Mello-Roos and Property Taxes

I frequently am asked about Mello-Roos Districts by those who aren't sure what they are or where they are located.

These districts were formed after the enactment of Proposition 13 in 1978 which was voted in to restrict public agencies' ability to increase property taxes based on assessed value. The 1982 Community Facilities Act was passed which gave government an alternative method to finance improvements and services.

While any county, city, school district, special district or joint power authority has the power to institute a Mello-Roos district, these districts, which are created to fund infrastructure such as streets, sewers, police protection, fire protection and similar services, are usually part of a new development which does not already have these services. They are more often found in areas such as Orange County or Riverside County where there are more post-1978 developments. The tax is not based directly on property value, but on other characteristics such as square footage and lot size of the property. It must be voted on by two-thirds majority vote by those residents living within the proposed boundaries. Large tax amounts may be funded through bonds issued by the District. There may be an ongoing maintenance fee even after the bonds are paid off.

The Community Facilities District does have the separate power to foreclose, making it all the more important to pay your taxes on time. Notice of the tax amount, if it is in your area, is found in the Notice of Special Tax which the seller must make a good faith attempt to provide to the buyer during escrow.

Long Beach

Transferring Your Property Taxes, California Prop. 90

There seem to be many inquiries about property taxes in California, so I hope you find this informative.

California voters approved Proposition 13 in the 1970's. Ordinarily, when the ownership of California real property changes, the property is reassessed at its current fair market value and the new owner pays property tax based on the reassessed value. However, the law provides certain exemptions from reassessment and, in certain instances, allows a taxpayer to transfer the base-year value of the property to a subsequent property without being reassessed. As a result of Proposition 13, a taxpayer's base-year value could be much lower than if based on the fair market value of the property. (Note: California tax code sections are Revenue and Taxation Code Sections 63.1 (dealing with transfers between parents and children, as well as grandparents and grandchildren), 62 (dealing with transfers into revocable trusts), 63 (dealing with interspousal transfers), 69.5 (dealing with transfers by persons over 55 years of age or severely and permanently disabled persons).)

Property which has had major renovations is normally subject to property tax reassessment. However, California law exempts certain property improvements from reassessment. Revenue and Taxation Code Sections 74.3 and 74.6 (dealing with improvements for disabled access), and 74.5 (dealing with seismic retrofitting improvements). Consult your tax advisor for advice.

Proposition 90.

Ordinarily under Proposition 13, the value of a home for property tax purposes is re-assessed to market level whenever a change in ownership takes place, which usually results in higher property taxes for the homebuyer.

In November 1988, the state's voters approved Proposition 90, which is designed to induce greater turnover of homes owned by senior citizens. The measure provides anyone over the age of 55 with relief from Proposition 13 by allowing them to move from one county to another without undergoing a change in their basic property taxes. (Note: there are currently a minority of counties that allow this transfer, Los Angeles and Orange Counties being two of them.)

Proposition 90 is a "local-option" law; each county has the option of participating. If a county has adopted a Proposition 90 ordinance, it accepts transfers of property tax base assessments from other California counties. If the county that the homeowner is moving from does not have a Proposition 90 ordinance, this does not affect the eligibility of the homeowner. Homeowners seeking to transfer their property tax base assessment must verify that the county to which they are moving has a Proposition 90 ordinance. Go to this list of California Counties to find information from your county tax assessor.

Proposition 60

Proposition 60 is a similar law passed by the state's voters two years prior to Proposition 90. It allows seniors to keep their property tax base assessment when they move within the same county. Proposition 60 does not require passage by a local municipality. It is state law.

Courtesy of Pacific West Association of Realtors

Baby Boomers, CA

California Property Tax Rates

I just found that someone was doing a search term for rates in Southern California. Actually, California has the same basic tax rate throughout the state. What varies are local taxes due to bonded indebtedness and other county or district taxes.

The basic property tax rate is estimated by multiplying the sales price by 1.25%. This is a the base rate of a tiered formula which does increase incrementally with time. When buyers are in escrow in California, the seller is required to provide a tax report to the buyer before the close so that the buyer can see all taxes due, whether or not certain ones are levied that year. That way, there are no unexpected surprises and the buyer is supposed to have full information. These reports are ordered through an outside source company paid to search all public records for the appropriate information in order to provide full disclosure on all taxes to the buyer.
See more California tax benefit information.

property taxes, CA

What Happens If You Are In Foreclosure?

Recently, California has experienced an increase in property owners who cannot seem to make payments. If you are one of those people who has received a Notice of Default from your lender, please read this.

You still have time to find solutions and avoid losing your property. Maybe your property isn't a mansion, but to you, it is. You should consult with your attorney for complete information on the foreclosure process, and your accountant for tax advice.

A non-judicial foreclosure under California Civil Code section 2924 allows lenders to foreclose upon real property without going to court. It takes approximately four months from start to finish. Once the sale auction is completed, it is final, but an IRS tax lien can cause a delay in the finality of the sale. The borrower must then vacate.

