Texas takes bold action against foreign adversaries with a sweeping ban on real estate purchases by individuals and entities from China, Russia, Iran, and North Korea, marking a significant escalation in the state’s stance on national security.
Key Takeaways
- Senate Bill 17, effective September 1, 2025, prohibits property ownership by foreign adversaries in Texas, targeting China, Russia, Iran, and North Korea.
- The law exempts U.S. citizens, lawful permanent residents, and individuals legally residing in the U.S. purchasing a primary residence, as well as short-term leases.
- Violations will be considered felonies, with Texas Attorney General empowered to investigate and enforce penalties including divestiture, fines, and voided leases.
- Twenty-five states have enacted similar restrictions, reflecting growing national concern about foreign ownership near critical infrastructure and military installations.
- Critics argue the law may lead to racial profiling and discrimination against innocent foreign nationals, while supporters point to legitimate national security concerns.
Texas Defends Against Foreign Threats
Texas has joined a growing number of states taking decisive action against potential security threats by prohibiting real estate purchases from countries deemed adversarial to U.S. interests. Senate Bill 17, signed into law by Governor Greg Abbott, specifically targets entities from China, Russia, Iran, and North Korea – nations identified as threats in U.S. intelligence assessments. The comprehensive ban covers agricultural, commercial, industrial, and residential properties, as well as land intended for mining or water use, reflecting concerns about foreign influence near sensitive locations.
“Chinese companies purchasing American land, particularly near sensitive strategic and military sites, is not a coincidence. The CCP is blatantly attempting to base espionage efforts, and potentially worse, right in our backyard, and it’s up to states to act accordingly,” said Michael Lucci, senior fellow at State Financial Officers Foundation, as quoted in Fox News.
The legislation comes amid heightened global tensions and increasing concerns about foreign asset acquisitions in the United States. Recent incidents have further fueled these concerns, including arrests of Chinese nationals attempting to smuggle biological pathogens into the country. The Texas law is designed to protect critical infrastructure and prevent potential espionage activities by hostile foreign powers seeking strategic advantage through property ownership.
Implementation and Enforcement
The ban, which takes effect on September 1, 2025, is not retroactive but leaves uncertainty regarding lease renewals for existing property agreements. This ambiguity could potentially affect current leaseholders from the designated countries when their leases come up for renewal. The law includes exemptions for U.S. citizens, lawful permanent residents, and individuals legally residing in the United States who are purchasing a primary residence, as well as leases lasting less than one year.
Enforcement power lies with the Texas Attorney General’s office, which can investigate suspected violations and pursue penalties. Violations of the law are classified as felonies and can result in severe consequences, including forced divestiture of property, substantial fines, and the nullification of lease agreements. The law might also impact U.S. investment funds and Real Estate Investment Trusts (REITs) that have passive economic minority owners from the designated countries, creating potential compliance challenges for legitimate business operations.
Controversy and Opposition
While supporters view the legislation as a necessary security measure, critics have raised concerns about its broad scope and potential for discrimination. Civil rights organizations have voiced opposition, suggesting the law could lead to unfair treatment of individuals based on their national origin rather than actual security threats. The sweeping nature of the ban has prompted debates about balancing legitimate national security concerns with principles of fairness and non-discrimination.
Asian Americans Advancing Justice described themselves as “outraged” by the new law, arguing that it “creates an overly broad net that places innocent foreign nationals at risk of racial profiling.”
Despite these objections, the trend toward restricting foreign ownership of U.S. real estate continues to gain momentum. Texas joins twenty-five other states that have passed similar restrictions, with more state-level bills pending in New Hampshire and North Carolina. At the federal level, Congress is considering legislation to increase oversight of foreign farmland purchases by involving the U.S. Agriculture Secretary in the Committee on Foreign Investment in the United States (CFIUS).
Future Regulatory Framework
Texas legislators had also proposed creating a Texas Committee on Foreign Investment (TCFI) modeled after the federal CFIUS to review foreign transactions for national security risks. Although this proposal did not pass in the current legislative session, it signals a potential direction for future regulatory efforts. The proposed committee would have included various state officials and would have reviewed a broad range of transactions involving foreign entities and critical infrastructure.
The legislative efforts in Texas reflect a growing anti-foreign-investment sentiment across the United States, particularly directed at countries considered adversarial to American interests. This trend is likely to continue with similar bills expected in future legislative sessions at both state and federal levels. As global geopolitical tensions persist, the balance between national security concerns and open investment policies remains a challenging issue for lawmakers throughout the country.
