Death Star Law Update: Dallas Lawsuit Impact on Texas Housing

Texas' "Death Star" Law: What Multifamily Housing Providers Need to Know

The regulatory landscape for Texas property owners and managers shifted dramatically in 2023 with the passage of House Bill 2127—a controversial state preemption law that critics have dubbed the "Death Star" bill. Now, more than two years after its passage, the law is finally getting its first major enforcement test. In October 2025, Dallas residents filed suit against their city to strike down 83 local ordinances, marking a new phase in how this law will reshape local regulations. Multifamily housing providers need to understand what this law means for their operations, compliance strategies, and future planning.

Key Takeaways:

• Dallas residents filed the first citizen-led lawsuit under HB 2127 in October 2025, targeting 83 city ordinances

• Any Texas resident can now sue their city over conflicting local rules—not just state officials

• Property managers should prioritize state Property Code compliance over local ordinances in covered areas

• The lawsuit outcome will set precedent for what cities can regulate statewide

What is the Death Star Law?

Officially known as House Bill 2127, this legislation fundamentally changed the relationship between state and local government authority in Texas. Passed in 2023, the law prevents Texas cities and counties from enacting local ordinances that exceed state law in specific regulatory areas including labor, business operations, agriculture, environmental controls, and health and safety standards.

The law establishes that if a regulatory field is entirely occupied by state code—such as the Texas Property Code—local municipalities cannot supersede or expand upon it with their own rules. Supporters argue this creates statewide consistency and eliminates the confusing patchwork of local regulations that burden businesses and property owners operating across multiple jurisdictions. Critics, however, contend it strips away important local protections and removes the ability of communities to address their unique challenges.

After initial legal challenges that briefly blocked the law, the Third Court of Appeals reversed a lower court ruling in July 2024, allowing HB 2127 to take effect and clearing the path for enforcement lawsuits against cities with potentially conflicting ordinances.

The Dallas Lawsuit: Citizens Take Action

The first major enforcement test of HB 2127 arrived in October 2025 when three Dallas residents sued their city in Denton County District Court, challenging 83 local ordinances as violations of the state preemption law. This case represents a significant shift in how the Death Star law is being enforced—it's no longer just advocacy groups filing challenges, but individual citizens taking their cities to court.

The lawsuit, with legal representation from the Texas Public Policy Foundation, targets ordinances covering LGBTQ+ protections, living wage requirements for city contractors, noise regulations for parks and recreational facilities, ride-hailing service rules at Dallas Love Field Airport, valet parking regulations, and gas drilling restrictions within city limits.

"Cities don't get to pick and choose which state laws they follow," said Matthew Chiarizio, a senior attorney for TPPF representing the plaintiffs. "For too long, Dallas has piled unnecessary and duplicative regulations on its citizens."

What makes this lawsuit particularly significant is that it demonstrates how the Death Star law can be enforced by ordinary residents, not just through state-level legal challenges. If the court sides with the plaintiffs, all 83 ordinances could be invalidated, fundamentally changing how Dallas regulates everything from labor practices to business operations.

The case builds on earlier legal battles. In 2023, Houston, San Antonio, and El Paso sued to block the law, with a Travis County judge initially ruling it unconstitutional. However, the Third Court of Appeals reversed that decision in July 2024, clearing the path for enforcement lawsuits like this Dallas case. The outcome will provide crucial guidance for other Texas cities facing similar challenges and will clarify which types of local regulations can survive under the new preemption framework.

Areas Directly Affected by HB 2127

The Death Star law targets city ordinances in several key areas relevant to multifamily housing operations:

Labor and Wages: Local minimum wage requirements, mandatory paid sick leave ordinances, and other employment protections that exceed state standards are now prohibited.

Health and Safety: City-specific health and safety regulations that go beyond state requirements in areas covered by state codes face challenges.

Environmental Controls: Local environmental regulations that exceed state standards in preempted areas may no longer be enforceable.

Business Operations: Ordinances governing how businesses operate, including property management practices covered by state property codes, must align with state law.

It's important to note that HB 2127 does not apply universally to every city rule—only those areas explicitly covered by state law are subject to preemption. Cities retain authority over matters not occupied by state regulation.

What Does This Mean for Smaller Communities?

For property owners and managers in smaller, more conservative Texas communities like Lubbock or surrounding cities, the immediate impact of HB 2127 may be limited. Most small cities and towns haven't passed the types of progressive ordinances targeted by the law, so day-to-day operations likely won't change significantly in the short term.

However, the law serves an important preventive function by ensuring that state law remains the primary framework governing rental property operations. This prevents future scenarios where individual cities might attempt to implement local rules that contradict state statutes or create compliance burdens for property managers operating across multiple jurisdictions.

