LID's or Local Improvement Districts are a way for property owners to fund property improvements that may not otherwise be feasible due to cost and project size, among other factors. These are typically for projects such as building sidewalks, paving alleys or streets, installing street lights, or connecting to water or sewer.
The municipality will manage all design, permitting, planning, and construction aspects and then finance the project by selling bonds to fund the improvements. An LID district is formed based on a geographical area consisting of property owners, so it could be a specific street of homes or a whole neighborhood or general area. The LID assessment is recorded on title to indicate that a particular property was part of a Local Improvement District that was formed for improvements. Over a span of anywhere from 10-20 years the property owners will pay off the LID assessment by paying monthly, quarterly, or yearly assessments. One advantage to an LID is that it can allow property owners to undertake projects that may otherwise be very difficult to finance, it also can help to keep costs down due to having a bulk project size versus one individual property owner.
LID's will show up on your preliminary title report as a recorded agreement.
It is important to notate in your contract if assessments are being prepaid in full by seller at closing, or assumed by Buyer, as this will determine how the LID is handled through escrow. If assumed by Buyer, escrow will prorate the assessment for the current time period and confirm that the Seller is current with their dues. If the LID is to be paid in full at closing, escrow will order a payoff statement from the proper municipality to ensure payment is made at closing.
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