Recently, the Texas legislature considered some bills that, if eventually passed into law, would have major implications for both current and prospective property owners in Texas. One of those bills was considered in the 88th Texas legislative session—S.B. No. 147, a bill particularly concerning for foreign individuals and entities. While the 88th legislative session is over and this bill did not pass as of yet, it is important to understand the types of changes lawmakers are proposing to the real estate landscape in Texas.
The bill, introduced by Senator Kolkhorst and others, pertains to the purchase or acquisition of real property by certain aliens or foreign entities. If passed, it could modify the current rules regarding foreign ownership of real estate in Texas, which might impact a variety of potential buyers, from international real estate investors to individuals from abroad looking to make Texas their home.
Here's a simple breakdown of the proposed law and how it may affect future property transactions:
Who might be affected?
The bill primarily concerns foreign individuals or entities who wish to purchase or acquire property in Texas. This includes entities headquartered in, controlled by, or owned by the government or citizens of a designated country that is identified as posing a risk to the U.S. national security. These parties may not purchase or otherwise acquire title to real property in Texas if the bill is passed into law.
What type of properties are involved?
The bill defines "real property" to include agricultural land, improvements on agricultural land, mines or quarries, minerals in place, and standing timber.
Any exemptions?
Yes, the bill exempts U.S. citizens and lawful permanent residents, including individuals who are citizens of foreign countries. Additionally, entities owned or controlled by such individuals are also exempt. Importantly, real property that qualifies as an individual's homestead residence is also exempt, meaning individuals residing in Texas are able to own their home, regardless of their citizenship. Lastly, leasehold interests in land or improvements constructed upon a leasehold are not covered by this subchapter.
What are the possible repercussions?
If a court finds that an individual or entity has violated this proposed law, the court could appoint a receiver to manage and control the property pending its sale or other disposition. The court would divest the violating party's interest in the property.
When would this take effect?
If passed, this Act was slated to take effect on September 1, 2023, and apply only to the purchases or acquisitions of real property on or after this date. Any transactions conducted before this date would be governed by the law as it currently stands.
In summary, a law like S.B. No. 147, if passed in a future legislative session, may significantly affect foreign individuals and entities wishing to purchase or acquire certain types of real property in Texas. As a potential purchaser, it's important to keep abreast of developments in this space. As your trusted real estate legal guide, I'll keep monitoring this proposed bill and other legislative updates that may affect your real estate interests. Remember, an informed buyer is a successful buyer!
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