New measures are scheduled to come into effect in September, with potentially big ramifications for housing
Texas’ newly signed real estate legislation—Senate Bills 15, 17, and 840—could bring notable shifts to the state’s property market, according to a new analysis by Foley & Lardner LLP, as the laws ease development restrictions in major urban areas while limiting property ownership by foreign entities from designated countries.
Signed into law by Governor Greg Abbott ahead of the June 22 deadline, the measures will take effect on September 1, 2025. SB 15 and SB 840 target municipal zoning regulations, aiming to enable more flexible housing development across the state’s largest cities.
According to Foley & Lardner, which advises clients on similar legislation, these reforms are designed to allow more residential development without the procedural delays that often result from local zoning restrictions.
Under the new laws, cities with populations exceeding 150,000 in counties with at least 300,000 residents must permit smaller lot sizes, higher density, and reduced parking requirements for single-family, multifamily, and mixed-use developments. For example, SB 15 mandates that municipalities allow homes of at least 3,000 sq ft with three 10-foot floors and reduced lot dimensions.
Meanwhile, SB 840 enables owners of commercial properties—such as offices, warehouses, and retail spaces at least five years old—to convert buildings into housing without going through traditional rezoning.
Foley & Lardner said the legislation could be significant in markets like Austin, Houston, and Dallas-Fort Worth, where commercial office vacancy rates remain between 24% and 28% following the pandemic. According to the bill, the intent is to enable developers to repurpose lagging commercial projects for residential development.
SB 17 adds a national security dimension to Texas property ownership laws by prohibiting individuals and entities from certain countries—currently China, Iran, North Korea, and Russia—from purchasing or acquiring property in the state. The law provides for enforcement by the Texas attorney general and includes penalties of up to $250,000 or 50% of the property’s market value.
Under SB 17, property transfers—including inheritances—may result in penalties and divestiture if the recipient is a foreign national from a designated country and lacks a US nexus.
Current owners are exempt from SB 17, but any transfer of property on or after September 1, 2025, involving a foreign national from a designated country may trigger enforcement if not handled through permissible channels.
Senator Lois Kolkhorst, who authored the bill, pointed to concerns over rising foreign ownership of U.S. land. USDA data show that Chinese-affiliated entities controlled over 123,000 acres of land in Texas as of 2023. The bill allows the Texas governor to add or remove countries from the restriction list at their discretion.
Foley & Lardner’s attorneys noted that while some aspects of the legislation may face legal challenges, they recommend that clients closely evaluate current and planned transactions to ensure compliance.
