As of September 1, 2021, TREC and TAR have made several form updates to comply with recent legislation from the Texas Legislature. At a high-level, these updates include:
- The adoption of a new form: Addendum Containing Notice of Obligation to Pay Improvement District Assessment
- Minor updates to the TREC & TAR promulgated contracts
Keep reading to find out what this update means for you and get answers to frequently asked questions.
What is a Public Improvement District (PID)?
A Public Improvement District (PID) is a defined geographical area that provides specific improvements which are funded by the property owners in that area. These improvements are supplemental to services already provided by a city and may include things like additional security, street or sidewalk cleaning, landscaping and other beautification efforts, among others.
How do you know if a property is in a PID?
To see if a property is located in a PID, you can:
- Search the MLS. Search for a property and check the “Jurisdiction” or tax info tab.
- Search County Appraisal District (CAD) records. Search for a property on the CAD website where the property is located. The CAD records will indicate if the property is located in a PID and the name of the PID.
When should the new PID addendum be used?
If the property is located in a Public Improvement District, the seller is required to provide notice to the buyer. Notice must be provided before the contract is executed.
There are two ways sellers can provide notice of a Public Improvement District:
- A PID service plan, which includes information about the PID, and a PID notice. These documents should be publicly available on the PID website. As of September 1, 2021, PIDs are required to include a PID notice with their service plan. However, they are not required to do this immediately but when they next update their service plans. If the PID service plan does not include a PID notice, you will have to use the new addendum.
- An addendum to the contract using the “Addendum Containing Notice of Obligation to Pay Improvement District Assessment”
How to fill out the “Addendum Containing Notice of Obligation to Pay Improvement District Assessment”
If a property is located in a PID, you’ll need the following information to complete the new addendum:
- Property address
- Name of the Public Improvement District
- Name of the municipality or county that approves and levies assessments (this information can be found on the PID website and should be included on the PID service plan)
- Name of the city council or county commissioners court
- The statute the PID was created under (see note below)
Note: If the property is located in one of these Bexar County PIDs: Cibolo Canyons Special Improvement District, Crosswinds at South Lake Special Improvement District, and Westside 211 Special Improvement District, then enter “Chapter 382, Local Government Code.” For all other PIDs, enter “Subchapter A, Chapter 372, Local Government Code.”
The PID addendum will show you where this information should be entered on the form.
What happens if notice is not provided?
If the seller fails to provide notice to the buyer, then the buyer can:
- Terminate the contract at any time prior to closing
- File a lawsuit for damages after closing (if a copy of the notice is executed at closing, the buyer can not sue for damages)
How does this affect the existing Texas purchase contracts?
Due to the new form, the following Texas purchase contracts have been updated to reflect the new notice requirement:
- TREC One to Four Family Residential Contract (Resale)
- TREC Unimproved Property Contract
- TAR New Residential Condominium Contracts
- TAR Commercial Contracts
When does the new PID requirement take effect?
The new requirement takes effect on September 1, 2021. This means if the contract is:
- Executed before September 1, 2021, then agents should use the existing Texas purchase contracts
- Executed on or after September 1, 2021, then agents should use the new Texas purchase contracts
What does the new Public Improvement District (PID) requirement mean for agents?
Here's what real estate agents in Texas need to know about the new Public Improvement District requirement:
- Because the addition of this addendum means updates to TREC & TAR purchase contracts, agents are required to use the updated purchases contracts starting September 1, 2021 whether the property is located in a PID or not.
- Notice of a property in a Public Improvement District is also required beginning September 1, 2021, but use of the new addendum is voluntary if you're able to use a form provided by the Public Improvement District that meets the statutory requirements (a PID service plan that includes a PID notice).
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Disclaimer: *The information provided in this article is meant for informational purposes only and is not intended to constitute legal, financial, tax, or insurance advice. Jointly encourages readers to contact their attorney or other advisors for advice regarding these matters.
