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Signed Into Law
Signed June 20, 2025Effective 2025-06-20
HB5435

Regular Session

Relating to required lease terms for public property leased to a nongovernmental entity.

Government Affairs & Regulatory Compliance Analysis

HB5435: Government Affairs Overview

HB5435 creates a specific exemption for private entities leasing property from Texas public institutions of higher education. Effective immediately, these tenants are no longer required to provide a 90-day Notice of Commencement prior to construction, though mandatory payment and performance bonding requirements remain in full force.

Rep. Keith Bell·House Bill·Regular Session

Low
Low Cost
Effective:2025-06-20
Enforcing Agencies

Public Institutions of Higher Education (as Lessors)

Business Impact

Who HB5435 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: low

Standard regulatory changes (effective 2025-06-20). Review during normal business planning.

🏢

Real Estate

Affected business types:

  • Property developers
  • Commercial landlords
  • Property managers
  • Real estate investors
View all real estate legislation

Key Operational Considerations

  • 1New Leases: Drafting teams must update lease templates for public university projects. Remove clauses requiring the "90-day Notice of Commencement" under Government Code Section 2252.909.
  • 2Construction Contracts: No change. You must continue to mandate that General Contractors provide payment and performance bonds as required by the underlying statute.

Estimated Cost Impact

lowMinimal cost impact anticipated.

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HB5435
Relating to required lease terms for public property leased to a nongovernmental entity.
Low Urgency
Passed with Opposition
House Vote145 - 1
YEA
99% in favor146 voting
Senate Vote31 - 0
YEA
100% in favor31 voting
1
Total Opposition Votes
Cost Impact
Low
Effective
2025-06-20
Enforcing Agencies
Public Institutions of Higher Ed...
Primary Author: Rep. Keith Bell
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: June 20, 2025 (Due to supermajority vote, despite statutory text referencing September 1).
  • Compliance Deadline: Immediate. Applies to all leases entered into on or after the effective date.
  • Agency Rulemaking: None. The statute is self-executing and requires no further agency interpretation.

Immediate Action Plan

  • 1. Audit Pending Deals: Immediately review any leases with public universities currently in negotiation. Strike the 90-day notice clause.
  • 2. Review Existing Portfolios: Identify active university ground leases with future construction phases. Draft a simple lease amendment to incorporate the HB5435 exemption.
  • 3. Update Schedules: Notify construction teams that the 90-day lead time is no longer a legal constraint for university projects.
  • 4. Verify Bonds: Reinforce internal controls to ensure bonds are executed before work starts, as this remains the sole statutory protection for the public land interest.

Operational Changes Required

Contracts

  • New Leases: Drafting teams must update lease templates for public university projects. Remove clauses requiring the "90-day Notice of Commencement" under Government Code Section 2252.909.
  • Existing Leases: The law is not retroactive. If you are currently under a lease containing the 90-day notice requirement, you remain contractually bound to it. You must negotiate a lease amendment to utilize this new exemption for future construction phases.
  • Construction Contracts: No change. You must continue to mandate that General Contractors provide payment and performance bonds as required by the underlying statute.

Hiring/Training

  • Project Management: Update development schedules. Project Managers can now schedule ground-breaking immediately upon permit issuance and bond execution, eliminating the previous three-month statutory buffer.

Reporting & Record-Keeping

  • Filing Elimination: You are no longer required to file the Notice of Commencement with the university administration.
  • Retention: You must strictly maintain proof of Payment and Performance Bonds. In the absence of the 90-day notice, the university’s primary compliance check will be an audit of these bonds.

Fees & Costs

  • Savings: Reduces project carrying costs by eliminating the mandatory 90-day idle period between lease execution/design finalization and construction start.

Strategic Ambiguities & Considerations

  • Lessor Definition: The exemption applies strictly to "institutions of higher education." It does not apply to leases with University Foundations or separate non-profit real estate holding companies unless those entities are legally structured as governmental bodies. If your lease is with a private foundation, standard private contract law applies, and this statute is irrelevant.
  • Mixed-Jurisdiction Projects: For developments spanning multiple parcels where one lessor is a university and another is a city or county, the exemption *only* applies to the university parcel. The 90-day notice remains mandatory for the portion of the project on city/county land.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 14, 2025
Passed House
May 8, 2025
Passed Senate
May 28, 2025
Signed
Jun 20, 2025
Effective
Jun 20, 2025
TopicsPublic Lands, Buildings & ResourcesState Agencies, Boards & CommissionsProperty InterestsProperty Interests--landlord & Tenant
03

House Authors

Rep. Keith BellRepublican · Primary Author

Senate Sponsor

Sen. Robert NicholsRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Rep. Keith Bell

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Related by Topic

View more Public Lands, Buildings & Resources legislation
Quick Reference

Frequently Asked Questions

Common questions about HB5435

Q

What does Texas HB5435 do?

HB5435 creates a specific exemption for private entities leasing property from Texas public institutions of higher education. Effective immediately, these tenants are no longer required to provide a 90-day Notice of Commencement prior to construction, though mandatory payment and performance bonding requirements remain in full force.

Q

Who authored HB5435?

HB5435 was authored by Texas Representative Keith Bell during the Regular Session.

Q

When was HB5435 signed into law?

HB5435 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce HB5435?

HB5435 is enforced by Public Institutions of Higher Education (as Lessors).

Q

How significant are the changes in HB5435?

The regulatory priority for HB5435 is rated as "low". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB5435?

The cost impact of HB5435 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does HB5435 address?

HB5435 addresses topics including public lands, buildings & resources, state agencies, boards & commissions, property interests and property interests--landlord & tenant.

Q

What are the key dates for HB5435?

Key dates for HB5435: Effective date is 2025-06-20. Consult with legal counsel regarding applicability.

Q

Which Texas businesses are affected by HB5435?

HB5435 primarily affects property owners and real estate professionals. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026