Colonias sprang up along the border because of the availability of affordable land close to urban areas. Other areas of the state, such as pockets of East Texas, also have colonias , but their spread is limited by a lack of affordable land. Many colonias are located outside city limits, an intentional strategy by developers to free themselves from city codes and regulations. Some colonias were originally located outside city limits but have since been annexed by nearby cities. Freedom from building codes makes the colonias affordable, but it also can make them unsafe.
Many subdivisions lack such basic infrastructure as water and disposal systems.
Colonia residents with complaints often have few legal remedies, in part because CFDs have not historically been recorded in the county register of deeds or recognized as official documents. In 1995, state lawmakers approved the Colonias Fair Land Sales Act, intended to curb CFDs as a method of finance by requiring developers to record contracts in county registries and provide annual financial summaries for buyers regarding their land purchase. At the Texas Department of Housing and Community Affairs, the Colonia Set-Aside Program allocates 10 percent of annual federal Community Development Block Grant funds to support housing, planning, and infrastructure needs in the colonias . Attempts to regulate colonia development have resulted in problems of their own. For instance, counties require colonias to be platted before they can receive utility hookups.