Texas Enacts Critical Real Estate Reforms—Senate Bills 15, 17, 840

Prior to his June 22, 2025, deadline, Texas Governor Greg Abbott signed into law hundreds of bills passed by the Texas Legislature.[1] Three of these, Senate Bills 15, 17, and 840, will have significant implications for both the development of affordable housing in Texas and the acquisition of Texas property by foreign entities from designated countries.[2] They are set to take effect beginning September 1, 2025.[3]

Jumpstarting the Housing Market

Despite Texas’ reputation as a relative haven for affordability, residents have undoubtedly felt the effects of the nationwide housing crisis.[4] The Texas Comptroller reported in October 2024 that housing affordability hit its lowest level since 1985.[5]

While some legislators proposed limiting corporate purchases of residential property,[6] such a move was a tough sell for Texas Republicans. Instead, two of the recently passed bills, SB 15 and SB 840, aim to lower costs by enabling developers to build more homes in more places, and on smaller lots.

SB 15 and SB 840 seek to address the affordability issue by limiting municipal regulations on new residential properties in major cities. In particular, they reduce minimum size, density, and accommodation requirements for single-family residential lots[7] as well as for mixed-use or multifamily residential dwellings in commercial zones.[8] Under SB 15 and SB 840:

• Certain municipalities must permit single-family dwellings of at least 3,000 sq ft, 30 ft width, and 75 ft depth, with density requirements to be adjusted accordingly. Homes must also be allowed at least three floors of 10 feet each.[9]
• Mixed-use (65 percent or more residential space) and multi-family (three or more units) residential buildings built in commercial zones can be limited to no lower than 45 ft in height or the maximum for commercial spaces. Density limits below 36 units per acre or the city’s highest are also prohibited.[10]
• Certain cities can no longer require dwellings to provide more than one parking space per unit or covered parking, including parking garages.[11] In fact, SB 15 permits cities to require small lots to share driveways.[12]
• A variety of other municipal housing limits are scaled back accordingly, such as setbacks, bulk limits, or zoning workarounds that might detract from the goal of maximizing livable space.[13]

SB 840 goes a step further, giving owners of commercial spaces a private right to convert certain nonresidential spaces for residential occupancy.[14] Even five years after the pandemic, office vacancy rates in Austin, Dallas-Fort Worth and Houston have hovered around 24% to 28%.[15] With SB 840, legislators aim to give developers the opportunity to abandon lagging commercial projects in favor of trying their hand in housing.

• SB 840 permits multifamily or mixed-use developments by right in commercial, office, retail, or warehouse zones without needing rezoning, variances, or plan amendments.[16]
• Residential dwellings in mixed-use zones can no longer be required to contain nonresidential uses.[17]
• Administrative approvals must be granted for any proposed development that meets municipal land development regulations.[18]
• For conversions of commercial buildings at least five years old to at least 65% residential use, it prohibits traffic studies, mitigation fees, extra parking or utilities, designs beyond building code standards, and new impact fees.[19]

Both of these laws affect cities with a population of more than 150,000 that are located at least partly in a county of more than 300,000. According to the latest United States Census Bureau data concerning annual estimates of residential population, 19 of the 21 largest cities in the State are likely to be affected, including:

1. Houston
2. San Antonio
3. Dallas
4. Austin
5. Fort Worth
6. El Paso
7. Arlington
8. Corpus Christi
9. Plano
10. Lubbock
11. Irving
12. Garland
13. Frisco
14. McKinney
15. Grand Prairie
16. Brownsville
17. Killeen
18. Denton
19. Mesquite[20]

Some exceptions under SB 15 or 840 include short term rentals, areas near certain government facilities (e.g., airports and wastewater treatment facilities), as well as any deed restrictions, homeowners’ association agreements, or private contracts.

Organizations or individuals adversely affected by a violation are entitled to seek declaratory and injunctive relief against the municipality as well as reasonable attorney’s fees.

Restricting Acquisitions of Property by Certain Foreign Entities

Meanwhile, a significant tranche of buyers will need to grapple with SB 17, which restricts certain foreign entities from acquiring property in Texas.

Over the past few years, significant portions of U.S. land have been acquired by entities linked to foreign governments, particularly China.[21] The U.S. Department of Agriculture (USDA) reported that, in 2023, Chinese-affiliated entities controlled at least 123,708 acres of land in Texas—half of all Chinese farmland in the United States.[22] By comparison, the city of Austin spans roughly 200,000 acres.

Growing concern over these developments have led to the passing of SB 17, which will prohibit foreign individuals and entities from countries designated as national security threats by the U.S. Director of National Intelligence from purchasing or acquiring property in the state.

