Three Sixty At South Bay

360 Real Estate and Homes for Sale in Three Sixty at South Bay, of of the premier gated communities

Does 360 South Bay have a Mello-Roos?

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When home buyers go into escrow in Three Sixty at some point they’ll find out that there is a mello roos in the community.  In general it means that there is a yearly addition to the normal property taxes.  Here’s a bit of background as to what it is, why and how much.

What is Mello-Roos?

Background
In 1978 Californians enacted Proposition 13, which limited the ability of local public agencies to increase property taxes based on a property’s assessed value. In 1982, the Mello-Roos Community Facilities Act of 1982 (Government Code §53311-53368.3) was created to provide
an alternate method of financing needed improvements and services.

The Mello-Roos Community Facilities Act of 1982
The Act allows any county, city, special district, school district or joint powers authority to establish a Mello-Roos Community Facilities District (a “CFD”) which allows for financing of public improvements and services. The services and improvements that Mello-Roos CFDs
can finance include streets, sewer systems and other basic infrastructure, police protection, fire protection, ambulance services, schools, parks, libraries, museums and other cultural facilities. By law, the CFD is also entitled to recover expenses needed to form the CFD and
administer the annual special taxes and bonded debt.

What is a Mello-Roos?
A CFD is created to finance public improvements and services when no other source of money is available. CFDs are normally formed in undeveloped areas and are used to build roads and install water and sewer systems so that new homes or commercial space can be built. CFDs are also used in older areas to finance new schools or other additions to the community.  This is why we see a mello-roos in 360 as it went to pay for the infrastructure for the community as it didn’t exist prior.

What is the Mello-Roos in Fusion?

While the amount of the mello-roos can vary and can change the mello-roos for owners in Three Sixty is currently (and approximately) around $1500 annually.   The table below is from a 2018 escrow with specific information at that time.  While we cannot guarantee the information below the contact number listed is 714-541-4585 for updated information.

 

How is a Mello-Roos CFD Formed?
A CFD is created by a sponsoring local government agency. The proposed district will include all properties that will benefit from the improvements to be constructed or the services to be provided.  A CFD cannot be formed without a two-thirds majority vote of residents living within the proposed boundaries. Or, if there are fewer than 12 residents, the vote is instead conducted of current landowners. In many cases, that may be a developer.

Once approved, a Special Tax Lien is placed against each property in the CFD. Property owners then pay a Special Tax each year. If the project cost is high, municipal bonds will be sold by the CFD to provide the large amount of money initially needed to build the
improvements or fund the services.

How is the Annual Charge Determined?
By law (Prop. 13), the Special Tax cannot be directly based on the value of the property. Special Taxes instead are based on mathematical formulas that take into account property characteristics such as use of the property, square footage of the structure and lot size. The
formula is defined at the time of formation, and will include a maximum special tax amount and a percentage maximum annual increase.

How Long Will the Charge Continue?
If bonds were issued by the CFD, special taxes will be charged annually until the bonds are paid off in full. Often, after bonds are paid off, a CFD will continue to charge a reduced fee to maintain the improvements.  According to the information from the table above the Mello-Roos will end in 2041.

IMPORTANT TO KNOW:
• Rights to Accelerated Foreclosure. It is important for CFD property owners to pay their tax bill on time. The CFD has the right (and if bonds are issued, the obligation) to foreclose on property when special taxes are delinquent for more than 90 days. Additionally, any costs of collection and penalties must be paid by the delinquent property owner. This is considerably faster than the standard 5 year waiting period on county ad valorem taxes.
• Disclosure Requirement for Sellers (California Civil Code §1102.6). When reselling a property in a CFD, the seller must make a “good faith effort” to obtain a Notice of Special Tax from the local agency that levies the Special Tax, and provide it to the buyer.

Property Tax Calendar and Escrow

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Homeowners, especially new homeowners, often contact us for information on property taxes as it’s a new experience. We hope that the following information may help you when it comes to property tax time.

