Mello-Roos refers to a special tax district established under California's Mello-Roos Community Facilities Act of 1982, allowing local governments to levy additional taxes on properties within a defined area to fund public infrastructure and services such as roads, schools and utilities. The tax is assessed on top of standard property taxes and is tied to the parcel, not the owner.
In real estate transactions, Mello-Roos obligations must be disclosed to buyers, as the additional tax burden directly affects affordability and can influence a property's marketability. Appraisers working in affected areas should account for Mello-Roos when analyzing comparable sales, particularly if tax burdens vary significantly between properties.
Loan originators should ensure that Mello-Roos assessments are factored into borrower qualification, as the additional obligation affects debt-to-income calculations and overall carrying costs.