biological age.  Consequently, many investors are questioning whether it may be better (for both derivative beneficiary eligibility reasons, and even for tax reasons) to have the minor child be the primary EB-5 applicant.

Unfortunately, like most matters related to EB-5, the issue whether a minor may act as the principal EB-5 immigrant investor is complex and involves federal immigration law, state contract law, federal and state securities laws, and the law of the place where the investor resides.  Legal counsel, including corporate, securities and immigration attorneys should explain these risks when offering advice to parents about their children filing as the primary investor.

Presently some Regional Center projects are accepting minors, and others are not.

This is an emerging issue and with adjudications taking over one year, the EB-5 community may not know USCIS’ position on minors filing as principals for some time.

Unintended Consequences of Chinese EB-5 Waiting Line

Some Chinese EB-5 investors whose children already have or will likely turn 21 before an EB-5 visa number will be available, are trying to withdraw their I-526 applications and have their child file a new Form I-526 as the principal applicant. Unfortunately, USCIS does not allow the I-526 priority date to be retained and therefore new Form I-526 flings have to go to the back of the waiting line. However, this trend will decrease the current waiting time for investors with pending Form I-526s.    We have seen the Chinese EB-2 category see-saw up and down from 2 years to 5 years. As the line gets longer, less people apply, and some withdraw, and then when it gets shorter, more people join the waiting line. We may see this occur with the Chinese EB-5 waiting line.

Can a Minor be the Principal EB-5 Immigrant Investor?

Federal Immigration Law

There does not appear to be an age limit exists for an EB-5 applicant to apply as a principal but most likely the USCIS has simply not opined on the issue. Clearly if the child is legally emancipated, there is unlikely to be an issue.  The immigration laws and regulations do not appear to set a minimum age limit for a principal EB-5 immigrant investor.

The instructions of the Form I-485 Application to Register Permanent Residence or Adjust Status which allows individuals to apply to adjust their immigration status to that of a lawful permanent resident of the U.S.A., indicate that a person 14 years or older must sign individually as the primary applicant.  These instructions regard a 14-year-old as an adult for purposes of the Form I-485 filing fee and for processing.  Thus, for purposes of applying for lawful permanent residence (or in the case of EB-5, receiving conditional lawful permanent residency), an individual aged 14 and over is arguably considered an “adult” and this would support the argument a child aged 14 years or older may act as the principal EB-5 immigrant investor.

Of course, there are other EB-5 requirements to consider if a child acts as the principal EB-5 immigrant investor.  The child’s Form I-526 petition will need to explain in detail how the funds were acquired. If by a loan the child’s own collateral must be used to secure the loan for the EB-5 investment.  The child investor’s parents and siblings may not be able to be co-owners of the asset used to secure the investment.

Another issue is whether a minor can legally “engage in the management” as a limited partner of the new commercial enterprise.  There are ordinarily no mandated age limits for members of limited partnerships. This is also true for minors who wish to start sole proprietorships. State laws vary as to whether members of limited liability companies need to be over the age of 18, and typically all states require corporation owners to be over 18. A prospective EB-5 investor should check to see if a Regional Center will allow a minor child as the primary beneficiary, and if the child meets all the requirements for admission to the EB-5 investment project.  To accept funds from a minor, the Regional Center or escrow agent/bank may require additional verifications by the parent and the minor that the Private Placement Memorandum and Investment Contracts have been reviewed together and that the minor fully understands the investment decision.  Finally, as discussed in more detail below, there may be issues of whether a minor’s EB-5 investment is sufficiently “at risk” due to minor’s contract rescission rights.

State Contract Law

Contracts are generally governed by state law, whereas immigration a is controlled by federal law.  Each state of the U.S. has its own body of statutes and common law that governs the creation and enforcement of contractual obligations, and contract law can vary from state to state.  There is no nationwide, federal contract law.

With regards to children, in general, unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person’s 18th birthday.[1]  This “age of majority” allows a child to assume control his/her person, actions, and decisions, terminating the legal control and responsibilities of his/her parents or guardians.[2]  States normally specify that an individual does not have the “legal capacity” to enter into a contract until that individual reaches the age of majority (though exceptions are usually made for employment contracts).  A “voidable contract” can be defined as a contract that can be affirmed or rejected at the option of one of the parties.[3]  Accordingly, a party contracting with a minor does so at jeopardy and subject to the right of the minor to avoid the contract.

