(TX) PID Disclosures: What are they and how do they affect my closing? | Industry Articles
Starting September 1st, there’s a new legal requirement on all property sales in Texas, and it has the potential to cause problems if not addressed correctly and promptly. I’m talking about PROP § 5.014 Notice of Obligations Related to Public Improvement District, which requires all sellers to notify potential buyers of any Public Improvement Districts that service the property. Let’s go further into detail about what it means, who is affected, and how to prepare.
The important thing to know, is that this new requirement affects every single real property sale in Texas, so long as that property sits within a Public Improvement District (PID) created under Chapter 372 or 382 of the local government code. It does not matter if it is a condo, farm, skyscraper, house, or business. If the property sits within this type of tax district, a new form, TREC 53-0, is required to be provided to a potential buyer prior to the property going under contract.
Failure to provide this document could have several potentially severe penalties. The first potential penalty, is that the buyer may cancel the contract at any time if a PID is disclosed after going under contract. Next up, the buyer may cancel the contract after the sale has been finalized, if the existence of the district is not disclosed until after closing. Finally, the buyer may also sue for damages up to the total cost of the home if not disclosed until after closing. These major risks must be addressed and diminished to ensure the security of the seller.
The Texas Department of Insurance recommends searching for the PID on each potentially affected property at the time of listing, while TREC then recommends completing the TREC promulgated 53-0 to provide a copy to all potential buyers of a property where a PID is found. Once the form is signed by both parties, the transaction can proceed normally.
A quick recap to remember when listing your or your seller’s property for sale:
- Visit unitedtaxservices.com and purchase a PID Report.
- If a PID is present, have your seller sign the completed 53-0.
- Ask the seller if they know of the existence of a PID.
- Verify by checking county and local records.
- If no PID is present, you may proceed.
- If a PID is present, complete TREC Form 53-0.
- Have your seller sign a copy of 53-0 so they are ready to provide to potential buyers.
- Make sure you have a buyer signed copy prior to accepting any offer to go under contract.
By following these steps, you can protect yourself and your seller from disaster. Be sure to conduct a thorough search and check with your seller about the existence of these districts. Once the proper notification has been completed, the transaction is ready to move forward!
If you are struggling to complete this step, or your seller is unaware of their taxing entities, simply visit www.unitedtaxservices.com and purchase a PID Report! We will search the property and report on any Public Improvement Districts, as well as provide a completed TREC 53-0 ready to be signed by your seller.
