Texas Attorney General Proposes New Enforcement Rules for Foreign Real Estate Ownership Law

Texas is moving toward a more detailed enforcement framework for its law restricting certain foreign individuals and entities from acquiring real estate in the state. On October 9, 2026, the Texas Office of the Attorney General published revised proposed rules implementing Senate Bill 17, a law that took effect on September 1, 2025.

The proposal would clarify reporting responsibilities for real estate transaction professionals, establish a conditional due-diligence safe harbor, and create additional ways for the state to collect information about potentially restricted property interests. The rules remain proposed and could change before final adoption.

What Texas Senate Bill 17 Does

Senate Bill 17 added Subchapter H to Chapter 5 of the Texas Property Code. It restricts certain purchases or acquisitions of interests in Texas real property by specified individuals, governmental entities, companies and other organizations connected to designated foreign countries.

The law identifies China, Russia, Iran and North Korea among the designated countries. Coverage depends on the statutory criteria, including a person’s citizenship or domicile and an entity’s ownership, control or government connections. The restrictions are not a blanket ban on every foreign national or every business with an overseas connection.

The statute includes exceptions for certain categories, including U.S. citizens and lawful permanent residents, as well as qualifying entities and specified residential homestead acquisitions. Leasehold interests lasting less than one year are also excluded under the statute.

Because eligibility depends on the law’s detailed definitions and exceptions, buyers and businesses should not assume that nationality or an overseas ownership connection alone determines whether a transaction is prohibited.

Key Changes in the Revised Proposed Rules

The October proposal builds on an earlier set of rules proposed in March 2026. It would establish a more detailed framework for reporting suspected violations, investigating transactions and identifying potentially restricted ownership interests.

Reporting obligations for real estate professionals

The proposal retains a reporting requirement for certain “facilitating entities” that know, or should have known after reasonable due diligence, that a transaction violates SB 17. These entities may include mortgage lenders, title insurers, property insurers, appraisers and licensed real estate professionals involved in facilitating property acquisitions.

The revised proposal also addresses certain post-closing transfers or assignments to affiliates, parent companies, subsidiaries or commonly controlled entities when such transfers are used to carry out or conceal a prohibited acquisition.

Separately, the proposed rules would allow any person to submit a complaint about a suspected violation, provided the complaint includes relevant facts or supporting information. That general complaint mechanism is permissive, unlike the reporting duty that applies to covered facilitating entities under the proposed framework.

Conditional due-diligence safe harbor

The revised proposal adds a conditional safe harbor for facilitating entities that conduct customer due diligence in accordance with applicable regulatory guidance or standards adopted in good faith by a recognized industry group.

If the required diligence does not uncover a violation, following qualifying procedures could help establish that the entity did not know—and was not required to know—about the violation. The proposal does not identify a definitive list of approved standards, so businesses may need to monitor further guidance and obtain legal advice on whether their procedures qualify.

The safe harbor would not excuse a violation that the entity actually discovers.

Proposed reporting mechanism for preexisting property interests

The proposal would allow individuals and organizations to voluntarily provide information to the attorney general about certain real property interests acquired before September 1, 2025, that would have been restricted under SB 17 if acquired after the law took effect.

The proposal also contemplates planning for a public property-search portal that could identify certain pre-effective-date property interests, with the attorney general’s explanation referring to finalized enforcement actions. The portal is a proposed measure, not an existing public search tool. Its eventual scope and listing criteria would depend on how the rules and any later implementation are finalized.

The statute generally applies to acquisitions occurring on or after September 1, 2025. The proposed reporting mechanism concerning earlier acquisitions should therefore not be interpreted as automatically making every preexisting foreign ownership interest a violation of SB 17.

Potential Penalties and Compliance Considerations

Under the statute, a company or entity found by a court to have violated SB 17 may face a civil penalty equal to the greater of $250,000 or 50% of the market value of the real property interest involved. Other enforcement consequences may apply under the law, depending on the circumstances.

The proposed rules would add administrative detail around complaints, investigations, coordination with other government agencies and due diligence. For real estate professionals, the practical concern is whether they have procedures to identify relevant ownership and control relationships, document their diligence, and respond appropriately when a potential violation is identified.

The proposal’s definition of control includes direct or indirect power over an entity’s management, policies or acquisition or disposition of Texas real property. It also identifies certain positions and rights—including holding at least 10% of voting interests—as circumstances that can indicate control.

That provision should not be treated as a standalone rule that every company with 10% foreign ownership is automatically prohibited from acquiring property. The law’s other criteria and definitions must also be considered.

Public Comment and Potential Adoption

The revised rules were published in the Texas Register on October 9, 2026. Written comments are accepted for 30 days after publication, and the notice identifies November 8, 2026, as the earliest possible adoption date.

That date is not a guarantee that the rules will take effect then. The proposal remains subject to the rulemaking process, and the final language may differ from the current draft.

Real estate professionals and affected businesses should consult the official Texas Register notice and the Office of the Attorney General for updates on the comment period, adoption and any subsequent guidance.

What Texas Buyers, Sellers and Investors Should Know

For most residential buyers and sellers, the law’s relevance will depend on the parties involved and the nature of the transaction. Businesses, developers and professionals handling transactions with potentially covered ownership or control connections may face more extensive compliance questions.

Before proceeding with a transaction that could fall within SB 17, parties should consider consulting a qualified Texas real estate attorney. Professionals involved in financing, title, appraisal, insurance or brokerage should also review their due-diligence and escalation procedures as the proposed rules develop.

Key takeaway: Texas’s underlying foreign real estate ownership restrictions are already in effect. The October 2026 proposal would add detail to how potential violations are reported and investigated, but the revised enforcement rules are not yet final as of November 2, 2026.

This article is for general informational purposes and is not legal advice. The law and proposed rules should be reviewed with qualified counsel before making transaction-specific decisions.