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What is Mello Roos? Understand Before You Buy a House

Justin Coupe

There are many factors to consider when you buy a house. Price...location...school district...type of loan...

One more issue you'll want to understand before you buy in California: Mello Roos.

Here's the skinny on Mello Roos:


Understanding Mello Roos is critical if you're new to the area, and come from a part of the country that doesn't have the same kinds of rules, regulations, taxes, and requirements as California.

You won't find Mello Roos in every state, but you will in California, so if you’re planning to live in this great state, it’s best to understand what they are and how they might impact you before you commit to your purchase.

What is Mello Roos?

Mello Roos are specific types of districts. They were established by the state as a way to get additional funding. Their real name is Community Facilities Districts (CFD), and they help pay for public services and public works. They can be used by cities, counties, special districts, school districts, and joint powers authorities.

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While it might sound confusing, it's actually just a way of getting additional revenue dollars to make improvements in a particular location.

Why call it Mello Roos?

Mello Roos is named after the original authors of the legislation that created these districts—Senator Henry J. Mello and Assemblyman Mike Roos.

Together their names form what people most commonly associate with these types of districts, but no matter what people call them, they are used to bring in additional money for public projects and improvements.

Most of the time this is a good thing!

There are plenty of reasons why you'd want to live in a neighborhood that had plenty of funding for schools and infrastructure.

But there are also some reasons you may not want to live in an area with Mello Roos. Before you buy in California, you'll want to learn about Mello Roos locations and determine whether the house you want to purchase is located in one.

If it is, think carefully about the extra assessments you'll be paying, before you proceed with the sale.

How Does a CFD Affect House Shopping?

These Community Facilities Districts affect house shopping because it costs homeowners more to live in areas that have them. 

That doesn't mean buyers will necessarily pay more initially. The cost would be distributed over time in the form special assessments, charges, and fees.

In fact, home prices in areas with Mello Roos are sometimes lower than average to entice people to purchase.

There are two schools of thought on shopping for a house in a CFD:

The first is that the value is higher because there are more things being done to keep those neighborhoods high quality.

The second is that it simply costs more for improvements the buyer may not want or need.

The second can be especially true for buyers who don't have children.

For example:

If a couple who has no children move into a neighborhood that has Mello Roos they may have to pay fees to the school district for improvements. They may not want to pay more for better schools if they don't have or don't plan to have kids.

There are other states where special assessments are a part of homeownership, but these assessments may go by other names. That's why it is crucial to understand the terms of the location where you plan to buy a home.

This will help reduce your chances of ending up with unexpected expenses down the road. 

Should You Choose a Mello Roos Community?

Deciding whether to live in a Mello Roos community is a decision only you can make after carefully considering your own personal pros and cons.

Once you understand the true cost of the special assessment, what it'll be used for, and how long it will last, you'll be able to decide if it's worth it to you. 

Also, be aware there will likely be another assessment for something else at a later date, so the idea that the assessment will disappear and you will pay less in the future may not be realistic. Decide if continued fees are worth what you may get in return.

If you do choose a Mello Roos community, make sure you don't focus so much on it that you overlook other important things about the house you're buying. You still want a great location and a home you and your family can enjoy for a long time.

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