On June 20, 2025, Texas Governor Greg Abbott signed Senate Bill 17 (SB 17) into law, marking a significant shift in the state’s approach to foreign investments in real property. This legislation, set to take effect on September 1, 2025, restricts purchases and acquisitions of real property by governments, individuals, and entities associated with “designated countries.” Texas now joins 27 other states that have enacted similar legislation, becoming one of nine states to do so during the 2025 legislative session.
SB 17 applies to all categories of real property, including agricultural land, timberland, commercial and industrial property, as well as mineral and water rights. It prohibits individuals and entities from designated countries from purchasing or acquiring any interest in Texas real property, including leasehold interests of less than one year. The restriction also extends to companies headquartered in, controlled by, or majority-owned by individuals or entities from these countries. Notably, indirect interests held through subsidiaries, affiliates, or agents are also covered if a majority interest is held by a prohibited entity or individual.
The law defines a “designated country” as one that poses a risk to U.S. national security in one of the last three most recent Annual Threat Assessments of the U.S. Intelligence Community. Specifically, SB 17 names China, Iran, North Korea, and Russia, citing concerns over cyber espionage, intellectual property theft, defiance of international sanctions, and covert influence operations. The Texas Governor, in consultation with the Department of Public Safety and the state’s Homeland Security Council, is authorized to designate additional countries, transnational criminal organizations, or entities subject to the law’s restrictions.
U.S. citizens and lawful permanent residents are exempt from these restrictions, as are companies majority-owned or controlled by these individuals. Enforcement of SB 17 will be overseen by the Texas Attorney General, who is required to establish procedures to examine acquisitions of real property, investigate suspected violations, and bring enforcement actions where appropriate. The law also permits the Attorney General to refer potential violations to local, state, or federal law enforcement agencies.
If a court determines a violation has occurred, it must order the divestiture of the real property and appoint a receiver to oversee the sale. In addition to divestiture, the law imposes criminal penalties for individuals and civil penalties for entities and governments found to be in violation. Importantly, SB 17 applies prospectively, meaning it governs purchases or acquisitions of land occurring on or after its effective date. Transactions occurring prior to that date are not subject to the new law’s restrictions.
The implications of SB 17 are significant for foreign investors and the Texas real estate market. While the law aims to protect national security and critical infrastructure, its broad application to all categories of real property may have far-reaching effects. The success of SB 17 in deterring prohibited investments and the state’s commitment to enforcement will be crucial in determining its long-term impact. As with other states’ foreign ownership laws, the extent to which Texas prioritizes implementation and monitors compliance in the months following the law’s effective date will be key.