For EB-5 purposes, this rescission right by a minor is worrying to many Regional Centers and EB-5 investment projects, as it leaves them in a vulnerable predicament. This is so even if the parents countersign all necessary subscription agreements, because the ability to void a contract once the child reaches the age of majority may adversely affect construction timelines, job creation requirements, and marketing endeavors.  A child may desire to void the EB-5 contracts in the event they become eligible for lawful permanent residence through other categories, like marriage to a U.S. citizen.  In response, a Regional Center or EB-5 investment project may require the child, upon reaching the age of majority, to sign a ratification agreement in order to make the subscription agreement and other EB-5 related-contracts enforceable.

Designation of China or Other state as Choice of Law

Another option is for the EB-5 investment project and the minor to agree to modify terms to a PPM, subscription agreement, and/or escrow agreement with language about changing the source of law to China with regards to issue of contractual capacity.  In China, there appears to be a sliding scale in terms of contractual capacity for those aged 14-18.  For example, it appears a 16-year-old in China can execute real estate contracts. Some argue the issue can easily be addressed by designating China as the choice of law for a child age 16-18 years, however this has not yet been litigated in U.S. state courts.

Federal and State Securities Laws

Finally, any EB-5 investment must comply with applicable federal and state securities laws.  Our firm strongly advises Regional Centers, EB-5 projects, and even escrow agents and bank to discuss this matter with experienced securities attorneys to determine whether there any prohibitions on contracts by minors for securities purposes.  At least one securities lawyer has indicated there may be securities law prohibitions on minors investing in securities.

The Uniform Transfers to Minors Act – “UTMA”

The Uniform Transfers to Minors Act (UTMA) is an act that allows a minor to receive gifts such as money, patents, royalties, real estate, without the aid of a guardian or trustee. Under UTMA, the gift giver or an appointed custodian the minor’s account until the latter is of age (usually 18 or 21). The Uniform Transfer to Minors Act also shields the minor from tax consequences on the gifts (up to a specified value). Presumably the limited partnership interest could be held in an UTMA account until the child reaches the age of majority.


The Chinese EB-5 backlog currently creates a risk of an age-out problem for derivative children over either the age of either 15, or 16 years at the time of filing.  Investors should be advised there is risk from the USCIS perspective, and for Regional Centers, EB-5 projects, and even escrow agents and for banks. Besides possible USCIS adjudication objections, there is risk the minor investor may be able to elect to set aside the investment contract upon reaching the age of majority.  Unless the annual allocation of 10,000 visas for immigrant investors and their families is increased, or unless temporary remedies are created to decrease the EB-5 visa backlog, the U.S. may see demand for the EB-5 Immigrant Investor Program drop by Chinese nationals.  We have already seen the percentage of Chinese investors drop from about 85% of the total for Fiscal Year 2015, to about 80% for the first two quarters of FY 2016. This issue could be one reason Regional Centers and projects are focusing on other countries when seeking investors, although it is expected that China will continue to provide most of the investors.

This post is designed to provide practical and useful information on the subject matter covered.  However, it is provided with the understanding that no legal, tax, accounting, or other professional services are being rendered or provided.  If legal advice or other expert assistance is required, the services of a competent professional should be sought.

[1] Restatement (Second) of Contracts, § 14 (1981).

[2] This is generally called “emancipation,” which is defined as “a surrender and renunciation of the correlative rights and duties concerning the care, custody, and earnings of a child; the act by which a parent (historically a father) frees a child and gives the child the right to her or her own earnings.” Black’s Law Dictionary 442 (Abridged 8th ed. 2005).

[3] Black’s Law Dictionary 277 (Abridged 8th ed. 2005).

This post originally appeared on Wolfsdorf Immigration Law Group. Copyright © 2016 Wolfsdorf Connect - All Rights Reserved. Reprinted with permission.

About The Author

Bernard Wolfsdorf Bernard Wolfsdorf is the managing partner of the top-rated law firm, Wolfsdorf Rosenthal LLP (www.wolfsdorf.com), and the past national president of the 14,000-member American Immigration Lawyers Association (AILA). Established in 1986, Wolfsdorf Rosenthal LLP is known worldwide for providing exceptional quality legal services. With 19 lawyers and offices in Los Angles and New York, the firm was recently listed as a top-tier immigration practice by Chambers & Partners with several of the firm's attorneys listed in the 2015 International Who's Who Legal. Mr. Wolfsdorf specializes in EB-5 investment immigration in addition to the full range of global immigration matters.

Joseph Barnett Joseph Barnett is licensed as an attorney in the State of Illinois and the State of Wisconsin and practices exclusively in immigration and nationality law. Mr. Barnett's practice focuses in the area of EB-5 Immigrant Investor Program and other business immigration matters. Mr. Barnett received his J.D. from Vermont Law School. Mr. Barnett may be contact at jbarnett@wolfsdorf.com

If you have any questions about this emerging issue or want to schedule a professional consultation, please contact a Wolfsdorf Rosenthal LLP attorney to discuss your case.

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