A new law significantly expanding the scope of existing Mello Roos disclosure requirements took effect Jan. 1, 2002.
Signed by Governor Davis, SB 1122 requires all California property owners to furnish a notice of special assessment to buyers prior to closing escrow if their property is subject to 1915 Act Assessment Installments. Sellers must fully disclose which special tax and/or assessment districts a property lies in, and provide a detailed breakdown of all costs associated with them.
Among the new information to be provided are current levy amounts, start and ending dates for the assessment, and a list of all facilities the monies are used for.
The Mello Roos Community Facilities Act was passed in 1982 as a response to Proposition 13, which taxpayers approved in an effort to limit homeowner taxes. Mello Roos quickly became popular as a means of raising money for additional improvements and services such as schools, fire stations, parks and other needed community services and facilities.
However, negative publicity associated with Mello Roos caused an increase in the use of alternative financing as permitted by the 1915 Bond Improvement Act. While the names may be different, the effect on homeowners is the same. These additional charges can add hundreds and even thousands of dollars per year in additional property taxes.