SB 17, passed by the 89th Texas Legislature and signed into law effective September 1, 2025, gets summarized in agent conversations as "foreign buyers can't buy property in Texas anymore." That's not what the statute says. Read directly against the enrolled bill text, SB 17 restricts a specific, multi-factor category of individuals and entities tied to a small set of "designated countries" — it does not touch the overwhelming majority of non-U.S.-citizen buyers an agent will ever work with, including most green card holders, most visa holders, and any designated-country citizen who's lawfully present and buying a single home to live in. Getting the restricted class wrong in either direction is the risk here: understating it exposes a client to real criminal and civil penalties; overstating it risks agents making buying decisions for clients based on national origin, which is its own legal problem. This guide walks through exactly who and what is covered, verified against the codified statute itself — not secondhand summaries.
What SB 17 actually is
SB 17 added Subchapter H (Property Code §§5.251–5.259) to Chapter 5 of the Texas Property Code. The bill's own caption describes it precisely: "relating to the purchase or acquisition of an interest in real property by certain aliens or foreign entities; creating a criminal offense; providing a civil penalty." It applies only to purchases or acquisitions of real property interests occurring on or after the September 1, 2025 effective date — transactions before that date are governed by the law as it existed previously.
Who is actually restricted
Under §5.253, the following may not purchase or otherwise acquire an interest in real property in Texas:
- Governmental entities of a designated country.
- Companies or organizations that are headquartered in a designated country, directly or indirectly controlled by that country's government, majority-owned or controlled by individuals described below, or specifically designated by the Texas governor.
- Companies owned by or majority-controlled by a company described above.
- Individuals who meet any one of five tests: (1) domiciled in a designated country — with an important carve-out below; (2) a citizen of a designated country who is domiciled outside the U.S. in a different, non-designated country without having completed naturalization there; (3) a citizen of a designated country unlawfully present in the U.S.; (4) a citizen of any non-U.S. country acting as an agent for a designated country; or (5) a member of the ruling political party (or any subdivision of it) in a designated country.
Notice what's not on that list: nationality or ethnicity alone, green card status, most employment or student visa holders, and — critically — anyone who is a U.S. citizen or lawful permanent resident, regardless of where they were born.
The exemptions that do most of the work
Under §5.252, this subchapter simply does not apply to: U.S. citizens or lawful permanent residents (full stop, regardless of country of origin); companies or organizations owned or controlled by U.S. citizens/LPRs with no restricted individual involved; and leasehold interests under one year in duration. There's also a specific carve-out inside the individual test itself: an individual who is domiciled in a designated country but is lawfully present and residing in the U.S. at the time of purchase may still buy one residential property intended as their homestead (as defined by Tax Code §11.13(j)) — they just can't acquire additional properties beyond that.
What "designated country" actually means
This is the piece agents most often get wrong: the statute does not name China, Russia, Iran, or North Korea. §5.251(3) defines "designated country" through two paths — (A) a country the U.S. Director of National Intelligence has identified as a national security risk in at least one of the three most recent Annual Threat Assessments of the U.S. Intelligence Community, or (B) a country the Texas governor separately designates. The four countries commonly cited in coverage of this law are the ones currently understood to satisfy path (A) based on the 2025 Annual Threat Assessment — but that's an inference from a federal intelligence document, not a fixed list written into the statute. It can shift if a future Annual Threat Assessment changes, or if the governor adds or removes a designation. "Is country X currently covered" isn't a question this guide — or the statute's text alone — can answer definitively at any given moment.
Property types — broader than the "near military bases" framing
SB 17 is sometimes described as targeting land near military installations or critical infrastructure. That's not what the statute covers. §5.251(6) defines "real property" broadly: agricultural land and improvements on it, commercial property, industrial property, groundwater, residential property, mines or quarries, minerals in place, standing timber, and water rights. Nothing in the definition or in §5.253 limits coverage by proximity to any installation — it applies to these property types statewide.
