Since 1984, the Texas Property Code provided non-U.S. citizens with the same real and personal property rights as U.S. citizens. However, the Texas Legislature’s passage of SB17 changed those rights for non-U.S. citizens effective September 1, 2025. The new law, codified at Subchapter H of the Texas Property Code, sections 5.251-5.259, imposes new restrictions on the acquisition of real property interests by certain foreign individuals and entities from certain designated countries. Commercial landlords should be aware of these restrictions and their potential impact on commercial leases.
Designated Countries and Prohibited Parties
The new law limits the rights of certain individuals and entities affiliated with certain “designated countries” to own or lease real property located in the State of Texas. Designated countries are those identified by the U.S. Director of National Intelligence as a country that poses a risk to the national security of the United States in at least one of the three most recent Annual Threat Assessments of the U.S. Intelligence Community. SB17 specifically references China, Russia, Iran, and North Korea, while allowing for expansion of that list.
Prohibited parties include:
- Governmental entities of designated countries
- Companies headquartered in or controlled by designated countries
- Entities owned or majority-controlled by prohibited persons or entities
- Citizens of designated countries that are domiciled outside the United States, that entered the United States unlawfully, or that are acting on behalf of a designated country
SB17 exempts from its application U.S. citizens, lawful permanent residents, and entities wholly owned and controlled by them.
Why This Matters to Commercial Landlords
Subchapter H applies not only to fee simple purchases, but also to leasehold interests of one year or longer. That means new commercial leases, renewals, and certain amendments may fall within the statute’s scope. Leases with people covered by SB17 may be void.
Enforcement authority rests with the Texas Attorney General. While violation of the statute may lead to civil or criminal proceedings, those provisions, on their face, do not appear to apply to sellers or landlords. Nonetheless, the new law may present significant business risk in transactions with people who may be subject to SB17. Consequently, those operating in the commercial real estate space should be mindful of SB17 and its implications on transactions.