Is the water district keeping your client from a valid contract?

iStock_000001503195SmallI am going to let you come to your own conclusion. I do want to take this opportunity to point out something many agents are still missing. The following is taken from page three of the 1 to 4 family contract. I am surprised how many realtors wait for this to be handled by the title company at closing. How can a listing agent be willing to let their seller go under contract without considering this disclosure?

The best way to find out if the property is in a MUD or WCID is to look at the tax records and also double check with the title company to determine who the taxing authority is.

This was copied from page three of the 1 to 4 Family Contract

(3) STATUTORY TAX DISTRICTS:  If the Property is situated in a utility or other statutorily created district providing water, sewer, drainage, or flood control facilities and services, Chapter 49, Texas Water Code, requires Seller to deliver and Buyer to sign the statutory notice relating to the tax rate, bonded indebtedness, or standby fee of the district prior to final execution of this contract.

Here is a little history why we have to concern ourselves with this

This is from our broker Jeffrey Dochen

I remember back in the 80′s when Rob Roy on the Lake was developed, the developer got approval for form a water district and sell bonds to raise money to construct the water treatment plant, water storage facility, and the water distribution lines.  The tax rate was modeled upon the notion that once homes were constructed on all of the lots  that the appraised value of the homes would be great enough to cover the debt service on the issued bonds.

When the real estate crash of the late 80′s hit, only a fraction of the lots were built on and the result was much higher property taxes on the homes that were built.

In this instance, we are talking about a Water District but the same held true for Municipal Utility Districts as well.  In some instances, the districts have the authority to levy Standby Fees on undeveloped lots as well.

Resources to help you with the matter

Here is a sample of the form to disclose the various information for a WCID or MUD

Here is a list of most of the MUDs and WCIDs for our area.

This form will give you or your client the information to fill in the blanks


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