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What is Mello Roos - Understand before you buy a house

Justin Coupe

There's a lot 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 especially important if you are 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 don’t find Mello Roos in every state, but you do in California, so if you’re planning to live in this great state, it’s best to understand what they are, so you can be informed before you commit to your purchase.

What Does Mello Roos Mean?

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 is actually just a way of getting additional revenue dollars to make improvements in a particular location.

But why call it Mello Roos?

Mello Roos got its name because the original authors of the legislation creating these districts were Senator Henry J. Mello and Assemblyman Mike Roos. Their joined names are 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.

There are plenty of reasons why this would be a good thing, but also some reasons why a buyer might not want to live in districts that have this particular feature. 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 buyers will pay more to live in a location that has them. That is to say, the buyers will pay more over time in special assessments, charges, and fees. Buyers may not pay more initially, because the prices of homes in these locations could be a bit lower 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.

That can be especially true for buyers who don't have children, for example, when they look at a home in a Mello Roos created by a school district. They may not want to pay more for better schools if they don't have, and don't plan to have, children.

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 so very important to understand the terms of the location where you plan to buy a home. It reduces the chances of ending up with something that wasn't expected.

Should You Choose a Mello Roos Community?

Whether you should choose a Mello Roos community is a decision only you can make after carefully considering your own personal pros and cons. It is very important that you learn about the implications specific to the home you are considering, though, and make sure you understand the cost of the special assessment, what will be used to pay for, and how long it will last.

Also, be aware that 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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