Residential Disclosures From Sellers And Lenders Page 10
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100Residential Disclosures from Sellers
B. Application.
B. Application. Subchapter D of Chapter 82,
(1) Types of Districts. Section 49.452 applies
Property Code applies to a seller of any condominium
to a seller of any real property that is located in a
unit in a condominium that is governed by Chapter 82,
statutorily created district. An executory contract with a
Property Code.
performance period longer than 6 months (contract for
deed) is a sale. For Section 49.452 to apply:
C. Remedies. Section 82.156 provides that a
(a) the district must provide or propose
buyer may cancel the contract within 6 days after the
to provide water, sanitary sewer, drainage, and flood
buyer
receives
the
required
information
control protection or protection facilities or services or
(condominium information statement, declaration,
any of these facilities or services that are or will be
bylaws, rules, resale certificate; whichever apply) if a
financed with bonds payable in whole or part from taxes
buyer has not received the applicable information
of the district or its standby fees;
before entering into a contract to buy a unit or if the
(b) the district must provide or propose
contract does not contain a bold or underlined
to provide such services or facilities to household or
statement in which the buyer acknowledges receipt of
commercial users (excluding agricultural, irrigation, or
the information and which recommends that the buyer
industrial users); and
read the information.
(c) the district includes less than all the
Section 82.156(d) prohibits a seller from
territory in at least one county and which, if located
requiring a buyer to close if the buyer has not received
within a city’s limits, includes less than 75% of the
the required information.
incorporated area or which is located outside the
The statutory rights of cancellation are inserted
corporate area in whole or substantial part.
as contractual provisions in the standard condominium
(2) Form of Notice. Subsections (b), (c), and
contract form published by TREC, which is used in
(d) set forth the particular notice that the seller is
the sale of existing condominium units.
required to deliver to the buyer.
The applicable
subsection and form depends on whether:
D. Exemptions. Section 82.151(b) contains 5
(a) the district is located in whole or
exemptions or types of transactions under which a
party in the ETJ of one or more home-rule cities and not
seller is not required to deliver the information
in the limits of a city (in such case, Subsection (b) and
required under §82.152 or §82.157, all of which are
its prescribed form applies);
very narrow (gratuitous dispositions, under court
(b) the district is located in whole or in
order, by a governmental body, foreclosure sales or
part in a city’s corporate boundaries (in such case,
deed in lieu of foreclosure, or when contract may be
Subsection (c) and its prescribed form applies); or
canceled at any time for any reason without penalty).
(c) the district is not located in whole or
part in the city’s corporate boundaries or the ETJ of one
or more home-rule cities (in such case, Subsection (d)
IX. NOTICE TO PURCHASERS OF PROPERTY
and its prescribed form applies).
IN A STATUTORY TAX DISTRICT - §49.452,
For the most part the three notices are
WATER CODE.
identical to each other except the notice under
Subsection (b) informs the purchaser that the district is
A.
Purpose.
Originally passed in the 1989
located in the ETJ of the applicable city and the notice
legislative session, §49.452, Water Code, requires the
under Subsection (c) informs the purchaser that the
seller of real property in a utility or other statutorily
district is wholly or partly located in the applicable city.
created tax district to deliver to the buyer a notice
Each notice informs the purchaser that when a district is
related to the tax rate, bonded indebtedness and
annexed, the district is to be dissolved and that the
standby fee of the district. Commonly, the notice is
property owners will continue to pay district taxes until
known as the “MUD Notice.” Subsection (f) requires
it is dissolved. When §49.452 first became law, only
the seller to provide the notice before the execution of
one form of notice was prescribed in the statute. In
a contract to purchase the property. The notice may
1997, the statute was amended to provide potential
be given separately or as part of the contract or as an
purchasers with a notice of potential annexation by
addendum. Subsection (h) requires that a separate
nearby cities (hence, the need for one of three different,
notice (but same type) must, at closing, be executed
but similar notices). In light of the statutory notice
by the seller and buyer, acknowledged, and recorded.
concerning annexation under §5.011, Property Code,
The standard TREC residential contract forms provide
one wonders whether the issue of annexation in this
a notice that the seller may be required to deliver the
notice is now redundant or unnecessary (or perhaps it is
notice under §49.452 if the property lies in such a
just a little overkill) and whether the statute could be
district.
simplified.
6
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