by NALC staff
On June 20, 2025, Texas Governor Greg Abbott signed into law Senate Bill 17 (“SB 17”), which restricts certain foreign purchases of real property located within the state. Prior to this measure, Texas law did not contain any restriction on foreign ownership of land. Texas is one of nine states to enact or amend a foreign ownership law during the 2025 legislative session and now becomes the twenty-eighth state to adopt legislation prohibiting certain foreign investments in land. SB 17 is set to go into effect on September 1, 2025.
SB 17 prohibits governments and individuals who are citizens of or domiciled in a “designated country” from purchasing or acquiring any interest – including leasehold interests of less than one year – in real property located in Texas. The restriction also applies to companies and entities that are headquartered in, controlled by, or majority-owned by individuals or entities from designated countries. Indirect interests held through subsidiaries, affiliates, or agents – such as U.S. businesses – are also covered if a majority interest is held by a prohibited entity or individual from a designated country.
While several states’ foreign ownership laws focus specifically on agricultural land or land near critical infrastructure, SB 17 applies to all categories of real property. This includes agricultural land, timberland, commercial and industrial property, as well as mineral rights and water rights. In short, individuals and entities associated with designated countries are prohibited from acquiring any type of real property within Texas.
As with any piece of legislation, the definitions contained in SB 17 are important because they provide context to how the words or phrases are to be understood throughout the legislative text. The law defines a “designated country” as a country 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, published by the U.S. Director of National Intelligence. The countries identified in this annual assessment include China, Iran, North Korea, and Russia. In fact, SB 17 specifically names these countries in its legislative findings and expresses concern over their activities that pose a threat to U.S. national security, such as cyber espionage, intellectual property theft, continual defiance of international sanctions, and their “increased capabilities to conduct covert influence operations and disseminate disinformation.”
In addition to relying on federal intelligence reports, SB 17 authorizes the Texas Governor, in consultation with the Department of Public Safety and the state’s Homeland Security Council, to designate additional countries, transnational criminal organizations, or entities as being subject to the law’s restriction.
Importantly, SB 17 makes clear that U.S. citizens and lawful permanent residents are not subject to the land ownership restriction, nor are companies that are majority-owned or majority-controlled by these individuals.
As with most states’ foreign ownership laws, SB 17 includes enforcement provisions. Under the law, the Texas Attorney General is required to establish procedures to examine acquisitions of real property, is authorized to investigate suspected violations and, where appropriate, bring an enforcement action against foreign investors suspected of violating the restriction. The law also permits the Texas Attorney General to refer a potential violation to be enforced by the appropriate local, state, or federal law enforcement agency.
If an enforcement action is brought against a prohibited foreign investor and a court determines a violation has occurred, it must order the divestiture of the real property and appoint a receiver to oversee the sale of the real property. In addition to divestiture, the law imposes criminal penalties. Individuals that intentionally or knowingly purchase or acquire an interest in Texas real property may face state jail felony charges. Prohibited entities and governments found to be in violation of the restriction may be subject to civil penalties of at least $250,000 or 50% of the market value of their interest in the property – whichever is greater.
Unlike a few states that have enacted foreign ownership laws which apply retroactively, Texas’ SB 17 applies prospectively. This means the law governs purchases or acquisitions of land occurring on or after its September 1, 2025, effective date. Transactions occurring prior to that date are not subject to the new law’s restriction.
Conclusion
SB 17 marks a significant shift in Texas’ approach to restricting certain foreign investments in real property located within the state. In fact, the Texas state legislature has attempted to enact a state foreign ownership law since the 2021 legislative session, but each proposal failed to pass. With SB 17’s enactment, the state legislature has successfully enacted a foreign ownership law, it joins a growing number of states over the previous few years to enact legislation that limit foreign investments in real property located within its state. However, despite the growing number of states enacting similar laws, enforcement actions under foreign land ownership restrictions have so far been minimal. Whether the restriction under SB 17 or if Texas will bring enforcement actions on violations of the law or if the restriction will deter prohibited investors from acquiring real property within the state likely depends on how the state prioritizes implementation and monitors compliance in the months following the law’s September 1, 2025, effective date.
To read SB 17, click here.
To read NALC articles discussing foreign investments in U.S. agriculture, click here.
To learn more about foreign ownership of U.S. land, click here.
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