Texas passes restrictive land laws amid concerns

For one business owner, it's regrettable that the Texas Legislature passed SB17, a bill primarily prohibiting Chinese nationals from purchasing real property in Texas and limiting renting to less than one year. If Governor Greg Abbott signs the bill, it will take effect on Sept 1.

Zhang, a Chinese business owner who asked to be identified by his last name only, has visited Texas a few times in the past two years, seeking a site to establish a battery factory. That plan is now scrapped, Zhang said.

SB17 prohibits citizens without green cards from countries deemed to pose a threat to the United States by the federal government and any entities they control from purchasing any real estate in Texas — including residential, commercial or agricultural properties.

The current list includes China, Russia, Iran and North Korea. In addition, the law gives the governor the power to designate additional countries, transnational crime organizations or other entities to the ban list. The group that SB17 will most impact is Chinese nationals due to their large number in the US.

The law allows for one narrow exception: a homestead residence if the buyer is lawfully present in the US on a valid visa and intends to reside on the property in the long term.

The bill makes it a criminal offense for any violator. The state has the power to create "in rem" action against the property in violation, meaning that the state can confiscate and dispose of the property without notifying the property owner personally.

In addition, SB17 prohibits the banned group from renting any property unless the lease is for a term of less than one year.

"Basically, I won't be able to purchase any property to set up a factory in Texas under this new bill," said Zhang. "I will be able to rent a facility, but the lease term has to be less than one year. Without a long-term lease, investment in the nature of a factory operation is virtually impossible."

Legal experts said the bill also presents issues for Chinese students, scholars, and H-1B workers who need to rent a place to live, as the most common residential lease term in Texas is one year.

Ready to fight

The Chinese American Legal Defense Alliance, or CALDA, announced immediately after the passage of SB17 that it is preparing to fight back. The organization is in the process of working with other civil rights groups to file an injunction against the bill.

"This means that large numbers of Chinese on student visas, working visas and other non-immigration visas will be unable to rent a place in Texas. It is discrimination based on race and origin of place," CALDA said in a news release. "This law, under the guise of national security, intends to oust Chinese from the state."

Zhang said he likes the overall business environment in Texas but regrets having to look for investment opportunities in other states where such restrictions don't exist.

Unfortunately for Zhang, he will find that his options are limited.

As of March, 28 states were considering 82 bills that would restrict property ownership in some way, including Texas.

The widespread use of alien land laws is "reviving exclusion" that occurred a century ago concluded Leo Yu, associate professor at the Southern Methodist University Dedman School of Law. Yu pointed out that the current alien land laws were often enacted with a bipartisan consensus "to ignore their constitutional defects and discriminatory impact on the Chinese community".