When State Law Collides with Fair Housing: What Texas Realtors Must Know About SB 17

Adriana Perez
Sep 12
4 min read

A Cautionary Tale from Long Island

Imagine house-hunting on a quiet Long Island street. Two buyers, identical incomes and credit scores, meet the same real-estate agent. One is white; the other is Black.

Over three years, Newsday’s undercover investigation “Long Island Divided: Testing the Divide” repeated that experiment with 93 agents and 86 pairs of testers, Black, Hispanic, Asian, and white, armed with identical financial profiles. The results were unsettling,

Black testers experienced unequal treatment 49% of the time.
Hispanic testers: 39%.
Asian testers: 19%.

The discrimination was subtle:

Agents quietly steered minority buyers toward or away from certain neighborhoods.
They offered them fewer listings.
They required extra mortgage documentation from minority testers but not from white buyers.
They spoke in coded phrases, “good schools,” “safer area,” “better fit”, that masked segregation.

Most of these agents probably didn’t set out to break the law. But their choices violated the Fair Housing Act (FHA), the federal law that promises every person the right to rent or buy a home free from discrimination.

This investigation is a reminder: housing bias often hides in everyday practice, and it affects entire communities, not just real estate insiders.

Why Fair Housing Matters to Everyone

Fair housing isn’t just a realtor’s rulebook. It is the legal and moral foundation for:

Neighborhood Stability. When people can live where they choose, communities stay economically balanced and diverse.
Economic Opportunity. Access to certain school districts, jobs, and services often depends on where you live. Housing discrimination limits upward mobility.
Property Values. Segregation and exclusion can depress or distort local markets, affecting every homeowner’s equity.
Social Cohesion. Inclusive housing reduces the divides that feed mistrust and conflict.

The FHA protects all of us, buyers, sellers, tenants, landlords, because where we live shapes our chances in life.

What SB 17 Does

Starting September 1, 2025, SB 17 prohibits individuals and entities “domiciled” in certain designated countries, including China, Russia, Iran, and North Korea, from:

Buying or acquiring any interest in Texas real property (residential, commercial, agricultural, or mineral).
Leasing property for more than one year if they fall under those designations.

Exemptions include U.S. citizens and lawful permanent residents (even if originally from a designated country) and a narrow homestead carve-out.

Penalties range from civil fines to forced sale of property and, in some cases, state-jail felony charges.

Supporters say SB 17 protects national security and critical infrastructure. But in real estate practice, and under federal law, its mechanism of excluding people based on national origin lands in dangerous territory.

Where SB 17 and Fair Housing Collide

The Fair Housing Act forbids housing discrimination on the basis of race, color, religion, sex, familial status, or national origin. SB 17’s core, blocking transactions because someone is from a “designated country”, mirrors the very conduct the FHA prohibits.

Legal flashpoints:

National-Origin Discrimination. Denying a transaction because a buyer is from a specific country is the textbook definition of FHA violation.
Federal Preemption. Housing discrimination and foreign relations fall under federal authority; courts may find SB 17 conflicts with federal law.
Equal Protection Challenges. The U.S. Constitution subjects nationality-based laws to the highest legal scrutiny.
Due Process / Vagueness. Terms like “domiciled” or “controlled by” may be too ambiguous to give fair notice.

Multiple lawsuits are already underway. Until the courts decide, every professional, and every buyer or seller, operates in a legal gray zone.

Lessons from Long Island Divided

The Long Island findings illustrate the danger of unconscious bias:

Subtle Steering. A Texas agent who “warns” a buyer from a designated country about SB 17 might unintentionally discourage or redirect that buyer, mirroring the steering uncovered on Long Island.
Unequal Treatment. Asking only certain clients for extra proof of citizenship is national-origin discrimination.
Code-of-Ethics Exposure. REALTORS® must provide equal service to all. SB 17 does not cancel that duty.

The parallel is clear: well-intentioned professionals can violate federal law without realizing it.

Practical Steps for Realtors, and Takeaways for Everyone

For real estate professionals

Stay Current on Legal Challenges. Monitor updates from the Texas Attorney General and Texas REALTORS®. Court rulings could delay or overturn parts of SB 17.
Standardize Your Process. Give every client the same list of required documents and the same scripted explanation of SB 17.
Train Your Team. Include SB 17 scenarios in fair-housing training; emphasize that FHA obligations override state law.
Avoid Coded Language. Replace “People from your country can’t buy here” with a neutral statement: “Texas Senate Bill 17 is under legal challenge; please consult a real-estate attorney for guidance.”
Audit Yourself. Conduct internal “mystery shopper” tests or third-party audits, as Newsday did, to uncover unintentional bias.

For the Broader Public

Know Your Rights. Whether you rent or own, you are protected by federal law from discrimination in housing transactions.
Watch for Subtle Signs. Being shown fewer listings, being asked for extra paperwork, or hearing coded warnings can all signal illegal bias.
Speak Up. HUD and local fair-housing agencies investigate complaints from anyone, tenant, buyer, or seller.

Market Implications to Watch

Reduced Foreign Investment. Texas markets such as Houston, Dallas, and Austin could see a slowdown in international buying.
Property Value Shifts. Less demand may affect pricing from high-end condos to farmland.
Increased Legal Costs. Brokerages may need more compliance staff or legal reviews.
Reputational Risk. As Long Island Divided showed, public trust can evaporate when discrimination surfaces.

The Long Island Divided investigation proved that fair-housing violations can flourish even where anti-discrimination laws are firmly in place. SB 17 raises the stakes by creating a direct conflict between Texas legislation and federal fair-housing protections.

This isn’t just a realtor issue. Where people are allowed to live shapes schools, jobs, and the future of entire communities.

Texas realtors, and every Texan who cares about fairness, must:

Follow state law as it stands, while
Unflinchingly upholding the federal Fair Housing Act and the REALTOR® Code of Ethics.

Fair housing protects everyone’s right to choose where to live and build a life. Navigating the tension between SB 17 and the FHA isn’t only about compliance; it’s about preserving the very principle of equal opportunity in the place we all call home.

Key Resources