Moving to Florida: What You Need to Know about HOA and CDD Fees


If you’re planning on moving to the Sunshine State, one thing you need to know is that many communities across Florida have an HOA or a CDD or both.  Why is this important?  Simply because living in a community governed by an HOA and/or CDD is different from living in a community that doesn’t have any of these structures.  

Although the convenience provided by a planned unit development that has an HOA and/or a CDD is the major attraction to living in these communities, the services and amenities offered come at a price.  To cover expenses, each member of a CDD- and/or HOA-governed community is required to pay a fair share, commonly referred to as fees, dues, or assessments.  But before committing to buying a home in a planned development, there are a few important things you need to know about these fees.

What Do HOA and CDD Fees Cover?

Because the HOA’s board of directors and/or the CDD’s board of supervisors establish a specific set of policies and procedures for each of the communities they govern, the amenities and services provided can vary substantially from one neighborhood to another.  The more varied the amenities and extensive the services, the higher the HOA and CDD fees typically are.  As a general rule, HOA dues cover:

  • the general upkeep of communal buildings;
  • operational costs for on-site amenities, like gyms, clubhouses, swimming pools, spas, playgrounds, etc.;
  • lawn care, trash removal, water and sewer services, as well as water and electric bills for communal areas;
  • pest control, including regular inspections and any treatments required;
  • insurance for public areas and buildings; homeowners still need to purchase separate homeowners insurance policies in order to protect their homes;
  • security services.

Coming down to CDD assessments, the developers of planned communities set and collect these dues in order to cover the cost of different community-wide infrastructure elements.  Instead of including infrastructure costs in the sales price of properties, which may significantly increase home prices, CDDs borrow money by issuing tax-exempt bonds at lower interest rates in order to finance different infrastructure and recreational elements for communities.  Because these bonds represent a loan made by investors to developers, the CDD dues paid by residents are basically used to repay the loan.

Without the CDD fee, building and improving the infrastructure components, which are vital for the development of a neighborhood, wouldn’t be possible.  Some of the infrastructure and recreational amenities and services covered by the CDD fee include:

  • the construction, maintenance, and improvement of roads, sidewalks, walking trails, street lights, and utility lines; 
  • the construction and improvement of schools, stores, clubhouses, gyms, parks, tennis courts, golf courses, swimming pools, playgrounds, and other communal structures.

In addition, HOAs and CDDs need to plan for the long-term needs of the communities they serve.  That includes smaller maintenance tasks, larger-scale repairs, and improvements that need to be made regularly, as well as any emergencies that may arise, such as damage to buildings, roads, sidewalks, and other structures due to severe weather conditions.

All these expenses are typically paid for out of a reserve fund that HOAs and CDDs should set aside.  If a community incurs unexpected expenses that are too large to be paid from the reserve fund, the HOA and/or CDD can charge an extra assessment in order to raise the funds required.  Cash reserves are also used to cover the regular HOA and CDD fees for the vacant properties within the community until they’re sold to homebuyers.

How HOA and CDD Fees Work

HOA and CDD fees are paid on top of property taxes, mortgage payments, and insurance premiums.  While you’ll have to pay HOA fees and the operation/management portion of the CDD assessment for as long as you own the home, the bond portion of the CDD dues is usually paid over a 30-year term.  But once the bonds are paid off, the CDD can issue new bonds and take out another loan in order to build any new infrastructure elements required.

Another important aspect is that HOA and CDD fees are mandatory.  If you fail to pay your HOA/CDD assessments, the HOA and/or CDD can get a lien on your home and pursue a foreclosure against you, even if you’re current on other financial obligations, including mortgage payments.

To make sure that the home you want to purchase fits not only your lifestyle but also your budget, it’s important to consider all the factors involved, including the home price, mortgage terms, property taxes, CDD and HOA dues, homeowners insurance, and ongoing maintenance costs along with all the amenities you’ll get.  Speaking of your budget, if you’re looking for the best financing options available for buying your dream home, our professionals can help you find the right type of mortgage for your current financial situation!

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