IN BRIEF: Regulating Foreign Ownership of Texas Real Property: An Overview of Texas Senate Bill 17
On September 1, 2025, Senate Bill 17 (“SB 17 or the Act”) took effect following its passage by the 89th Texas Legislature to address perceived national security concerns related to foreign state actors’ acquisition of Texas real property. The Act restricts individuals and entities associated with countries designated as national security risks from acquiring interests in real property in Texas. While the list may expand, current designated countries include China, Russia, Iran, and North Korea.
What interests are affected? Under SB 17, “real property” is defined broadly to include agricultural land and improvements, commercial property, industrial property, groundwater, residential property, a mine or quarry, a mineral in place, standing timber, and water rights. Long-term lease interests are also subject to the Act (for terms of one year or more). Importantly, the law applies prospectively, meaning that transactions conducted before September 1, 2025, remain governed by prior law; however, any acquisition occurring on or after the effective date is subject to SB 17.
Who is affected? SB 17’s restrictions extend to
- Governments of designated countries;
- Entities headquartered in, controlled by, or majority-owned by individuals from designated countries;
- Individuals domiciled in a designated country or who are citizens of such countries; and
- Agents or members of the ruling party of a designated country.
U.S. citizens and lawful permanent residents (“LPRs”), as well as entities entirely owned and controlled by them, are not subject to the restrictions. Additionally, a residential homestead exemption allows individuals lawfully present and residing in the U.S. to acquire a residential property intended for use as their primary residence.
Enforcement and Penalties. The Texas Attorney General is authorized to investigate potential violations, bring in rem actions, and seek divestiture of unlawfully acquired property. Civil penalties can be substantial, as SB 17 provides for the greater of $250,000 or 50% of the market value of the property interest involved. Further, individuals who intentionally violate the law may face state jail felony charges. Transactions that violate SB 17 related to real estate purchases and sales are not automatically void. On the other hand, those leasehold interests held in violation of the Act are void and unenforceable.
Implications. SB 17 adds an additional regulatory layer on the acquisition of real property by foreign individuals, entities, and governments, necessitating important due diligence considerations for real estate transactions conducted in Texas. It is imperative to assess whether potential buyers or lessees are subject to SB 17, which could involve complex analyses of ownership structures and country affiliations. If you or your business may be affected, please contact Kessler Collins to assist you in navigating these challenges and protecting your interests.
