Can Chinese citizens living overseas challenge Texas' property law?

A federal appeals court is weighing a new question over Texas' controversial property law : Can Chinese citizens living outside the United States challenge the law if they want to buy Texas property ?

The 5th U.S. Circuit Court of Appeals heard arguments Monday from attorneys of two Chinese citizens who own rental properties in the Houston area and want to buy more. They are challenging Senate Bill 17, the Texas law that restricts certain people and entities connected to China, Russia, Iran and North Korea from acquiring real property in Texas. The panel did not immediately rule.

Min Huang lives in Shanghai and Qiong Dai lives in New Zealand, according to Courthouse News Service . Both own rental properties in the Houston area and say SB 17 is preventing them from making additional purchases.

That broader market is significant in Texas. International buyers purchased about 7,780 homes statewide over the previous year, with Chinese buyers accounting for 9 percent of those purchases, according to a recent study . About 62 percent of international buyers were already living in the U.S. on visas or were recent immigrants.

The bigger issue before the court isn't simply whether Texas can restrict those purchases. It's whether Huang and Dai have the legal standing to challenge the law in federal court in the first place.

Their attorney, Justin Sadowsky, told the judges that his clients have constitutional protections because the transactions involve property in Texas and could be subject to enforcement in Texas courts.

"I think there are three grounds for people having constitutional rights in the United States," Sadowsky told the panel. "One is for actions that take place in the United States. Two is over property that they have within the United States. And three, when actions are taken by courts in the United States against a third party, they have constitutional rights regarding those courts' decisions."

Texas pushed back, arguing the proposed purchases are too speculative and that the plaintiffs don't have enough connection to the United States to bring the challenge.

"The standard is not a reasonable probability that an event will happen," Assistant Solicitor General Benjamin Mendelson told the court. "The standard is that the event is certainly impending."

So what does Texas' property law actually do?

SB 17 took effect Sept. 1, 2025. It bars certain individuals and entities connected to designated countries from purchasing or otherwise acquiring interests in Texas real property. China, Russia, Iran and North Korea are among the countries covered by the law.

The law defines "domiciled" as having a person's "true, fixed, and permanent home and principal residence" to which they intend to return. It also exempts U.S. citizens and lawful permanent residents, along with certain other transactions.

The law gives the Texas Attorney General authority to investigate potential violations. If the state finds a violation, it can bring an action involving the property, and the law provides for divestment of the property and possible criminal prosecution.

This isn't the first SB 17 case

A separate challenge brought by Chinese citizens living in Texas reached the same appeals court last year.

Peng Wang, a Chinese citizen who had lived in Texas for 16 years while attending school in Fort Worth, argued that SB 17 was unconstitutional. But the Fifth Circuit ruled in December that Wang lacked standing because he was not domiciled in China and had not shown a substantial threat that Texas would enforce the law against him.

The court noted that Wang intended to remain in Texas after graduation and had "no real plans to return to China." It also pointed to repeated statements from Attorney General Ken Paxton that SB 17 did not and could not apply to Wang.

Unlike Wang, Huang and Dai live abroad. The Fifth Circuit panel pressed Sadowsky on whether their plans to purchase additional property were concrete enough to give them standing.

Sadowsky argued the plaintiffs' interest is real because they already own Texas property and want to make additional purchases. He also pointed to proposed regulations from Paxton's office as evidence that the state intends to enforce the law.

The state disagreed.

"A proposal doesn't do anything," Mendelson said, arguing that no one has been arrested or prosecuted under SB 17 and that the plaintiffs have not identified specific purchases they are prepared to make.

The three-judge panel took the case under submission Monday, but did not indicate when it would rule.

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This article originally published at Can Chinese citizens living overseas challenge Texas' property law? .