Texas doesn’t want real estate in the hands of America's most serious adversaries. That’s the premise behind S.B. 17, a law aimed squarely at foreign governments and individuals linked to countries the U.S. considers threats.
On Sept. 1, this sweeping new law took effect. It bars governments, companies and even individual citizens from certain foreign countries from acquiring or even leasing real property in Texas. It’s a move framed as a matter of national security, but one that will ripple quickly through the real estate market — from title companies trying to close sales and loan transactions on time, to shopping center and office building owners simply leasing real estate.
Who Is Excluded
The law blocks buyers and tenants tied to China, Iran, North Korea and Russia. That includes governments, companies based in those countries, and individual citizens of said countries. The Texas governor has authority to expand the list to other countries or organizations at any time, which means today’s rules may not be tomorrow’s.
There are carve-outs: U.S. citizens and permanent residents are unaffected, and short-term leaseholds are exempt. Lawfully present individuals from designated countries may buy a single homestead, but not investment property. Still, the default under this law is restriction, not permission.
New Burdens on Title Companies and Management Companies
Title companies and management companies are now tasked as gatekeepers with respect to the most common commercial real estate transactions. They must dig into the citizenship, domicile, and ownership structure of every party in a deal, however complex. That means verifying layered ownership chains, securing affidavits from buyers and tenants, updating closing checklists, and rewriting contracts to include new compliance and indemnification language.
In practice, this isn’t just a paperwork exercise. It means transaction timelines will increase, costs will rise, and some deals will collapse when parties can’t prove eligibility fast enough.
Enforcement Has Teeth
The Texas Attorney General has broad power to investigate and prosecute violations of S.B. 17. Penalties are not symbolic — the state can force divestiture, appoint receivers, and impose fines equal to the greater of $250,000 or half the property’s market value. Individuals who knowingly violate the law even risk criminal felony charges.
For businesses, that adds reputational risk. Nobody wants to see their name in the news tied to a high-profile enforcement action.
Market Consequences
Expect a chill in foreign investment. Texas has long attracted overseas capital, especially in commercial and agricultural sectors. That pool of buyers has suddenly narrowed, and the uncertainty around which countries might be added next could make investors think twice.
Landlords and lenders face new headaches too. They must vet potential tenants and borrowers for compliance and will certainly start demanding stronger representations and indemnities with respect to compliance with this law. Every participant — buyers, sellers, brokers, lenders, title companies and landlords — is now navigating a new layer of risk and new due diligence requirements.
What To Do Now
- Screen every party. Don’t assume eligibility; you must verify it.
- Revise your contracts. Add explicit S.B. 17 compliance provisions (representations, warranties and indemnification).
- Train your teams. Everyone involved in Texas real estate transactions needs to know the rules.
- Keep records. Thoroughly document due diligence in case the Attorney General comes knocking.
- Watch for updates. The Texas governor can expand the list of restricted countries at any time.
Bottom Line
S.B. 17 is a blunt instrument with sweeping effects. It will slow deals, shrink the tenant and investor pool, and create real legal exposure for anyone who fails to adapt. Texas has sent a clear message: national security comes first, even if the market pays the price.
For anyone buying, selling, leasing or lending on real property in Texas, compliance can no longer be an afterthought — it’s now a permanent part of the due diligence checklist.
[View source.]
