What a MUD Adds to Your Tax Bill, and the Notice Texas Requires Before You Sign

A lot of the newer housing around Houston sits inside a municipal utility district. A MUD is a political subdivision authorized by the Texas Commission on Environmental Quality to provide water, sewer and drainage, and sometimes parks and pools, in areas a city doesn't serve. It pays for that infrastructure with bonds, then levies a property tax to repay them. That tax is its own line on your bill, stacked on top of county, school district, and the rest. Each district sets its own rate, so two houses ten minutes apart can carry very different total tax rates on the same appraised value.

Texas requires that you be told. Under Section 49.452 of the Water Code, the seller has to give the buyer a written notice titled NOTICE TO PURCHASER OF SPECIAL TAXING OR ASSESSMENT DISTRICT, in 24-point bold, before the contract is executed or attached as an addendum at signing, signed and dated by both. It lists the district's tax rate, its bonded debt, and a standby fee if there is one. If a contract gets signed without it, the buyer is entitled to terminate. TREC publishes the form.

Don't stop at the notice. Ask what the district still owes and how long those bonds run, because the rate moves as the debt gets paid down. Then pull an actual tax bill for the address at hctax.net rather than trusting a payment estimate. Eighteen years in this business and MUD taxes are still one of the most common surprises I see at closing. If you're looking at a house in a MUD and want help reading the numbers before you sign, call or text me at 281-818-8177.