{"id":6877,"date":"2025-10-07T07:56:52","date_gmt":"2025-10-07T11:56:52","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=6877"},"modified":"2025-10-07T07:56:55","modified_gmt":"2025-10-07T11:56:55","slug":"texas-law-restricting-foreign-buyers-chills-chinese-investment","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/texas-law-restricting-foreign-buyers-chills-chinese-investment\/","title":{"rendered":"Texas Law Restricting Foreign Buyers Chills Chinese Investment"},"content":{"rendered":"\n
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Tonya Li works as a real estate agent in Austin. A Sotheby\u2019s agent, Li has represented Chinese clients for the better part of a decade.<\/p>\n\n\n\n

Li reports losing 50% of her work after Texas enacted a new state law, banning certain foreigners from buying real estate. Texas Senate Bill 17<\/a> came into effect in September. It bars people and companies from countries designated as national security threats to the United States from buying real estate in Texas.<\/p>\n\n\n\n\n\n\n\n

The Chilling Effect on Many Potential Buyers<\/h2>\n\n\n\n

This broad-brush legislation names all parties from China, North Korea, Russia, and Iran as threats. But Li\u2019s clients have no relationship to national security. Much of Li\u2019s business has come from parents of young people enrolled at the University of Texas, where the largest group of international students is from China. Parents who do not hold U.S. citizenship or green cards might decide to buy real estate as future assets for their U.S. student children.<\/p>\n\n\n\n

As for the lawful permanent residents and citizens of Chinese descent, they\u2019re shocked, and some are selling, says Li. To many, \u201cit is a sign that tells them that the Texas government does not like foreign investors.\u201d<\/p>\n\n\n\n

They\u2019re not directly impacted by the law, yet they\u2019re backing away from the market, according to Li, feeling the chilling effect of the law. The list of presumed security threats could grow. The state governor of Texas has the prerogative to add more countries.  <\/p>\n\n\n\n

Wind Farm Developer Sells Texas Real Estate Holdings   <\/h2>\n\n\n\n

Bills to stop Texas deeds from going to parties related to China have been gaining steam over the past five years. One catalyst, reportedly, is real estate lawyer Dallas Barrington. The lawyer set out to stop Sun Guangxin, owner of 140,000 acres, from starting up a wind farm. The wind farm would have spanned 15,000 acres.<\/p>\n\n\n\n

Sun Guangxin, like Tonya Li, has worked for high-profile real estate companies in Austin.<\/p>\n\n\n\n

Barrington organized other deed holders to sue the Texas energy agency, in an effort to derail Guangxin\u2019s project. Texas lawmakers got behind Barrington\u2019s cause. They passed S.B. 17, the Lone Star Infrastructure Protection Act<\/em>. The result? A ban on parties associated with China, Iran, Russia, or North Korea from engaging with \u201ccritical infrastructure\u201d such as the state\u2019s energy sources. That could make much of the state off-limits, given that infrastructure is developed as time goes on.<\/p>\n\n\n\n

The law declares that banned deed holders would be forced to sell. The state will then seize the costs of enforcement out of the sale proceeds. After the state takes its cut, the targeted seller will get the leftover funds.<\/p>\n\n\n\n

But that\u2019s not all. Those who are charged with offending the Lone Star Infrastructure Protection Act<\/em> could be charged with a felony and jailed.<\/p>\n\n\n\n

Guangxin\u2019s energy firm, GH America, has filed suit in federal court to have the new state law deemed unconstitutional. But Guangxin has also sold his Texas real estate holdings.<\/p>\n\n\n\n

Red Flags: Limits on Owners\u2019 Rights to Transfer Deeds<\/h2>\n\n\n\n
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A deed isn\u2019t a nationality document. A mortgage agreement doesn\u2019t discuss the ancestry of the borrower. LLCs can receive deeds, and the owners of these companies need not live locally or even within the national borders. No county deed recorder asks what nationality a person recording a deed happens to be.<\/p>\n\n\n\n

How, then, will the Texas Attorney General even formulate new investigations under Senate Bill 17? Is Texas likely to rely on nervous people who report on their neighbors to determine the targets of prosecution? Will suspicious Texans attempt to guess buyers\u2019 nationality and permanent resident status by looks, or by names? The prospects are troubling.<\/p>\n\n\n\n

A law like this one, from the simple perspective of property rights, represents the act of a state to impose new deed transfer limits on land owners. At the same time, research projects and companies that depend on international experts will miss out on economic opportunities, amenities, and infrastructure.<\/p>\n\n\n\n

Other States Limiting Deed Transfers by Nationality<\/h2>\n\n\n\n

At least twelve states have enacted bills like this so far.<\/p>\n\n\n\n

With their House Bill 1<\/a> and Senate Bill 88, lawmakers in Ohio have also come up with a list of countries as they consider keeping non-citizens from purchasing land in many areas of Ohio. The Ohio Property Protection Act<\/em> restricts farm land, and land around transit hubs and certain infrastructure.<\/p>\n\n\n\n

Ohio might have patterned its bill after Florida\u2019s, but Florida\u2019s example is already being challenged in court on Constitutional grounds.<\/p>\n\n\n\n

Nowhere in the United States is property more popular with international buyers than it is in Florida. But international buyers are now steering clear of the real estate market in places like Miami and Palm Beach.<\/p>\n\n\n\n

Then there is North Carolina. Its Senate has advanced a sort of giant deed restriction<\/a> to keep certain groups from holding farm land. North Carolina\u2019s Senate Bill 394, an Act to<\/em> Prohibit Foreign Ownership of NC Land<\/em>, characterizes China, Iran, North Korea, and Russia as adversaries. Nationals of these countries will no longer be able to acquire a deed to:<\/p>\n\n\n\n