3.3 California-Specific Disclosures

Mello-Roos Community Facilities Districts

Mello-Roos derives from the Mello-Roos Community Facilities Act of 1982, which lets local governments form a Community Facilities District (CFD) and issue bonds to finance public infrastructure and services, repaid by a special tax on parcels inside the district.

The defining exam facts: the Mello-Roos special tax is non-ad-valorem — it is not based on the property's assessed value — and it is generally not deductible on a federal income tax return because it funds specific local benefits rather than general property value. It is layered on top of the ordinary 1% Proposition 13 base tax and any voter-approved bond add-ons.

When a parcel sits in a CFD, Government Code 53340.2 / Civil Code 1102.6b require the seller to make a good-faith effort to obtain and deliver a Notice of Special Tax disclosing the maximum annual amount and the years the levy runs (often 20-40 years until the bonds retire). The buyer signs to acknowledge receipt. If the seller cannot get the official notice, the seller must still disclose the existence of the lien.

Trap: candidates confuse Mello-Roos (non-deductible, fixed special tax) with the regular ad-valorem property tax (value-based, deductible). They are opposite on both points.

Death on the Property — Civil Code 1710.2

California balances buyer information against fairness to the deceased's circumstances.

The three-year clock runs from the date of death to the date the buyer makes the offer. An agent may not make an intentional misrepresentation in response to a direct question even about an event outside the window. Beyond death, California does not require disclosing other "stigma" (a notorious former occupant, an alleged haunting), but affirmative lies are still actionable fraud.

Lead-Based Paint — Federal Overlay

For any residential dwelling built before 1978 (the year residential lead paint was banned), the federal Residential Lead-Based Paint Hazard Reduction Act (Title X) requires the seller to:

1. Provide the EPA pamphlet "Protect Your Family From Lead in Your Home."
2. Disclose known lead-based paint and provide any available records/reports.
3. Include a Lead Warning Statement signed by seller, buyer, and agents.
4. Give the buyer a 10-day opportunity to conduct a lead inspection or risk assessment (the period is the default and may be lengthened, shortened, or waived by mutual written agreement).

Safety-Device Compliance

Water-heater strapping is inexpensive (commonly $50-150 to retrofit) but is a recurring exam item because the written certification is mandatory at sale, not merely recommended.

Environmental and Other Disclosures

Sellers must disclose known environmental conditions: soil contamination (former gas stations, dry cleaners), methamphetamine-lab contamination (the property must be remediated and cleared by the local health officer before sale under Health & Safety Code 25400 et seq.), asbestos, radon in affected areas, leaking underground storage tanks, and known toxic mold.

Common-Interest Development (HOA) Disclosures

For a condominium or planned-development unit, the seller must deliver the association's governing and financial documents:

Quick-Reference Add-Ons

• Supplemental property tax notice — a change of ownership triggers reassessment to current value, which can generate one or two supplemental bills covering the remainder of the fiscal year(s); buyers should budget for this beyond the prorated taxes paid at escrow.
• Private transfer fee — must be disclosed and recorded against the parcel if it burdens future sales, naming the amount, payee, and duration.
• Former military ordnance within one mile and airport influence area / overflight notices.
• Window security bars with release mechanisms must be disclosed so occupants can escape in a fire.
• Megan's Law database notice — every California residential purchase contract must contain the statutory paragraph informing buyers that sex-offender information is available at the Department of Justice website; the agent is not required to research it, only to deliver the notice.

Trap: HOA document delivery carries its own buyer right to cancel; do not assume the TDS termination clock covers it.

Putting the Disclosures in Order

For the exam, organize California disclosures into three tiers so you can answer "which document applies" questions quickly:

A single transaction can require all three tiers at once. A 1971 condominium inside a Mello-Roos district and a flood zone, for instance, needs the TDS, NHD, lead disclosure, Notice of Special Tax, HOA documents, and a flood-insurance notice simultaneously. Remember that statutory exemptions (probate, foreclosure) excuse the TDS but rarely the federal lead rule or the agent's common-law honesty duty, and never permit affirmative concealment of a known material defect.