The penalty split: individuals vs. companies
SB 17 draws a sharp line between how it punishes an individual violator versus a company or entity — this is the detail most worth getting right before telling a client what they're actually exposed to.
| Who violated | What triggers it | Penalty |
|---|---|---|
| An individual described under §5.253(4) | Intentionally or knowingly purchases or acquires an interest in real property in violation of the subchapter | State jail felony — §5.258 |
| A company or entity | A court determines, in an action brought by the attorney general, that the company/entity violated the subchapter | Civil penalty: the greater of $250,000 or 50% of the market value of the property interest at issue — §5.259 |
Who enforces this — and it isn't the closing table
Enforcement runs entirely through the Texas Attorney General. The AG investigates, can issue civil investigative demands, can bring an in rem action in the county where the property sits, records notice of that action in the county's real property records, and can refer matters to law enforcement for criminal prosecution. There's no private right of action created here for a buyer, seller, or agent to sue over an SB 17 issue directly — this is a state-enforcement statute, not a basis for private litigation between transaction parties.
The disclosure gap the statute leaves open
Subchapter H itself creates no buyer certification, affidavit, or disclosure requirement at closing — nothing in §§5.251–5.259 requires a buyer to sign anything confirming their citizenship or domicile status. Two things are filling that gap, and it's worth being precise about what each one actually does:
- Texas REALTORS forms. Effective January 2026, Texas REALTORS added an informational notice about SB 17 to the Buyer/Tenant Representation Agreement – Long Form (TXR 1501) and to the Residential Lease Application (TXR 2003). As of that release, this notice was not added to the standard One-to-Four Family Residential Contract itself — it lives in the representation agreement and the lease application, not the purchase contract form.
- Proposed Attorney General enforcement rules. The OAG published proposed rules (1 TAC Chapter 67) in the Texas Register in March 2026 that would create a duty for "facilitating entities" — a term the proposed rule defines to expressly include "licensed real estate professional," alongside title companies, mortgage lenders, appraisers, and property insurers — to file a complaint with the OAG when the entity "knows or should have known, after reasonable due diligence," that a transaction violates the law. As of the version of this rule reviewed for this guide, it was still in proposed status following its public comment period; confirm its current adopted status before treating this reporting duty as settled, final law.
The tension nobody has resolved: "reasonable due diligence" vs. fair housing law
This is worth naming directly rather than glossing over. The proposed enforcement rule tells real estate professionals they have a duty to catch and report SB 17 violations through "reasonable due diligence" — but neither the statute nor the proposed rule defines what that diligence actually looks like. There's no checklist, no required document, no safe harbor. At the same time, treating a buyer differently based on national origin or citizenship — extra scrutiny, extra document requests, differential showing decisions — is exactly the kind of conduct the federal Fair Housing Act, the Texas Fair Housing Act, and TREC's own rules against discriminatory conduct exist to prohibit. SB 17's restricted class is built from citizenship and country of domicile, which is legally distinct from the "national origin" protected class under fair housing law — but in the day-to-day reality of a showing or an intake conversation, there is no clean, government-issued way to ask the right compliance question without risking the wrong discriminatory one.
This isn't a hypothetical concern — it's live, contested litigation. Three Chinese citizens on nonimmigrant visas sued the Texas Attorney General in Wang v. Paxton, raising a Fair Housing Act preemption claim among others. The district court dismissed the case in August 2025 — but only on standing grounds, because the plaintiff wasn't actually domiciled in a designated country and the law didn't reach his conduct. The Fifth Circuit affirmed on the same standing grounds in early 2026. No court has yet ruled on whether SB 17 actually conflicts with the Fair Housing Act. The law is in full effect and enforceable statewide right now, and the fair-housing question remains genuinely open — not resolved in either direction.
What this means for the file, practically
- Don't default to "foreign buyer" language. The restricted class is narrow and specific — designated-country domicile, citizenship-plus-non-naturalization, unlawful presence, agency for a designated country, or ruling-party membership. U.S. citizens and lawful permanent residents are exempt entirely, regardless of birthplace.
- Know which penalty track a file is on. The state jail felony under §5.258 applies to individuals only; the $250,000-or-50%-of-value civil penalty under §5.259 applies to companies and entities only. They aren't interchangeable, and neither automatically voids the underlying contract.
- Property type doesn't limit exposure. This covers residential, commercial, agricultural, and mineral/water interests statewide — not just parcels near a military installation.
- No closing-table certification is required by the statute itself. Watch for the SB 17 notice on TXR 1501 (buyer representation) and TXR 2003 (lease applications), and confirm the current status of the OAG's Chapter 67 enforcement rules before assuming any "facilitating entity" reporting duty is finalized.
- If a citizenship or domicile question genuinely comes up on a specific file, route it to the broker and to a title company or closing attorney — don't build a routine screening process, and don't guess at what "reasonable due diligence" requires.