• Designated countries currently include China, Iran, North Korea, and Russia. However, SB 17 grants the governor discretion to designate or even remove designations of a country or entity.[23]
• The attorney general may bring an action against a company or entity that intentionally or knowingly acquires an interest in real property in Texas in violation of SB 17.[24]
• Violators incur a civil penalty which is the greater of $250,000 or 50 percent of the market value of the interest in real property that is the subject of the violation, as well as mandatory divestiture.[25]
• A severability provision in the bill instructs courts to uphold the rest of the bill in the event any portion of it is struck down, and to construe remaining provisions to prohibit any purchases or acquisitions.[26]
• The attorney general will begin adopting rules for the bill’s implementation following September 1, 2025.[27]

SB 17 offers current property owners relief, as it limits the scope of the bill to purchases or acquisitions in interests in real property on or after September 1, 2025. However, without any exception being made for the land itself, owners may later struggle to transfer their property to similarly designated entities. Transfer that does not involve a connection in the United States or other non-designated country, such as an inheritance to a similarly designated noncitizen, risks mandatory divestiture and penalties. In the long run, the bill could not only prohibit additional land acquisition from designated foreign entities but may even whittle down existing holdings.

The author, Senator Louis Kolkhorst (R-Brenham), filed a similar bill, SB 147, in 2023, but it failed to reach the floor in the Texas House.[28] Today, however, it seems this bill may only be the beginning of a series of similar actions across the nation. On July 8, 2025, the USDA Secretary Brooke Rollins announced the Farm Security Action Plan,[29] which states that the USDA will work alongside State and Congressional partners to enact legislative or executive actions “to end the direct or indirect purchase or control of American farmland by nationals from countries of concern or other foreign adversaries.”[30]

About Foley’s Real Estate Practice Group 

Foley’s Real Estate Practice Group represents clients in a broad range of real estate transactions throughout the United States and abroad, including mixed-use and multi-family development transactions. Foley’s Real Estate Practice Group is ranked by Chambers USA in the States of Florida and Wisconsin.  In addition, four Foley real estate attorneys are ranked individually. Along with our Government Solutions and Estate Planning practice groups, we are well-positioned to advise you on the implications of Senate Bills 15, 17, and 840 and other state or federal legislation that might affect the way you conduct business.

Special thanks to Carson McNabb, a summer associate in Foley’s Dallas office, for his contributions to this article.

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[1] Press Release, Office of the Governor Greg Abbott, Governor Abbott Signs Over 600 Critical Bills Passed During 89th Regular Legislative Session (June 21, 2025), https://gov.texas.gov/news/post/governor-abbott-signs-over-600-critical-bills-passed-during-89th-regular-legislative-session.

[2] S.B. 15, 89th Leg., Reg. Sess. (Tex. 2025); S.B. 17, 89th Leg., Reg. Sess. (Tex. 2025); S.B. 840, 89th Leg., Reg. Sess. (Tex. 2025).

[3] S.B. 15 § 2; S.B. 17 § 8; S.B. 18 § 5.

[4] Tex. Comptroller of Pub. Accounts, The Housing Affordability Challenge (Aug. 2024), https://comptroller.texas.gov/economy/in-depth/special-reports/housing-affordability/96-1999.pdf.

[5] Id.

[6] S.B. 443, 89th Leg., Reg. Sess. (Tex. 2025).

[7] S.B. 15.

[8] S.B. 840.

[9] S.B. 15.

[10] S.B. 840.

[11] S.B. 15; S.B. 840.

[12] S.B. 15.

[13] S.B. 15; S.B. 840

[14] Id.

[15] Office Transformation Extends into 2025, Expecting Vacancy Rates to Plateau, CommercialEdge (Jan. 23, 2025), https://www.commercialedge.com/blog/national-office-report-january-2025/.

[16] S.B. 840.

[17] Id.

[18] Id.

[19] Id.

[20] U.S. Census Bureau, City and Town Population Totals: 2020-2024 (May 28, 2025), https://www.census.gov/data/tables/time-series/demo/popest/2020s-total-cities-and-towns.html

[21] U.S. Dep’t of Agric., Farm Serv. Agency, Foreign Holdings of U.S. Agricultural Land Through December 31, 2023 5 (2024), https://www.fsa.usda.gov/sites/default/files/2024-12/AFIDAYR2023ReportwithPageNumbers.pdf.

[22] Id.

[23] S.B. 17.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] S.B. 147, 88th Leg., Reg. Sess. (Tex. 2023).

[29] U.S. Dep’t of Agric., National Farm Security Action Plan (2025), https://www.usda.gov/sites/default/files/documents/farm-security-nat-sec.pdf.

[30] Id. at 5.