Texas Bans Some Foreign Buyers From Acquiring Property With New Law

On Monday, a new law went into effect in the state of Texas banning foreign buyers from some countries from purchasing land and other real estate in the state.

The law was first introduced in February as Senate Bill 17, and prohibits individuals and companies from China, Iran, North Korea, Russia and any other country designated by Governor Greg Abbott from owning residential, commercial, industrial and agricultural land, as well as interests in other property like easements or mineral and water rights. The new law likewise prohibits leases of longer than one year.

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Gov. Abbott lauded the bill’s passage in a statement released by the governor’s office last week.

“It is very simple. Hostile foreign adversaries like China, Russian, Iran, and North Korea, as well as foreign terrorist organizations like Tren de Aragua, must not be allowed to own land in Texas,” the governor said. “They should not be allowed access to our critical infrastructure, and they may not be allowed to exploit our border. Stiff, criminal penalties will be inflicted on those who violate these laws.”

The new law follows similar legislation passed in Florida in 2023, which likewise sought to curb real estate ownership by citizens of China, Russia, Iran, North Korea, Cuba, Venezuela and Syria.

Texas Realtors told Inman that the state’s real estate professionals should be aware of the new law so that they can direct clients accordingly, but it does not change anything regarding how agents’ apply the Fair Housing Act and Realtor Code of Ethics to their business.

“Real estate agents in Texas should be aware of SB 17 and prepared to direct clients to consult an attorney if they have questions about whether the law applies to them,” Tray Bates, vice president of Governmental Affairs at Texas Realtors, said in a statement. “However, nothing in SB 17 changes agents’ obligation to comply with the federal Fair Housing Act and the Realtor Code of Ethics requiring Realtors to provide equal professional services to all consumers.”

The Realtor association said it had adjusted some of its forms for members to make sure consumers are aware of the new law, and is also providing member education on the new law, as well as closely following any further updates from the attorney general’s office.

The Houston Association of Realtors told Inman that “anytime legislation restricts who can buy, sell, or lease property, it impacts our members, their clients, and the overall health of the housing market.”

“The Greater Houston area has always been an open, global marketplace, and HAR pays close attention to policies like SB 17 because they impact investment, development, and housing overall,” HAR Governmental Affairs Advisory Group Co-Chair Michael Davis told Inman in a statement. “At the same time, we understand that legislators and community members have raised national security and economic concerns that drive this type of policy.”

Davis also added that it will be HAR’s responsibility to provide feedback to legislators on how the new law actually ends up playing out in the market.

When Florida’s foreign buyer ban went into effect, major real estate companies and investors pushed back at legislators because of the potential ripple effects of the ban, including reduced Chinese capital for commercial real estate projects in the state, which might dissuade some major firms from developing there.

The Asian Real Estate Association of America (AREAA) also filed a fair housing discrimination lawsuit against the state of Florida in response to the law, arguing that it violated the Fair Housing Act of 1968, which prohibits housing discrimination based on race, color, national origin, religion, sex, familial status and disability.

Inman has reached out to AREAA about the Texas foreign buyer ban and will update this story if they respond.

The Texas law has also been challenged in court, and is facing a lawsuit from the Chinese American Legal Defense Alliance on behalf of three visa holders from China, arguing that the law is unconstitutional. The ACLU of Texas also issued a warning in May that the bill violates the First Amendment.

“S.B. 17 denies people meaningful access to housing and business opportunities,” Sarah Cruz, a policy and advocacy strategist for immigrants’ rights at the ACLU, said in a statement. “The bill would promote racial profiling against citizens and non-citizens wanting to purchase or lease property, as well as cause sellers to discriminate against potential buyers. The bill also gives the governor and attorney general the unconstitutional power to dictate foreign policy and target countries and residents on a whim.”

In the last few years, several other states have also passed bills to restrict foreign buyer real estate ownership — about 50 bills across 26 states. There was a spurt in new bills in 2023 after a Chinese surveillance balloon traversed North American airspace.

Email Lillian Dickerson