On June 20, 2025, Texas Governor Greg Abbott signed Senate Bill 17 (SB 17) into law, creating restrictions on foreign ownership of real estate in the state. The law takes effect September 1, 2025, and will have significant implications for foreign individuals, companies, and investors with ties to certain countries.
Below, we break down the key provisions, penalties, exemptions, and practical implications of this new legislation, especially for clients from China and other designated countries.
What does SB 17 do?
SB 17 prohibits designated foreign individuals and entities from acquiring any interest in Texas real property, including:
- Residential, commercial, industrial, and agricultural holdings
- Mineral and water rights
- Easements
- Leaseholds of one year or longer
It is important to note that the law only applies to transactions occurring on or after September 1, 2025. Properties acquired before this date are not affected and remain governed by prior law.
Which countries are affected?
The law specifically targets persons and entities associated with:
- China
- Russia
- Iran
- North Korea
However, this list may grow. The Governor of Texas has authority to add or remove countries based on national intelligence threat assessment.
Who Is Restricted?
SB 17 applies to a broad range of actors, including:
- Foreign governments and government-controlled companies from designated countries
- Individuals from designated countries who are:
- Not U.S. citizens or green card holders
- Unlawfully present in the U.S.
- Agents or affiliates of a designated government or ruling party
- Entities majority-owned by restricted individuals or governments
- Transnational criminal organizations linked to designated countries
What are the penalties?
Violations of SB 17 carry both civil and criminal consequences:
- Court-ordered divestiture of the prohibited property interest
- Criminal liability, categorized as a state jail felony
- Civil penalties, including fines of up to $250,000 or 50% of the property’s value, whichever is greater
Who is exempt?
Certain individuals and entities are expressly exempt:
- S. citizens and lawful permanent residents (green card holders)
- Entities majority-owned and controlled by U.S. citizens or green card holders
- Leaseholders of less than 12 months
- Residential homestead exemption: foreign nationals from designated countries who are legally present in the U.S., such as those who are on work or student visas, may purchase a primary residence for personal use, but not investment properties or multiple homes
Does SB 17 Apply Retroactively?
No. SB 17 does not apply retroactively. Property owned before September 1, 2025 is not affected. The law only governs new acquisitions on or after that date.
Practical Examples for Chinese Clients
Current Legal Challenges
Texas SB 17 is currently facing legal challenges on the grounds that it may violate the First Amendment and the Equal Protection Clause of the U.S. Constitution. Petitioners argue that the law discriminates based on national origin and restricts the rights of individuals from certain countries, potentially infringing on equal protection guarantees. Additionally, some claims argue that the law may suppress free speech by targeting individuals based on their perceived foreign connections. These challenges are ongoing and may affect how the law is enforced moving forward.
Final Thoughts
Overall, SB 17 introduces aggressive state-level restrictions on foreign real estate ownership in Texas. Clients from designated countries, especially China, should assess their exposure and consider planning options before the September 1, 2025 effective date.
We are closely monitoring developments, including possible additions to the designated countries list and next steps for compliance.
For clients looking for alternative opportunities, our team has a strong presence in California and Florida, two of the most desirable real estate markets for foreign investors, where we are ready to provide personalized guidance and support.
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