MUD and PID notices: what Texas sellers hand buyers
Draft Pending review by a Texas title professional before it is final.
Many Texas homes pay a tax or an assessment to a district on top of the usual county, city and school taxes. If yours does, Texas requires a written notice to the buyer. Here is what each district is and what the notice says.
Updated
What a MUD is
A municipal utility district — a MUD — is a small local government that builds and runs the water, sewer and drainage for a neighborhood. MUDs are common in subdivisions built outside city limits, especially around Houston. A MUD pays for its pipes and plants with bonds, and pays the bonds with a property tax of its own, on top of the county, city and school district taxes.
The MUD notice
Texas requires the seller of a home in such a district to give the buyer a written notice about it before the buyer signs the contract (Water Code §49.452). The notice follows a form set by law. It names the district and gives its tax rate and its bonds, so the buyer knows the tax before committing. The district, or the title company, can give you the current figures.
The TREC contract points to this notice among the title notices in ¶6, and the buyer signs it too.
What a PID is
A public improvement district — a PID — is an area where a city or county has paid for improvements such as streets, drainage, landscaping or parks, and charges the homes that benefit an assessment to repay the cost. The assessment is usually billed in yearly installments with the property taxes, for a set number of years.
The PID notice
Texas requires the seller of a home in a PID to give the buyer a written notice that the home owes PID assessments (Property Code §5.014). The TREC contract carries the notice’s words among its title notices (¶6). The city or county that runs the district can tell you what the home still owes.
How to tell if a home is in one
Your tax bill lists every taxing unit that taxes your home, and a MUD shows up there by name. A PID assessment usually appears on the tax statement too. The appraisal district’s page for your property lists the taxing units, and a title company will confirm both once you’re under contract.
What it changes for a buyer
A MUD’s tax is part of the home’s combined tax rate, so it changes the monthly cost of owning the home; a PID adds its installment on top. Two homes at the same price can cost a buyer different amounts a month for this reason alone, which is why buyers compare the monthly cost and not just the price.
On ListedBy
When the public records put a home in a MUD or a PID, its listing on ListedBy says so in the records section, and the monthly cost uses the home’s combined tax rate. When you build a listing, the notice goes on your list of disclosures to upload for buyers.