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Can there be something done in regards to HOAs and Mello-Roos in CA.?

Mello-Roos and having TWO HOA's make it impossible to afford housing in CA. Mello-Roos can be up to 25 years and TWO monthly HOAs can be $300.00 extra a month!
  • August 07 2013 - Eastlake Trails
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Answers (4)

Mello-Roos is a topic that has evolved over the years and is something a home buyer should be completely aware of when purchasing a home in a neighborhood that has this added tax.

It used to be that the builders were responsible for the taxes for schools and street improvements and they would post bonds (and the $$) and those bonds would be held in escrow until a certain number of units in the new development were sold, at which time, the necessary paperwork would be returned and thus, bonds were released to the developer.  The builder paid for the improvements and included those amounts into the purchase price of the home. 

When the original Eastlake development was created back in the '80's, the cost of the road, City and schools, were incorporated in a redevelopment bond.  This was a 25 year bond which is now paid on some of the properties and some homeowners are finding that it is dropping off of their tax bills.  This is a great selling feature "No Mello-Roos"!

Over the years, it has become increasingly higher. Now, the Mello-Roos bonds can be several hundreds per month, a higher amount more than likely due to the cost of everything going up. 

One word of caution with the newer developments, and especially if you are working with a builder, ask them to provide you the disclosure about the mello-roos taxes up front.  What the builders are now doing in some cases is disclosing a lower mello-roos, which is accurate for the first year but has a graduated payment plan.  Once you are in love with the property and you are sitting in the office signing your builder contract to purchase, they will submit a mello-roos taxes disclosure which will go up annually.  It is my opinion that it is substantial.  I know this first hand as I had a buyer in a new development and I was surprised myself.  My buyer, however, was fine with it and purchased the property.

Also, at any time, you can payoff your mello-roos. There is a special department in the County's tax assessors office that can provide you with a payoff.

Homeowners associations can be costly but at the same time, it can be a good thing.  Keeping your neighborhood uniform and nicely maintained can help preserve your property's value and your investment.

If you are opposed to Mello-Roos and homeowners associations, there are many homes out there that do not have either.  You can find a beautiful home, perfect for you, without these added costs, if you so choose. 

As always, I am here to help!

  • April 01
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Profile picture for Juan Diego Saffon
If you own a property with these fees, you can rent it out or sell it and buy one with no Mello-Roos or HOA's. Here in Chula Vista, CA there are very attractive properties with no monthly fees attached. If you send me an email, I can give you an idea of what it will cost to rent out a property with HOA's and Mello-Roos!
  • January 21
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Hi Susan,

Mello-Roos is here because buyers like new properties in new developments, and they are willing to pay these bonds to get them. Every time a buyer purchases a property with Mello Roos assessments, they're approving them. The shorter term assessments will hopefully be shorter term. If services are in danger of being interrupted, they'll likely be extended. These are not like HOA's, where the homeowners decide by vote.

As for as HOA's, they are necessary in developments where people don't individually own the building and share ownership of the common areas. And, lenders require them to be in place and functioning well, in order to protect the value of the units. HOA's are all different and govern differently. Some detached home subdivisions have HOA's as well,  usually with much lower monthly dues, just to keep up neighborhood standards. There are plenty of neighborhoods that look like they could benefit from one!

There are lots of neighborhoods without Mello Roos assessments and HOA's, in fact, most in San Diego County do not have them. Many are well established areas, with homes that have been updated beautifully.  And often, once a couple of houses start updating, other neighbors follow suit. They're worth a look.

Warm Regards,

Cory La Scala, REALTOR
Independence Realty
Lic # 01443391
  • August 07 2013
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The Mello Roos Act seemed like a good idea at the time Eastlake and other outlying areas were being developed. There was not enough money for infrastructure, so the California legislature came up with the idea of improvement bonds that could be used in areas such as Eastlake, San Marcos, Riverside and other outlying areas in California. Mello and Roos were actually the legislators the law was named after.

Some of the Mello Roos bonds will be paid off in the next 5-8 years. Communities can vote to extend the Mello Roos assessment so that will be interesting to see if any of the Eastlake developments do that. As far as the HOA's go, many of these same developments had HOA's as part of their development plan. Once an HOA is in place, I don't believe they go away, or at least we have not seen that happen. 

The majority of residential areas in California do not have Mello Roos, so if a buyer objects to Mello Roos fees, they can look at purchasing in the older more established neighborhoods. It is a trade off. If a buyer wants a home or condo in a newer area that did not have infrastructure, then be prepared for Mello Roos. 

Affordability is definitely an issue in California. We have numerous governmental fees that increase the cost of building and these costs are passed on to the buyer. My partner, Sharyn, has been a broker since 1976 and says the same forces that we face today were present 30 years ago. Although people leave California for less expensive areas, there will always be people who want to live in southern California due to our weather. We are now also experiencing the influx of foreign investors. No matter how bad things may seem to us sometimes, there are many who see the United States as the place to be. 
  • August 07 2013
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