1. Your trust deed functions as the lender's security device for its loan. Lenders may hire a new trustee to replace the trustee named in the trust deed and then instruct the new trustee to issue a Notice of Default, and "NOD", in which you, the borrower, are warned to act or face the consequences. The NOD is recorded at the County recorder's office, and sends copies to the borrower and to any party who requested a Notice of Default form, to holders of junior trust deeds, to the borrower's successor in interest, and anyone else legally entitled, no later than one month following the recordation of the NOD.

2. You have the right to reinstate the loan by tendering to the lender or trustee your delinquent loan payments, plus the trustee's fees and costs. Upon receipt of that payment, the trustee is obligated to rescind the NOD, and the loan is reinstated to normal status, as long as it is reinstated until five business days before the scheduled foreclosure sale. Otherwise, the lender is not required to stop the sale, and the lender may demand the borrower pay-in-full the total outstanding principal balance and accrued interest on the loan, plus trustee's fees, right up until the moment before the sale is completed.

3. If three months pass following recordation and the borrower does not reinstate the loan, the trustee is instructed by the lender to set a time, date and place for the sale, usually three to four weeks from that time, hence, the total time of about four months.

4. The borrower will receive a Notice of Trustee's Sale, along with other entitled parties. The NOS must be mailed, posted in a public place, published in a newspaper of general circulation in your property city--all 20 days before the sale date-- and recorded at the County recorder at least 14 days prior to the sale date.

5. At the appointed time, the trustee conducts the sale at public auction.

You may have time to refinance (there are hard money lenders who will loan even though an NOD has been recorded) and even if at a higher rate, that is better than losing your home. When your situation has improved, you may be able to obtain a better loan. You may also contact your lender for arranging a "short sale". Lenders don't really want to take back properties, and are often willing to make an arrangement with the borrower who might otherwise be able to sell the property rather than going into foreclosure.

Above all, you should not ignore your situation, as difficult as it is at the time.

Please know that this is one of my most frequently read posts. Many people are facing this issue. If that could be you, or it is you, please know that (1) you may be able to refinance your way out of your situation, (2) you may be able to negotiate a short sale with your bank. If you need immediate loan qualification, or are considering negotiating a short sale, PLEASE CALL ME.
If you would like a market analysis of your property to try to sell it, please call me at 562-896-2609 or e-mail me ocean@surfside.net immediately.


Long Beach, CA, Foreclosure

Mills Act Property Tax Abatement Program

For property owners living within Long Beach historic districts, the Mills Act may work for them to reduce their property taxes: The State describes it as: "A formal agreement, generally known as a Mills Act or Historical Property Contract, is executed between the local government and the property owner for a minimum ten-year term. Contracts are automatically renewed each year and are transferred to new owners when the property is sold. Property owners agree to restore, maintain, and protect the property in accordance with specific historic preservation standards and conditions identified in the contract. Periodic inspections by city or county officials ensure proper maintenance of the property. Local authorities may impose penalties for breach of contract or failure to protect the historic property. The contract is binding to all owners during the contract period."
This process includes bringing it before City Council for approval. Find historic districts under "community information" here.

Property Tax Exemptions from Reassessment

Did you know that in certain California counties you are able to transfer your tax base? A taxpayer who is 55 years of age or older may transfer the Proposition 13 base-year assessment value of his or her principal residence to any replacement dwelling of equal or lesser value in the same county and, sometimes, in another county ( Cal. Rev. & Tax Code § 69.5(a)(1)and (2)). And, you may have up to two years before the sale or two years after the sale of the original dwelling to purchase or construct the replacement property. The catch is, your replacement property must be of equal or lesser value than your sold property. So, if you're thinking of selling your principal residence located in Los Angeles County and moving to Alameda, Orange, San Mateo, Los Angeles, San Diego, Santa Clara or Ventura Counties, you may transfer your tax base to those locations provided all the transfer qualifications are met. Otherwise, the transfer applies if you stay within the same county you're selling in.

Zillow.com is a Zing

The new Zillow.com site seems interesting, but in the end doesn't seem any more unusual than any other site based on local property tax records data, which is sometimes inaccurate in itself. This site happens to combine with aerial photo technology so that you can see the exact location, and it gives you an estimate of value. But that doesn't necessarily sync with the current market value, so the viewer should be careful about making final conclusions without further investigation. An average or a median price for a zip code area does not give spccific value for a specific property, any more than the selling price for the last market sale is the same as today's market value.

Higher Property Tax Revenue - How Much? A Lot

I don't think we've been seeing this printed in the media, but counties are getting a boost in revenues from increased property tax revenues. Ventura County's tax bills are up 9.2 percent from 2002. In Ventura County, 17,000 homes changed ownership in 2003. Read Daily News for more.

What You Need to Know Besides the Selling Price.

It's no news to most homeowners that home insurance premiums have risen in California, or that the reason is due to claims against insurance companies because of mold and water-related damage. But have you ever thought about a Realtor's insurance coverage during your transaction? Errors and omissions insurance premiums have more than doubled--there are fewer carriers willing to carry risk in California. This is a result of the sharp increase in claims against Realtors, even though only a small percentage are actually valid. Consequently, some brokers no longer can afford this coverage. The working relationship between clients and their Realtors, if given some advance thought and preparation by all concerned, could alleviate misunderstandings. This article explains more.