Fifth Circuit questions whether Chinese citizens can challenge Texas property ban

Two Chinese nationals say Senate Bill 17 unconstitutionally blocks them from making further purchases of Texas real estate. The state says their plans are too speculative and lack constitutional rights.(CN) — Two Chinese citizens living abroad asked the Fifth Circuit on Monday to revive their challenge to a Texas law barring people linked to China and other designated countries from buying most real property in the state.Min Huang, who lives in Shanghai, and Qiong Dai, who lives in New Zealand, own rental properties in the Houston area and want to buy more. They argue Texas Senate Bill 17, which took effect in September 2025, unconstitutionally blocks additional purchases.With limited exceptions, the law restricts individuals and entities connected to China, Russia, Iran and North Korea, countries flagged in U.S. intelligence assessments, from acquiring interests in Texas real estate.In December 2025, a lower court dismissed the plaintiffs’ claims, finding that foreign citizens outside the United States generally lack constitutional rights. U.S. District Judge Alan D. Albright, a Donald Trump appointee, stayed the rest of the case pending the Fifth Circuit’s decision in a related challenge, Wang v. Paxton.On Monday, attorney Justin Sadowsky told the appellate panel the Constitution protects the plaintiffs’ planned purchases because they would travel to Texas on visitor visas to complete them, the property is in Texas and enforcement would occur in Texas courts.“I think there are three grounds for people having constitutional rights in the United States,” he argued. “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.”Chief U.S. Circuit Judge Jennifer Walker Elrod, a George W. Bush appointee, questioned how the appeals court could help the two Chinese citizens after a lower court dismissed their claims and whether people living overseas have a constitutional right to buy Texas property without setting foot in the United States.Sadowsky said the case remains alive because a third plaintiff’s claims have not been dismissed, though he acknowledged the appeal could become moot if they are. He argued the law targets the property itself, giving buyers a protected interest once they purchase it, and that the Constitution protects transactions involving U.S. property even when buyers remain abroad.U.S. Circuit Judge Carl E. Stewart, a Bill Clinton appointee, asked whether the plaintiffs’ plans to purchase were speculative. Sadowsky said they have the same development interest as anyone else.“People who have purchased properties, who have plans to purchase properties, will in fact execute purchasing properties,” he said, also pointing to newly proposed attorney general regulations creating an enforcement task force and reporting requirements as evidence of a willingness to enforce the law.For Texas, Assistant Solicitor General Benjamin Mendelson argued that the plaintiffs lack standing because they “alleged no specific plans to purchase any real estate in Texas.” Citing related cases, he said the standard is whether the event is imminent, not merely probable.“The standard is not a reasonable probability that an event will happen,” he said. “The standard is that the event is certainly impending.”Mendelson further argued that sovereign immunity bars the suit, that foreign citizens abroad have no cause of action under the equitable doctrine of Ex parte Young and that the plaintiffs lack a “substantial connection” to the United States sufficient to assert constitutional rights.“A proposal doesn’t do anything,” he said, adding that no one has been arrested or prosecuted under the statute and that a settlement in an unrelated case does not equate to enforcement.Elrod asked whether the state has any interest in who owns land within its borders. Mendelson focused on the jurisdictional defects, while Sadowsky, in rebuttal, contended that national origin discrimination would trigger strict scrutiny and that standing should not require a completed transaction that would immediately moot the case.The panel also included Senior U.S. Circuit Judge Carolyn D. King, a Jimmy Carter appointee who participated remotely. It took the case under submission without indicating when it would rule.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads