Texas Proposes New Rules for Foreign Ownership of Real Estate

Texas Attorney General Ken Paxton has proposed additional rules to implement and enforce Senate Bill 17 (SB 17), a 2025 law restricting certain foreign individuals and entities from purchasing or acquiring interests in Texas real estate.

Published in the Texas Register on October 9, 2026, the proposal would establish additional procedures for reporting suspected violations, conducting investigations, and coordinating enforcement. The rules remain subject to public comment and have not yet been finalized.

What the Proposed Rules Would Change

SB 17 took effect on September 1, 2025, and added restrictions to the Texas Property Code concerning certain real estate acquisitions by designated foreign individuals, government entities, and companies or organizations meeting specified ownership or control criteria.

The law covers designated countries identified under the statute, including China, Russia, Iran, and North Korea. However, the restrictions apply to specific categories of individuals and entities rather than everyone associated with those countries.

The Attorney General’s October proposal builds on an earlier set of rules published in March 2026. It introduces additional procedures intended to clarify how the law will be administered and enforced.

Reporting Requirements for Real Estate Professionals

One of the proposal’s significant provisions concerns businesses and professionals involved in real estate transactions.

The proposed rules define a “facilitating entity” to include certain parties that assist with, broker, insure, finance, value, or process property acquisitions. Examples include mortgage lenders, title insurance companies, property insurers, appraisers, and licensed real estate professionals.

Under the proposal, a facilitating entity that knows or should have known, after reasonable due diligence, that a transaction violates SB 17 would be required to submit a complaint to the Office of the Attorney General. Failure to submit a required complaint could result in a referral to the appropriate licensing or professional disciplinary authority.

The proposal also provides a due-diligence safe harbor for facilitating entities that follow applicable regulatory guidance or recognized industry standards in good faith and do not discover a violation.

These provisions remain proposed requirements. Their final wording and implementation will depend on the rulemaking process.

Additional Reporting and Transaction Clarifications

The proposed rules would also allow individuals and organizations to report information about certain properties acquired before September 1, 2025.

This optional reporting mechanism is intended to help the Attorney General identify potential ownership patterns and support administration of the law. Submitting such a report would not, by itself, establish that a violation has occurred.

Other proposed provisions address successive short-term leases or similar arrangements that effectively create a longer-term property interest. The rules also clarify how certain transactions involving the acquisition of an entity that already owns Texas real estate may be treated.

The proposal therefore addresses not only direct property purchases but also certain arrangements that could fall within the law’s definitions of acquiring an interest in real property.

What This Means for Texas Real Estate

If adopted, the rules could affect the due-diligence and reporting procedures used by real estate professionals, lenders, insurers, and other businesses involved in property transactions.

Professionals may need to review their compliance procedures to understand how the proposed requirements would apply to their roles. Buyers, sellers, and investors should also be aware that the underlying statute contains specific restrictions and exceptions.

SB 17 includes exceptions for U.S. citizens and lawful permanent residents, as well as certain qualifying entities. It also excludes leasehold interests lasting less than one year, although the proposed rules address successive short-term arrangements that collectively create a longer-term interest.

Because the law and proposed rules involve detailed legal definitions, the effect on a particular transaction will depend on the facts and applicable statutory provisions.

Public Comment and Next Steps

The proposed rules were published in the Texas Register on October 9, 2026. The Office of the Attorney General is accepting written public comments for 30 days following publication.

The filing lists November 8, 2026, as the earliest possible adoption date. This is not a confirmation that the rules will be adopted on that date.

Real estate professionals and other interested parties can review the proposal through the official Texas Register and monitor updates from the Attorney General’s office as the rulemaking process continues.