Tax Calendar

  • July 1 – Fiscal year begins.  Homeowners notified of new value
  • September – Tax rates set
  • October – Late October Tax bill mailed
  • November 1 – First tax installment due
  • December 10 – Taxes delinquent if not paid
  • January 1 – Assessment date
  • February 1 – Second tax installment due
  • April 10 – Second tax installment delinquent if not paid
  • April 15 – Last day to file homeowners, veterans or senior citizens exemption

Property Taxes while buying a home and Escrow

If you are in the process of buying a home the prorations of property taxes are handled by the escrow company.  If escrow closes:

  • July 1 – No prorations
  • August 1 – Charge seller 1 months, credit buyer 1 month
  • September 1 – Charge seller 2 months, credit buyer 2 months
  • October 1 – Charge seller 3 months, credit buyer 3 months
  • November 1 – Collect 1st installment from sellers account – credit seller 2 months, charge buyer 2 months
  • December 1 – credit seller 1 month, charge buyer 1 month
  • January 1 – No prorations
  • February 1 – Collect 2nd installment from sellers account – charge buyer 5 months, credit seller 5 months
  • March 1 – Charge buyer 4 months, credit seller 4 months
  • April 1 – Charge buyer 3 months, credit seller 3 months
  • May 1 – Charge buyer 2 months, credit seller 2 months
  • June 1 – Charge buyer 1 month, credit seller 1 month

Why a Home Inspection Is Highly Recommended

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Whether you’re buying a fairly new home in 360 South Bay or an older home  in the South Bay, a home inspection is an absolute necessity. A home inspection will assess the building code conformity as well as all the systems and structural components that make up the building, such as:

  • Structural elements, foundation, framing etc
  • Plumbing systems
  • Electrical systems
  • Heating and Cooling systems
  • Roofing
  • Cosmetic condition, paint, siding, etc.
  • General Environmental Issues.

Keep in mind that a home inspection is a “general” inspection and they may recommend additional investigations.  While they will call out obvious problems they are not inspecting for things like termites, mold, hidden environmental hazards, etc.  If there are additional concerns beyond the scope of the inspection, it’s important to have them addressed within the agreed upon inspection period.

When you’ve decided upon the South Bay home you want to buy and you’re about to sign the offer, make sure there is an inspection contingency in that contract allowing you to do your due diligence and inspect anything of concerns.  The best place to start is to get your own professional home inspection. Although “Pre-Selling” or “Pre-Listing” inspections are not common, some sellers may have had their own home inspection done which they usually will provide to a prospective home buyer.  They may have corrected some/all of the issues on the report or it may be for information purposes only.  We highly recommend having your own home inspection done with a professional and recommended home inspector.  If the terms of the contract as standard are accepted, a buyer will have 17 days to have the inspection completed, analyze the report, schedule any additional inspections/estimates and provide the seller with a list of repairs (which they are not obligated to accept…or even respond to). We will be your eyes and ears at the structural inspection should it not be possible for you to be present yourself.

In the event that hidden problems are revealed through the inspection inspection process, you may do one of two things:

  1. If the inspection reveals conditions that change your desire to buy the home, you may terminate the purchase agreement by notifying the seller in writing and provide a copy of the inspection report disclosing the problems.  If it is within the inspection period the deposit is returned to the buyer.
  2. You may submit a list of the problems discovered in the inspection report, known as a request for repair, to the seller and request that the seller make the necessary corrections and repairs before the deal is closed, or adjust, issue a credit, or adjust the price accordingly.  The seller may, or may not, agree to any of the requests.

The Inspection Report

When you interview a home inspector, ask him what type of report format he provides. There are several types of reports used by inspectors, such as computer generated reports, the checklist format and the narrative style report. Some reports are completed and generated on site and some may take up to a week to complete. There are good and bad points to all of these formats.

  • Make sure that the inspector will take pictures that explain their descriptions and potential problems.
  • Some inspectors now have drones to inspect roofs and hard to see areas
  • Hire an inspector that gives detailed descriptions of the home and potential problems instead of vauge and easily missinterpreted descriptions.

“Bathroom Shower Enclosure: Condition – Minor wear, heavy wear, damaged, rust stains, or chips in enamel finish. Recommend sealing drain and pan at base of tile.”

As you can see, this narrative description includes a recommendation for repair. Narrative reports without recommendations for repairing deficient items may be difficult to interpret, should your knowledge of construction be limited.

Make sure, if you do not understand something, that you ask questions. Items in the inspection report that are not serious quite often can be interpreted by a nonprofessional to be a major factor. A good home inspector should be able to put things into perspective and answer all your questions. If for some reason a question cannot be answered at the time of the inspection, the inspector should research the question and obtain the answer for you.

Take the time to become familiar with your home inspection report. If the report has a legend, key, symbols or icons, read and understand them thoroughly. The more information provided to you about the property, the easier it will be to understand the overall condition. If possible, try to be present when the inspector is doing the inspection. You do not have to be there during the entire process, but if you can walk through with the inspector at the end so he can show you the findings of the structural inspection, you will learn a great deal about the home you are about to purchase.