The New Disclosure Law Explained

If you’re a real estate professional or a Texas property owner preparing to sell, you’ll need to be up to speed on the new disclosure law put into effect by the Texas legislature and enforced by Texas Real Estate Commission (TREC) and Texas REALTORS. As of September 1, 2021, Texas sellers are  required to provide notice to buyers when selling a property located in a Public Improvement District (PID). If at first this new disclosure law is about as clear as mud to you, you’re not alone. Ironically, it’s quite similar to the state’s current municipal utility district (MUD) notice requirements that you might already be familiar with. Either way, this new disclosure law is really not that complicated. Here’s the basics of what you need to know to meet the new requirements:  

What’s a PID?

A Public Improvement District is property in a specific geographic area that allows for a city or county to plan and execute a source of funding that will pay for improvements within the district. A PID can affect all types of real estate including but not limited to: single family home neighborhoods, condominiums and commercial properties. PIDs file their documentation paperwork with the county clerk and anyone can seek the information on the city and/or county’s website.

Notice One, Notice Two

Sellers are required to provide notice twice to their buyer during the purchasing process with information about where the PID is located and the name of the city or county that authorized the PID. The first notice should be given prior to the finalization of the sales contract. The second notice must be given at closing. It will need to be notarized and officially recorded in the county’s records. Both notices must be signed by both the buyer and seller.

Failure To Comply

If the seller fails to provide these notices, it can create all kinds of problems. The buyer could totally walk away from the contract prior to closing. Plus, the failure to give required notices could result in being fined by TREC and/or Texas REALTORS and ultimately end in a costly lawsuit. As the seller (or the real estate agent representing the seller), it’s crucial that these requirements are followed to the T. It’ll save everyone a lot of headaches and help assure a smooth closing. 

The Notice Forms

TREC has launched an official PID notice form required for this new disclosure law. Be prepared to fill out information such as: property address, name of the public improvement district, name of the municipality or county that approves the PID and the statute (or local government code) that the PID was created under. For more information go to: www.trec.texas.gov