H.B. No. 5435 amends Section 2252.909 of the Government Code to establish new requirements for leases between governmental entities and nongovernmental entities regarding public property. The bill mandates that such leases must include terms that require the contractor to execute both a payment bond and a performance bond for any construction, alteration, or repair work on the leased property. Additionally, the bill stipulates that the governmental entity must receive a notice of commencement at least 90 days prior to the start of any construction activities.

However, the bill introduces a specific exemption under Subsection (b-1), stating that the requirement for a notice of commencement does not apply to leases between institutions of higher education and other parties concerning public property. This change is effective for leases entered into on or after September 1, 2025.