Texas bill to ban purchase of real estate by Chinese: some unintended consequences?

Texas state senator Lois Kolkhorst (R) has proposed to the state senate a bill that would ban “the purchase of or acquisition of title to real property” within the state by citizens of China, Iran, North Korea, or Russia (CINR) as well as various entities defined in the statute as being sufficiently connected with those countries.

I have comments about drafting problems in two areas: (1) who is covered, and (2) what is covered. In brief: (a) it covers permanent residents; (b) it covers dual citizens; and (c) it does not cover long-term leases, or if it does, it also covers short-term leases. In short, it will do way more and way less than it probably intends. You can confirm my take by looking at the language of the bill; it’s very short, and I’m attaching the text at the end of this post.

• Who is covered

Contrary to Kolkhorst’s own statement about the bill, it does not except permanent residents from its ban. She doesn’t seem to have read her own bill.

Second, it covers US-CINR dual citizens. As long as you are a citizen of China, Iran, North Korea, or Russia, you’re barred. Are you a US citizen, too, at the same time? Doesn’t matter, according to the law. Note that you can’t get around this by simply renouncing your foreign citizenship, because it’s not always simple. Unlike the US, many countries consider citizenship a duty, not a privilege, and it’s not for the citizen to renounce. My brief googling around on Iran suggests that getting rid of Iranian citizenship is not easy at all.

Ironically, the only way to determine whether someone is an Iranian citizen is to apply Iranian law–which might consider them a citizen even against their will. (This is true for citizenship of any country, which is always a matter of that country’s domestic law.) Thus, to enforce this law, the Texas authorities will need to apply Iranian law. As there has been quite a moral panic in Texas in the last few years about local courts allegedly applying Islamic law, one wonders what the legislators are going to do about this quandary.

Equally ironically in the other direction, it will cover the Olympic skier Eileen Gu, who acquired Chinese citizenship in 2019. Did she remain a US citizen? Doesn’t matter, under this law.

• What is covered

By its terms, the law covers the “purchase of or acquisition of title to” real property. (It is explicitly not retroactive.) But what does it mean to purchase or acquire title to real property? More importantly, what doesn’t it mean? It doesn’t mean having a lease on real property, that’s what. Chinese students in Texas will still be able to rent apartments to live in. But wait a minute: if you can have a lease for six months or a year, why not for ten years? Why not for 100? Or 1,000? It still wouldn’t count as the “purchase of or acquisition of title to” real property. It is precisely this ridiculous formalism that has allowed China to have an urban real estate market while being able to say that all urban land is state-owned.

Of course, it’s not beyond human capacity to define the leasehold itself as real property, and the law in fact does treat leases that way for some purposes (if the lease contract doesn’t specifically give the landlord the right of entry, they don’t have it, and it’s trespassing of them to come in without your consent). But if they’re going to treat leases that way, then that means that Chinese students (among others) aren’t going to be able to live anywhere; they can neither rent nor buy. Maybe that’s what Texas wants. Has someone asked the state university system what they think of this?

Here’s the text of the bill: