Texas is at the center of a class-action lawsuit challenging a new state law that went into effect Sept. 1, banning certain people and countries from buying land in the Lone Star State.
Three Chinese citizens with ties to Texas are challenging the controversial new state law that restricts foreign nationals from countries such as China, Russia, North Korea, and Iran from buying, leasing, or investing in property across the state.
The class-action lawsuit, filed Tuesday in the U.S. District Court in Austin, claims Senate Bill 17 (SB 17) violates the U.S. Constitution and unfairly targets people of Chinese descent, according to KXAN. Texas Attorney General Ken Paxton is named as a defendant.
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“[Plaintiffs] will be unable to rent (and therefore continue to live, study, and work) in Texas, and unable to purchase second homes or investment properties,” the lawsuit states, as obtained by KXAN. “The law stigmatizes them and their communities, and casts a cloud of suspicion over anyone of Chinese descent who seeks to buy property in Texas.”
Who does the lawsuit represent?
One of the plaintiffs is a Baylor University sophomore legally in the U.S. on an F-1 visa. He currently rents an apartment in Waco but may be forced to relocate, according to KXAN. SB 17 bars nationals from designated countries—including China—from entering into leases longer than a year.
“While leases under a year exist in the Waco area, having to choose from a property that offers a less-than-one-year lease limits his options and increases the potential rent. Most landlords prefer longer-term leases,” the lawsuit states.
The two other plaintiffs, who already own real estate in Texas, say they will be forced to sell their homes and divest from the market. In the future, foreign citizens from restricted nations who acquire property in Texas could face state jail felony charges. Companies or organizations that violate the law are subject to a penalty of equal to or greater than $250,000 or 50% of the market value of the interest in the property that’s in violation.
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The plaintiffs’ attorneys argue that SB 17 directly conflicts with federal authority.
“[SB 17] regulates a field exclusively occupied by the federal government, specifically, the intersection between foreign affairs, national security, and foreign investment, including foreign real estate acquisitions,” the lawsuit states.
What the new law does
SB 17 officially took effect Sept. 1 after being passed by the Texas Legislature earlier this year. The law prohibits property sales in Texas to citizens and companies from China, Iran, North Korea, Russia, and other countries designated by the governor. It also restricts certain foreign nationals from renting homes or apartments for more than 12 months.
Proponents say the measure is about national security and protecting Texas’s infrastructure from foreign influence.
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“It is very simple. Hostile foreign adversaries like China, Russia, Iran, and North Korea, as well as foreign terrorist organizations like Tren de Aragua, must not be allowed to own land in Texas,” Gov. Greg Abbott said in a press release.
“They should not be allowed access to our critical infrastructure, and they may not be allowed to exploit our border. Stiff, criminal penalties will be inflicted on those who violate these laws.”
It’s not yet clear whether hearings have been scheduled or if the court has issued any immediate orders regarding enforcement of the law, KXAN reported.
For now, SB 17 remains in effect—leaving international students, homeowners, and investors from the affected nations in legal limbo as the lawsuit moves forward.
Texas growth
In 2023, Texas led the nation in homebuilding, responsible for 15% of all new housing permits—well above its share of the U.S. population. Builders are not only putting up more homes but also focusing on smaller, more affordable options, with median square footage shrinking 5.3% since 2020 and more listings priced under $350,000.
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The state’s housing market is being reshaped by rapid population growth, driven by both international migration and an influx of Californians seeking lower housing costs, job opportunities, and relief from climate risks.
These trends have helped improve affordability, at least on paper. Still, a Realtor.com® report shows much of the available inventory remains out of reach for low- and middle-income buyers, highlighting the continued need for entry-level housing.
In addition, Austin—the state’s capital—has found itself with too many listings, flipping that city into a buyer’s market.