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Signed Into Law
Signed June 20, 2025Effective 2025-06-20
HB718

Regular Session

Relating to prohibiting a public institution of higher education from partnering with certain private entities for the construction of a student housing facility.

Government Affairs & Regulatory Compliance Analysis

HB718: Government Affairs Overview

Effective June 20, 2025, Texas public universities are statutorily prohibited from entering into student housing construction contracts with private entities carrying unresolved liens or pending nonpayment actions. This legislation creates a strict "clean hands" eligibility standard; general contractors and developers with open disputes regarding subcontractors or vendors will be disqualified from bidding unless they possess a payment bond or formally document a good faith contest.

Rep. Cecil Bell·House Bill·Regular Session

Critical
High Cost
Effective:2025-06-20
Enforcing Agencies

Public Institutions of Higher Education (University Systems) • Texas Higher Education Coordinating Board (THECB)

Business Impact

Who HB718 Affects

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

Regulatory Priority: critical

Significant regulatory changes (effective 2025-06-20). Review with your legal and compliance teams to understand implications.

🎓

Education

Affected business types:

  • School districts
  • Charter schools
  • Private schools
  • Education service providers
View all education legislation

Key Operational Considerations

  • 1Procurement & Legal Teams: Must implement a "Lien Sweep" protocol. Before any bid submission, staff must verify the entity’s legal standing regarding nonpayment claims.

Estimated Cost Impact

highSignificant operational investment may be required.

Enforcing Agencies

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HB718
Relating to prohibiting a public institution of higher education from partnering with certain private entities for the construction of a student housi...
Critical Urgency
Passed with Opposition
House Vote131 - 6
YEA
96% in favor137 voting
Senate Vote31 - 0
YEA
100% in favor31 voting
6
Total Opposition Votes
Cost Impact
High
Effective
2025-06-20
Enforcing Agencies
Public Institutions of Higher Ed...THECB
Primary Author: Rep. Cecil Bell
89th Texas Legislature
jdkey.com
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Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: June 20, 2025 (Immediate effect due to supermajority vote).
  • Compliance Deadline: Immediate. Any contract executed on or after June 20, 2025, is subject to this prohibition. If you are currently negotiating a deal expected to sign this summer, you must clear or bond around liens now.
  • Agency Rulemaking: While the Texas Higher Education Coordinating Board (THECB) has oversight, individual University Systems (UT, A&M, etc.) will likely issue immediate internal procurement updates. Expect new addenda to RFPs within 30 days.

Immediate Action Plan

  • 1. Conduct an Immediate Lien Search: Run a search on your contracting entities today. Identify every open lien or pending nonpayment claim.
  • 2. Bond or Contest: For every item found in step 1, either secure a payment bond or file a formal legal response contesting the claim.
  • 3. Update Bid Packages: Draft an "Affidavit of Non-Disqualification" to include proactively in all university RFP responses submitted after today.
  • 4. Review Bonding Capacity: Verify with your surety agent that you have sufficient capacity to bond around potential disputes without tapping out your limits for performance bonds.

Operational Changes Required

Contracts

  • University Agreements (Upstream): Expect new "Representations and Warranties" clauses in Master Service Agreements (MSAs) requiring you to attest to a lack of disqualifying liens. Breach of this provision will likely trigger "Termination for Cause."
  • Subcontractor Agreements (Downstream): You must strengthen indemnification clauses. If a subcontractor files a lien that disqualifies you from a university project, your contract must provide a mechanism to recover lost profits and damages from that subcontractor.

Hiring/Training

  • Procurement & Legal Teams: Must implement a "Lien Sweep" protocol. Before any bid submission, staff must verify the entity’s legal standing regarding nonpayment claims.
  • Project Managers: Train PMs to elevate subcontractor payment disputes to Legal immediately. Informal email disputes are no longer sufficient; a formal "good faith contest" is now a compliance requirement.

Reporting & Record-Keeping

  • Affidavit of Eligibility: Prepare a standard sworn statement for bid packages attesting that the entity has no pending actions or liens for nonpayment.
  • Contest Documentation: Create a "Contest File" for every disputed claim. You must be able to produce formal legal correspondence or court filings proving a claim is being contested in good faith to avoid disqualification.
  • Bond Verification: Maintain digital copies of all payment bonds ready for immediate submission to procurement officers.

Fees & Costs

  • Bonding Premiums: Budget for increased surety costs. You may need to secure payment bonds specifically to "bond around" liens to maintain bid eligibility.
  • Legal Spend: Anticipate higher legal fees to formalize disputes. You cannot simply ignore a vendor claim; you must legally contest it to preserve your ability to bid.

Strategic Ambiguities & Considerations

  • Definition of "Pending Action": The statute does not explicitly define if a "pending action" requires a filed lawsuit or if a formal demand letter triggers the ban. Guidance: Adopt a conservative approach. Treat any formal demand or filed lien affidavit as a trigger requiring a bond or formal contest.
  • Subjectivity of "Good Faith": The law allows an exception for "good faith contests" but leaves the determination of that validity to the University. A procurement officer could subjectively decide your contest lacks merit and disqualify you.
  • Scope of "Partnering": While the language targets Public-Private Partnerships (P3), the prohibition on "partnering... for construction" is broad. Guidance: Assume this applies to all prime construction contracts (Design-Bid-Build, CM-at-Risk), not just developer-led P3 models.

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JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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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.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Nov 12, 2024
Passed House
Apr 30, 2025
Passed Senate
May 28, 2025
Signed
Jun 20, 2025
Effective
Jun 20, 2025
TopicsEducationEducation--higherEducation--higher--generalHousingHousing--financeHousing--generalState Agencies, Boards & CommissionsPurchasingPurchasing--generalContractors' Liens
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House Authors

Rep. Cecil BellRepublican · Primary Author

Senate Sponsor

Sen. Tan ParkerRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

Explore more bills from this author and on related topics

More from Rep. Cecil Bell

View all bills by Rep. Cecil Bell

Related by Topic

View more Education legislation
Quick Reference

Frequently Asked Questions

Common questions about HB718

Q

What does Texas HB718 do?

Effective June 20, 2025, Texas public universities are statutorily prohibited from entering into student housing construction contracts with private entities carrying unresolved liens or pending nonpayment actions. This legislation creates a strict "clean hands" eligibility standard; general contractors and developers with open disputes regarding subcontractors or vendors will be disqualified from bidding unless they possess a payment bond or formally document a good faith contest.

Q

Who authored HB718?

HB718 was authored by Texas Representative Cecil Bell during the Regular Session.

Q

When was HB718 signed into law?

HB718 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce HB718?

HB718 is enforced by Public Institutions of Higher Education (University Systems) and Texas Higher Education Coordinating Board (THECB).

Q

How significant are the changes in HB718?

The regulatory priority for HB718 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB718?

The cost impact of HB718 is estimated as "high". This may vary based on industry and implementation requirements.

Q

What topics does HB718 address?

HB718 addresses topics including education, education--higher, education--higher--general, housing and housing--finance.

Q

What are the key dates for HB718?

Key dates for HB718: Effective date is 2025-06-20. Consult with legal counsel regarding applicability.

Q

What are the penalties under HB718?

HB718 establishes the following penalties: administrative/contractual penalty of Total disqualification from contract eligibility for Private entity has a pending action or lien for nonpayment of a contractor, subcontractor, or vendor without a payment bond or good faith contest.. Consult with legal counsel for specific applicability to your situation.

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