H.B. No. 718 introduces a new provision in the Texas Education Code that prohibits public institutions of higher education from entering into contracts with private entities for the construction of student housing facilities if those entities have pending actions or liens related to claims of nonpayment to contractors, subcontractors, or vendors. The bill specifies that this prohibition does not apply if the private entity has provided a payment bond to cover the claim or is contesting the validity of the claim in good faith. This new section, designated as Section 51.9273, aims to ensure that institutions partner only with financially stable entities.

The bill clarifies that the new regulations will only apply to contracts entered into after the effective date of the Act, which is set for September 1, 2025. Contracts established before this date will continue to be governed by the existing laws. The legislation was passed with significant support in both the House and Senate, reflecting a strong legislative consensus on the need for these protections in higher education partnerships.

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