On Oct. 9, 2026, the Texas Office of the Attorney General published revised proposed rules implementing Senate Bill 17, codified in Subchapter H of Chapter 5 of the Texas Property Code. Effective Sept. 1, 2025, SB 17 restricts certain foreign persons and entities from acquiring interests in Texas real property. As discussed in a July 2025 GT Alert, covered purchasers include governmental entities of designated countries, specified entities with ownership or control ties to designated countries or covered persons, and individuals meeting statutory citizenship and domicile criteria. Designated countries currently include China, Russia, Iran, and North Korea. The statute contains exceptions, including for U.S. citizens, lawful permanent residents, certain qualifying entities, and specified residential homestead acquisitions, and excludes leasehold interests lasting less than one year.
The October proposal largely retains the OAG’s March 27, 2026, proposed rules, which were discussed in an April 2026 GT Alert, including a reporting duty for certain transaction participants and provisions addressing control, indirect acquisitions, and anti-circumvention. It adds a conditional due diligence safe harbor, voluntary reporting of preexisting ownership, and further transparency and enforcement measures. The revisions remain proposed and may change before adoption.
Reporting of Potential Violations
Under Section 67.4, the proposal retains the requirement that a “facilitating entity” submit a complaint to the OAG when it knows, or should have known after reasonable due diligence, that a transaction violates SB 17. Facilitating entities include persons and entities that assist with, broker, insure, finance, value, or process acquisitions — such as mortgage lenders, title insurers, property insurers, appraisers, and licensed real estate professionals. The proposal expands reporting requirements to include post-closing transfers or assignments to affiliates, parents, subsidiaries, or commonly controlled entities when used to effect or conceal a prohibited acquisition.
The proposal restates Section 67.5 to clarify that any person, not only a facilitating entity, may submit a complaint about a suspected violation, together with supporting facts, documents, or other information. Unlike the reporting duty imposed on facilitating entities, this broader complaint mechanism is permissive.
Due Diligence Safe Harbor
The proposal adds Section 67.4(g), which provides that a facilitating entity conducting know-your-customer diligence in accordance with guidelines of an applicable regulatory body or standards adopted in good faith by a recognized industry group would not be deemed to have known or been required to know of a violation if its diligence did not uncover one. The proposal does not identify approved standards or specify whether a borrower certification, internal compliance policy, or another participant’s diligence alone would qualify. The safe harbor does not excuse a violation that is discovered.
Preexisting Ownership and Proposed Public Portal
New proposed Section 67.10 would permit the OAG to develop a plan for a public property-search portal identifying real property interests acquired before Sept. 1, 2025, that would have been prohibited under SB 17. The rule contemplates a portal similar to other statewide public information registries. The OAG’s explanation refers to finalized enforcement actions. The proposal authorizes planning only; questions about the portal’s scope, listing criteria, and treatment of historical ownership remain unresolved. New proposed Section 67.6 would permit any person to voluntarily submit reports to the portal.
Enforcement and Investigative Procedures
The proposal revises Section 67.3 to require the OAG’s designated enforcement unit to include a task force responsible for receiving and investigating complaints, coordinating with governmental agencies, issuing guidance, responding to written inquiries concerning specific transactions, and enforcing compliance. New Section 67.8 adds the Texas Department of Agriculture to the agencies the OAG may consult, alongside the Texas Secretary of State, the Texas Real Estate Commission, the Texas Department of Insurance, and other relevant agencies.
Control and Indirect Acquisitions
The proposal retains the existing definition of “control,” which includes direct or indirect power over an entity’s management, policies, or acquisition or disposition of Texas real property. General partners, managing members, executive officers, holders of at least 10% of voting interests, and persons with specified rights to acquire or dispose of an entity’s Texas real property are deemed to exercise control.
Practical Implications
While the proposal largely retains the March 2026 rules, there are significant additions, including expanding reporting obligations to include certain post-closing transfers.
With the addition of the conditional due diligence safe harbor for facilitating entities, mortgage lenders, title insurers, and other facilitating entities may wish to review their diligence procedures to ensure they comply with applicable regulatory guidance and recognized industry standards. As the OAG has not yet identified approved standards, facilitating entities may also wish to monitor any additional guidance the OAG may provide in this regard.
Written comments on the revised proposed rules will be accepted for 30 days after their publication in the Texas Register on Oct. 9, 2026. The earliest possible adoption date is Nov. 8, 2026. Comments may be emailed to OAGRuleCommentsCh67@oag.texas.gov or mailed to the OAG’s General Counsel Division.