The delay in processing EB-5 immigrant visas caused by the increasing waiting line commonly referred to as “retrogression” is causing an increase in demand by parents in China to have their minor children named as the primary applicant on I-526 petitions.
With estimated delays of five to six years for the processing of EB-5 immigrant visas or green cards for applicants subject to the Peoples Republic of China (“PRC”) quota, many parents are concerned their children will “age out” by reaching the age of 21 before their final green card interviews are scheduled. As a result, the children may be ineligible to immigrate as derivative beneficiaries and may be unable to join their parents and younger siblings when immigrating. Since many PRC parents are primarily motivated to obtain green cards under the EB-5 Program for the benefit of their children, these parents are requesting EB-5 investment funds to accept their minor children as investors, so that the child can file the I-526 petition as the principal applicant.
Acceptance of minors as investors in EB-5 investment funds poses risks to EB-5 investment funds, escrow banks and EB-5 investors under U.S. laws.
Under the laws of every state in the United States, minors under the age specified in that state’s law, normally persons under 18 or 21 years of age, are not legally competent to sign certain contracts, and many states provide that such contracts are voidable by the minor. Under these state laws, an investor who signed a subscription agreement who was not of legal age to enter into a contract would have the right to void the subscription agreement, and to make a claim against the EB-5 investment fund to return the investment funds to the investor. This may be done usually when the child reaches the age of majority. For this reason, EB-5 investment funds typically require that each EB-5 investor represent in their subscription agreement that the investor is of the required age to legally sign a contract. Some escrow banks believe they also could be subject to claims if a minor investor voids their subscription agreement and demands their investment funds be returned to them, and for this reason, these escrow banks will not accept subscription funds from investors who are minors. In addition, EB-5 investors who are minors may face a risk of denial of their I-526 petitions, although to the best of our knowledge no EB-5 investor has been denied approval of their I-526 petition solely on the grounds that the investor is not of legal age to sign a contract.
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