Fellow broker, manager, and leader extradornaire, Ann Walker updates you on what you need to know on MUD and annexation notices. You can also download her powerpoint for your next sales meeting.
Most agents listing properties in Houston’s suburban real estate markets have become familiar with Municipal Utility Districts (MUD) and the associated notification requirements to buyers purchasing properties located in a MUD. Water Code, sec. 49.452 requires a seller of property located in a municipal utility district to provide written notice to the buyer regarding the taxing authority of the MUD. The legislation requires sellers of a property in a MUD to include in the required written notice a statement about the potential for annexation of the property by a municipality or the potential for dissolution of the MUD. The notices vary depending on the location of the property relative to city limits and boundaries of the city’s extraterritorial jurisdiction (ETJ) which generally expand beyond the actual city limits.
These notice requirements are intended to inform property buyers in a MUD that they could be annexed if the property is located within the ETJ of a city, or the MUD could be dissolved if the property lay within city limits.
HAR provides members three separate Water District Notices that can be used for properties located in a MUD district depending on the location of the property. HAR forms 400A, 400B and 400C are explained below to help you determine which form should be used.
• HAR Form 400A – Applies to property located partially or wholly within the corporate limits of a municipality. The seller needs to provide notice that the MUD is subject to dissolution by the municipality without the consent of the property owners served by the MUD. If your property is located within the city limits, this is the form for you.
• HAR Form 400B – Applies to property located partially or wholly within the ETJ of a municipality but not within the municipal corporate limits. In this scenario the seller must provide notice that the property is subject to annexation by the municipality without the consent of the property owner. If your property is located outside of the incorporated city limits but inside the city’s ETJ, this is the form for you.
• HAR Form 400C – Applies to property located outside the limits of either a municipality or a municipal ETJ. The required notice does not need to include a statement concerning annexation or dissolution. If your property is located outside of city limits and beyond the city’s ETJ boundary, this is the form for you.
Determining whether or not a property is located within city limits or within a city’s ETJ is the most difficult part of the notification requirements. Lawmakers in Austin envisioned a system where the operator or tax assessor of a MUD district would be able to share this information with you. However, in practice it can be difficult to locate anyone who knows what you are asking, let alone has the correct information.