Selling Land in a Texas MUD: The Notice You Must Give Buyers

Short answer: Some land around Texas cities sits inside a municipal utility district (MUD) or another special district that provides water, sewer, drainage or flood control and can levy taxes or a standby fee. Texas Water Code Section 49.452 says a seller of property in such a district must give the buyer a written notice before a binding contract is signed, and a copy with current information is signed and recorded at closing. The form in Section 49.4521, titled 'Notice to Purchaser of Special Taxing or Assessment District', states the district's current or projected tax rate, the bonds voters approved and the bonds issued, any standby fee, and the district's purpose. If the contract is signed without the notice, the buyer may terminate it and may sue for damages, within 90 days after the first district tax notice or four years after the sale, whichever comes first. Check your tax statement for district taxes before you list.

Some land around Texas cities sits inside a municipal utility district, usually called a MUD, or another special district that builds and pays for water, sewer and drainage. These districts can levy their own property tax on top of the county, city and school district. Because that tax can be a real cost for a buyer, the Texas Water Code requires sellers to tell buyers about it in writing, on a set form, before the contract is signed. This guide explains when the notice applies, what it says, and what happens if it is missed.

This article is general information. It is not legal advice. Ask your title company or a Texas real estate attorney about the notice for your property.

Which districts the rule covers

Water Code Section 49.452 applies to districts whose principal function is providing water, sanitary sewer, drainage and flood control facilities or services, with bonds payable from taxes or a standby fee. Many MUDs fit that description, and the section also reaches certain other districts created under the Water Code, a special act, or Chapter 375 of the Local Government Code.

To see whether your land is in one, look for a MUD or other water district among the taxing units on your property tax statement or appraisal district record. Our guide on how to look up the property taxes you owe shows where to find them. County pages on our site, like Brazoria County, also list the taxing units the Comptroller shows for that appraisal district, including MUDs.

When the notice must be given

Section 49.452 says a person who proposes to sell or convey real property located in a covered district must give the purchaser the written notice, and that it must be given to the prospective purchaser before a binding contract of sale is signed. A separate copy with current information is signed and recorded at closing. In practice, give it with or before the contract, not as a surprise at the closing table.

What the notice says

Section 49.4521 sets the form, titled "Notice to Purchaser of Special Taxing or Assessment District" in large bold type. It tells the buyer that:

• the district may, with voter approval, levy taxes and issue bonds, and may impose an unlimited tax rate to pay them;
• the district's current tax rate per $100 of assessed value, or the projected rate if it has not taxed yet;
• the total bonds voters have approved and the bonds actually issued, by purpose such as water, sewer and drainage, roads, and parks;
• any standby fee the TCEQ approved, which becomes a personal debt and a lien if unpaid;
• the district's purpose, and that the cost of its facilities is not part of the purchase price.

The form also warns that the information can change and that the buyer should contact the district for current figures. Seller and buyer both sign and date it.

If the notice is missed

Section 49.452 gives the buyer real remedies. If the contract was signed without the notice, the buyer may terminate it. The buyer may also sue for damages: either all costs relating to the purchase plus interest and reasonable attorney's fees, or damages of up to $5,000 plus reasonable attorney's fees. The suit must be brought within 90 days after the buyer receives the first district tax notice, or within four years after the sale, whichever comes first. If the seller gives the notice by closing and the buyer chooses to close, the buyer is presumed to have waived the right to terminate and to recover damages.

For a seller, the lesson is simple: find out early whether the land is in a district, and get the current notice information from the district before you sign anything.

How a district tax affects price

A buyer will add the district tax to the cost of owning the land each year. Our guide on the cost of holding vacant land shows how those yearly costs add up, and our guide on who pays closing costs covers how taxes are split at closing.

A seller's checklist

1. Check the tax statement or appraisal district record for a MUD or other water district.
2. Contact the district for its current tax rate, bonds and any standby fee.
3. Give the buyer the notice before the contract is signed, and keep a signed copy.
4. Make sure the title company records the current notice at closing.

Our guide on what to have ready before you sell covers the rest of the paperwork. If you want a number for land in a district, you can ask us for a written cash offer.

Common questions

What is a MUD in Texas?

A municipal utility district is a special district created under the Texas Water Code. The districts covered by the seller notice rule are those whose principal function is providing water, sanitary sewer, drainage and flood control facilities or services, with bonds payable from taxes or a standby fee, according to Water Code Section 49.452.

Do I have to tell a buyer my land is in a MUD?

Yes, if the land is in a covered district. Section 49.452 says a person who proposes to sell or convey real property located in such a district must give the purchaser a written notice before a binding contract is signed. A copy with current information is also signed and recorded at closing.

What does the MUD notice say?

Under Section 49.4521, the 'Notice to Purchaser of Special Taxing or Assessment District' states the district's current tax rate per $100 of value (or the projected rate), the bond amounts voters approved and the bonds issued, any standby fee, and the district's purpose. It says the cost of district facilities is not part of the purchase price.

What if the seller didn't give the MUD notice?

Section 49.452 says the buyer may terminate the contract. The buyer may also sue for damages, either all costs related to the purchase plus interest and attorney's fees, or up to $5,000 plus attorney's fees. If the notice is given by closing and the buyer closes anyway, the buyer is presumed to have waived those rights.

How do I know if my land is in a MUD?

Look for a MUD or other water district among the taxing units on your property tax statement or appraisal district record. The district itself can confirm its current tax rate and bonds.

Sources

• Texas Water Code Section 49.452 (notice to purchasers)
• Texas Water Code Section 49.4521 (form of the notice)

Each source was opened and read on October 23, 2026. Rules and rates change: check the source for the current version.

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