Fifth Circuit Questions Chinese Citizens' Challenge to Texas Property Ban
The Fifth Circuit is reviewing if Chinese citizens abroad can contest Texas's property ban under SB 17.
Why it matters: This ruling could clarify constitutional rights of foreign nationals and shape legal counsel strategies on property and foreign investment restrictions affecting major markets.
- The Fifth Circuit heard arguments on November 2, 2026, about Chinese nationals suing over Texas's SB 17 property purchase restrictions.
- Senate Bill 17, effective September 1, 2025, bans property acquisitions by people and entities from China, Russia, Iran, and North Korea.
- Plaintiffs Min Huang and Qiong Dai, who own Houston rental properties but reside abroad, claim SB 17 violates their constitutional rights.
- The lower court dismissed the case, stating foreign nationals outside the U.S. generally lack constitutional protections, which the Fifth Circuit questioned.
On November 2, 2026, the Fifth Circuit Court of Appeals heard arguments over whether Chinese citizens living abroad can legally challenge Texas' Senate Bill 17 (SB 17).
SB 17, effective since September 1, 2025, prohibits individuals and entities from China, Russia, Iran, and North Korea from acquiring interests in Texas real estate. The law aims to address national security concerns and restrict foreign influence in key property markets.
Plaintiffs Min Huang, who resides in Shanghai, and Qiong Dai, based in New Zealand, own rental properties in Houston but say SB 17 blocks them from purchasing additional properties. They argue the law is unconstitutional because it infringes on their rights related to property ownership.
Initially, a lower court dismissed their claims, citing the general principle that foreign citizens outside the U.S. do not have constitutional rights. However, the Fifth Circuit panel expressed skepticism about this broad exclusion. Judges questioned whether individuals should have constitutional protections when actions involve property within the U.S. or court decisions affecting their rights.
Justin Sadowsky, attorney for the plaintiffs, emphasized, "There are three grounds for people having constitutional rights in the United States: 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." He also noted that plaintiffs have strong intentions—and some past precedent—to purchase properties in Texas.
On the defense, Benjamin Mendelson, Assistant Solicitor General for Texas, stressed a high standard for challenges, stating, "The standard is not a reasonable probability that an event will happen. The standard is that the event is certainly impending," emphasizing the state's justification behind SB 17.
The outcome could set important precedent on constitutional rights related to foreign ownership of U.S. real estate, impacting national security, property law, and foreign investment rules. Legal professionals advising in real estate and constitutional law will closely follow the decision.
By the numbers:
- September 1, 2025 — Effective date of Texas Senate Bill 17 restricting property ownership
- November 2, 2026 — Date Fifth Circuit heard arguments on SB 17 lawsuit
- Four countries specified in SB 17 — China, Russia, Iran, North Korea
Yes, but: The Fifth Circuit has not yet ruled, and the timeline for a decision remains uncertain, meaning the legality of SB 17 and the rights of foreign nationals remain unresolved.
What's next: The court’s forthcoming decision will clarify whether foreign nationals living abroad possess constitutional protections to challenge state property bans like Texas's SB 17.