Mello Roos vs Home Owners Association

Often times buyer's are confused by the difference between a property that has Mello Roos and a property that has a Home Owners Association. It is important to understand the difference between the two as each one of these can significantly raise your anticipated monthly payment.

Mello Roos is a special type of financing that cities, counties and special districts such as school districts use for improvements and services. These improvements or services could be for schools, roads, libraries, or police and fire protection. The financing for these improvements and services comes from taxes that are levied against the property within the district and can often times last 30-40 years. Often times houses with Mello Roos attached to them are viewed negatively because they raise your annual taxes significantly which in turn raises your monthly payment. So when dealing with a house that has Mello Roos it is very important to know A) How much the Mello Roos is annually and B) How long the Mello Roos will last for.

http://www.californiataxdata.com/a_free_resources/faq.asp#faq_04

A Home Owners Association is typically a non-profit corporation that is created by a developer of a community. Home Owners Associations, or more commonly known as HOA's primary purpose is to maintain property values by enforcing covenants and restrictions on each property within the community. Often times the HOA will provide a common area such as a pool/park area or recreation room that the homeowners can enjoy. Each HOA has their own set of governing documents which places rules and regulations on all home owners in the community. Everyone that purchases a property in that community is subject to those rules and regulations set forth by the HOA. It is important when dealing with an HOA to A) Find out the price the HOA charges per month and B) To receive a copy of the CC&R's to review the rules and regulations the HOA has in place.

https://www.hoa-usa.com/files/documents/HOA_USA_Guide_to_Understanding_Homeowner_Associations.pdf

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