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A MUD is a political subdivision of the state that’s authorized by the Texas Commission on Environmental Quality to provide water, sewage, drainage, and other services within its boundaries. The seller is required by the Texas Water Code to provide a buyer a notice to purchasers indicating that property is located within a MUD prior to the buyer entering into a sales contract. The notice must provide information regarding the tax rate, bonded indebtedness, and fees, if any, of the MUD.

The 88th Texas legislature made changes that went into effect June 18, 2023, that modify the content of the notice to provide more clarity to purchasers. MUDs are also now required to make the notice available online.

The revised notice separately lists the property tax and property assessments levied against the property for greater clarity. The revision also lists the amounts of bonds that have been issued by the MUD categorized by the type of facility the bonds will be used for: water, sewer, and drainage facilities; road facilities; parks and recreational facilities; and other facilities. Additionally, the notice must contain a disclosure informing the buyer that the information in the notice is subject to be changed by the MUD at any time and to contact the district directly for information on any proposed or pending changes.

You have a few options for obtaining copies of the notices. Beginning on June 18, 2023, MUDs were required to make the notice available on their websites. Additionally, MUDs are required to file these notices with their county property records office, so you may request a copy from the county. Lastly, the MUD is required to keep the correct notice on file and can provide a copy for an administrative fee not to exceed $10.

To look up a district’s information, including the contact information for the district’s agent, use TCEQ’s online database of utility districts.

Article reprinted from Legal FAQ: MUD and Buyer Special Notices
July 24, 2023 | Texas REALTORS® Staff