The primary benefit for smaller communities is maintaining regulatory consistency and predictability—property owners can rely on state property codes as the definitive guide without worrying about unexpected local variations in covered regulatory areas.

Why Should Multifamily Owners and Managers Care?

HB 2127 carries significant implications for multifamily housing providers across Texas, particularly those operating in multiple cities. The October 2025 Dallas lawsuit reveals a critical new dimension: the law can be enforced by individual citizens, not just state officials or advocacy groups. This dramatically increases the likelihood that local ordinances will face legal challenges.

Simplified Compliance: If you manage properties in several Texas cities, statewide consistency in covered regulatory areas can dramatically simplify your compliance efforts. You'll no longer need to track and implement different rules for wages, labor protections, or property management practices across different jurisdictions.

Urban Market Changes: Property owners in major cities like Dallas, Austin, and Houston may see city-specific operating rules overturned, especially those tied to tenant rights, minimum wage requirements, or special health and safety standards that exceed state law. This could reduce compliance costs but may also change community expectations.

Citizen-Led Enforcement: The Dallas case demonstrates that any resident can challenge local ordinances they believe violate HB 2127. This means cities face pressure not just from state-level actors but from their own citizens, making it more likely that conflicting ordinances will be challenged and potentially overturned.

Legal Precedent Matters: Ongoing lawsuits like the Dallas case will establish legal precedents that determine what cities can regulate moving forward. These decisions will impact future advocacy efforts and shape the relationship between multifamily housing providers and city governments.

Streamlined Development: For developers and investors, HB 2127 creates a more predictable regulatory environment across Texas. This could expedite development projects, reduce legal complexities, and lower compliance costs—particularly beneficial for multi-city portfolios.

What Remains Uncertain

Despite HB 2127 being in effect since July 2024, significant uncertainty remains as the Dallas lawsuit and other legal challenges move through the Texas court system:

Active Litigation: The October 2025 Dallas lawsuit is the first major citizen-led enforcement case. How the Denton County District Court rules will set important precedents for both future challenges and city responses. Appeals are likely regardless of the initial outcome, potentially taking the case to the Texas Supreme Court.

Scope Interpretation: Which specific ordinances fall within preempted areas versus those remaining under local authority continues to be litigated and clarified through court decisions. The Dallas case will help define these boundaries more clearly.

Citizen Enforcement Trends: Now that individual residents have shown they can successfully file lawsuits under HB 2127, it's unclear how many more citizen-led challenges will emerge in other Texas cities or what types of ordinances they'll target.

Legislative Changes: Future legislative sessions may further expand or restrict city powers depending on political climate, lobbying efforts, and the outcomes of current legal battles.

City Compliance Strategies: How cities will respond to these lawsuits remains uncertain. Some may proactively repeal potentially conflicting ordinances, while others may fight to preserve local authority in court.

Multifamily housing providers should actively monitor developments through state industry associations, legal bulletins, and news from large cities fighting these lawsuits to stay ahead of changes.

Practical Steps for Multifamily Housing Providers

To navigate this evolving regulatory environment effectively:

Focus on State Law: Make Texas state codes—particularly the Property Code—your primary compliance framework. Ensure your policies, procedures, and employee training align with state standards.

Stay Informed: Track statewide legislative changes and major lawsuit outcomes. Court decisions in cities like Dallas will provide clues about regulatory trends that may eventually affect your markets.

Engage with Associations: Maintain active membership in industry associations that monitor and report on legal developments. Organizations like LAA provide crucial updates and advocacy on behalf of members.

Document Compliance: Maintain thorough documentation showing your operations comply with state law, providing protection if local ordinances are challenged or overturned.

Plan Strategically: Consider how greater regulatory consistency might affect your expansion plans, development projects, or operational strategies across Texas markets.

Looking Ahead

For most multifamily housing providers in smaller Texas cities, local rules remain largely unchanged for now. However, the October 2025 Dallas lawsuit marks a turning point—the Death Star law has moved from theoretical threat to active enforcement. This represents a fundamental shift in how Texas regulates business and property operations, one that will continue evolving through court challenges and potential legislative adjustments.

The key takeaway for property owners and managers is simple: stay engaged and informed. The Dallas case will likely take months or years to resolve through the courts, but its outcome will directly affect how cities across Texas can regulate multifamily housing operations. Those who monitor these developments and adapt proactively will be best positioned to take advantage of streamlined regulations while avoiding compliance pitfalls.

The Texas multifamily housing industry stands at an important crossroads. By understanding HB 2127 and tracking its implementation through cases like the Dallas lawsuit, you can turn regulatory change into competitive advantage—ensuring your operations remain compliant, efficient, and positioned for growth in an increasingly consistent statewide regulatory environment.