What Are "Mello Roos"

Did you know that you might be responsible for the cost of public improvement projects used to build your neighborhood? In most states, property taxes cover this sort of thing. However, in the state of California, voters attempted to put a cap on government spending of property taxes, so developers and local governments have come up with a clever alternative – a new tax called Mello-Roos.

In short, Mello-Roos is a tax homeowners pay in addition to their property taxes. If you’re interested in the boring details of how this magical new tax is legally permissible, check out this helpful article. The gist: communities with a Mello-Roos are a part of what is known as a Community Facilities District (CFD); these districts are capable of placing a Special Tax Lein against each property within the district, aka, a Mello-Roos.

The good news – this tax money goes straight into your community. Services paid for by the Mello-Roos include road construction or improvement, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection.

Homebuyers whose homes are within a CFD, or whose homes are subject to a Mello-Roos, should be aware that the CFD has the right, and sometimes the obligation, to foreclose on property when taxes are delinquent for more than 90 days. This is considerably faster than 5 year waiting period standard on county ad valorem taxes. If there are any costs of collection and penalties occurred as a result of the delinquency, these too must be paid by the home owner.