Buying new construction in Frisco? MUD, PID and what to check before you sign

• MUD (Municipal Utility District) builds and provides water, sewer, drainage or flood control for an area, and can levy its own tax to pay for it.
• PID (Public Improvement District) pays for improvements like streets, parks or landscaping, and can charge an assessment on each property inside it.
• Under the Texas Water Code, the seller delivers the district notice and you sign it before the contract is final. For a PID, the Texas Property Code requires a written notice.
• Frisco sits in two counties, Collin and Denton. Your lot's county decides which appraisal district values it and which tax statements you get.
• The tax figure on a new-build flyer is rarely the one you'll pay. Yours comes from the notices and the appraisal district, not the brochure.

When a new community opens, somebody has to pay for the pipes, the drainage and the streets. Sometimes the city does. Sometimes a special district is created, borrows the money to build it, and pays that back through what it collects from homes inside the district.

A MUD is one of those districts. It has its own tax rate, which stacks on top of the city, county and school district rates. The notice you receive covers that rate, the district's bonded debt and any standby fees.

A PID works in a similar way, but instead of a tax it's an assessment, which can be charged every year for a period of time. It pays for public improvements inside that area.

Here's what that means for you: two new homes in Frisco, same size, same builder, can cost you different amounts each year just because they sit on different sides of a street. Neither one is "better." What changes is the number in your budget, and you check that number before you sign.

I've also written about the hidden costs of MUDs and PIDs in DFW new homes if you want more detail.

1. Bring your own agent to the very first visit. The model-home rep is friendly and knowledgeable, and works for the builder. Some builders require your agent to be registered from your first visit.
2. Talk to a lender before you pick a lot. Your pre-approval letter sets what you can buy. The builder may offer incentives through its preferred lender; compare them in writing against another lender before you decide.
3. Ask for the MUD and PID notices in writing. In Texas, the district notice is delivered and signed before the contract is final. If the builder hasn't handed it to you, ask. Read it slowly: it names the district and what it can charge.
4. Confirm the lot's county. Frisco is in Collin and Denton. According to the city, residents on the Denton side receive two tax statements. The county decides whether the Collin or the Denton appraisal district values your home.
5. Check the official school district map. In a fast-growing city, school boundaries are confirmed on the district's official map, not the brochure and not a third-party website.
6. Read the builder's contract all the way through. Some builders use their own contract. What's included, what's an upgrade, when the home is delivered, what happens if it runs late, and what the warranty covers. Nobody signs what they don't understand.
7. Get an independent inspection, even on new. New homes get inspected too: before the walls are closed if the builder allows it, and before the final walk-through.
8. After closing, file your homestead. You apply for the residence homestead exemption yourself, with your county's appraisal district. Nobody files it for you.

If you'd like a second set of eyes on a builder's notices before you sign, book 30 minutes at veronicayeary.com/en/book.

• Using the flyer's tax figure as your own. In a new home's first year, the appraisal may cover only the land or an unfinished house. Once the appraisal district values the finished home, the number changes. More on that in why the tax bill on the listing won't be yours.
• Signing the MUD or PID notice without reading it. It slides by in a stack of papers. It's the page that tells you what the district can charge. Read it first.
• Visiting the model home alone the first time. Many people assume the builder's rep represents them. They don't; they work for the builder.
• Picking the incentive without running the numbers. An incentive tied to the builder's lender may or may not be the better deal. Compare it in writing against another offer before you decide.
• Forgetting the homestead. If you don't apply, it doesn't apply. It's your filing, with your county's appraisal district.

Picture two professionals moving from a smaller home into new construction in Frisco. They like two floor plans from the same builder in two different sections of the community.

Before choosing, they ask for the notices in writing. One section sits inside a PID and the other doesn't. They also confirm both lots are on the Collin side, so the same appraisal district values them. With the notices and the lender's letter in hand, they run the numbers on each one the same way and choose the one that gives them the monthly number they want.

Before signing, they read the builder's full contract and get what's included in writing. After closing, they file their homestead.

That's an example, not a real client. In your case the notices and the county may be different.

• The MUD notice, if the lot is in one: the district's name and what it can charge.
• The PID notice, if it applies: the assessment and how long it runs.
• The lot's county, Collin or Denton, and the lot's account at that county's appraisal district.
• Each taxing unit's rate on that lot: city, county, school district and any special district. Each one publishes its rate, and the City of Frisco has its own tax page.
• The official school district map, on the district's own website.
• The FEMA flood map, even on a new build. See the map almost nobody checks.
• The HOA dues, which are separate from the MUD and the PID.

When Veronica Yeary represents a new-construction buyer in Frisco, this list gets checked before anyone signs with the builder.

What is a MUD on a new home in Texas?

It's a utility district that provides water, sewer, drainage or flood control to an area and can levy its own property tax. That tax is added to the city, county and school district taxes. In Texas, the seller delivers a district notice before the contract is final.

What is a PID, and how long do you pay it?

It's a public improvement district that can charge each property an assessment to pay for streets, parks or other improvements. How much and for how long depends on the PID and is spelled out in the written notice the Texas Property Code requires. Ask for it before you sign.

Do I need a Realtor to buy new construction in Frisco?

It isn't required, but the model-home rep works for the builder. Your own agent reviews the notices, the contract and the dates with you. Some builders require your agent to be registered from your first visit.

Is Frisco in Collin County or Denton County?

Both. According to the city, the tax statements you receive depend on which county your home is in. Confirm the lot's county before you sign, because it decides which appraisal district values your home.

Why do property taxes on a new home change in year two?

Because the appraisal district values property as of January 1. If the home wasn't finished on that date, the first appraisal may reflect only the land or a partly built house. The next year, it's valued complete.

Before you sign with a builder, it helps to have someone on your side read the notices, the contract and the lot's county with you. That fits in half an hour.

Let's talk for 30 minutes about your situation, not houses: veronicayeary.com/en/book

Call or text 469-441-8890 · veronica@veronicayeary.com

Veronica Yeary, Realtor®, CRS, ABR, SRS, CIPS · All City Real Estate DFW · Dallas-Fort Worth. This isn't legal, tax or loan advice: the appraisal district, your lender and the title company confirm your case.