HOA vs. CDD in Florida: the fee on your tax bill you didn’t know you’d agreed to

What’s the difference between an HOA and a CDD?

The HOA runs the community. The CDD paid for the ground it stands on. You can be paying both, and outside Florida almost nobody has met the second one.

The CDD is a Florida invention, created by state law in 1980 to let developers finance infrastructure without carrying it on their own balance sheets. It is why so much of Florida’s suburban growth happened the way it did — and why a buyer from Ohio can sign a contract without ever encountering the concept.

How much do they actually cost?

Median $196 a month for the HOA and $168 for the CDD — and where both exist, a combined median of $392 a month.

These are not estimates. They come from our catalogue of 940 new-construction communities across Florida, counting only the ones that publish their fees:

To put $392 a month in context: on a mid-priced Florida home that is comparable to the entire property tax line. It is also the line most often missing from an out-of-state buyer’s budget, because the CDD half does not arrive as a bill — it arrives folded into a tax figure the buyer already thought they had accounted for.

Why does the CDD appear on my tax bill?

Because it is a government levy, not a private fee. It is collected on the same annual notice as your property tax, which has two consequences worth understanding.

First: it is easy to miss. A buyer who checks “what are the taxes on this house” sees one number that already contains the CDD, assumes it is all property tax, and budgets accordingly. Then they compare it to a similar house without a CDD and cannot work out why the numbers differ.

Second: not paying it has tax consequences, not HOA consequences. An unpaid CDD assessment is treated like unpaid property tax — the county can sell a tax certificate against your property, which is a faster and harsher path than an HOA collection.

The CDD portion of your bill usually has two parts:

• The debt assessment, repaying the bonds. This is the part that eventually ends, and the part that can sometimes be paid off early.
• The operations and maintenance assessment, funding the district’s ongoing upkeep. This one does not end.

How long does a CDD last, and can it be paid off?

The bonds typically run 20 to 30 years. The debt portion can often be paid off in a lump sum — and whether the previous owner did changes your monthly cost materially.

This is the question almost nobody asks, and it is worth real money:

• How many years are left on the bond? A community in year 3 and a community in year 24 look identical from the street and cost very differently to own.
• Has this specific lot’s debt been paid off? Within the same community, some lots are paid off and others are not, depending on what each previous owner chose. Two neighbours can have different bills.
• Is paying it off a good idea? Sometimes. It removes a monthly cost but ties up capital, and it does not always translate into a higher sale price. It is an arithmetic question, not a philosophical one.

Every CDD is a public body. Its budget, its bond documents and its assessment schedule are public records, and most publish them on their own website. If a seller or an agent cannot tell you the remaining term, the district can.

What can an HOA actually make me do?

More than most people expect. In Florida an association’s covenants run with the land, and they bind you whether or not you read them.

Typical powers, all enforceable:

• Architectural control — paint colours, roof materials, fences, landscaping, solar panels within statutory limits, even the type of mailbox.
• Use restrictions — parking, commercial vehicles, pets, and whether you can rent the property at all.
• Fines for violations, subject to statutory caps and a hearing process.
• Liens and foreclosure for unpaid dues. An HOA can foreclose on a home over a debt far smaller than the mortgage.

Florida gives buyers a window to review association documents and, in some circumstances, to cancel. Use it. The documents are dull and they are the contract you are signing.

What is a special assessment, and how worried should I be?

It is a one-off charge on top of your regular dues, levied when the association needs money it does not have. It is the single biggest financial risk of buying into a community.

Roof replacement, a failed seawall, hurricane repairs beyond the insurance settlement, a lawsuit — any of these can produce an assessment of thousands or tens of thousands per unit, payable on a schedule the board sets.

The defence is the reserve study, and it is the most useful document nobody reads. It lists the community’s major components, their remaining life and what it will cost to replace them, then says whether the reserve fund is on track. An association with thin reserves and a 22-year-old roof is not a risk — it is a schedule.

Ask for three things: the reserve study, the last two years of financial statements, and the minutes of the last twelve months of board meetings. The minutes are where trouble shows up first.

What about condominiums after the 2022 reforms?

Florida changed the rules after the Surfside collapse, and the effect on condominium budgets has been substantial. If you are buying a condo, this is the most important part of this guide.

The reforms require, for buildings three storeys and taller:

• Milestone structural inspections at defined building ages, and again periodically after that.
• Structural integrity reserve studies, identifying the major structural components and what they will cost.
• Mandatory funding of those reserves — associations can no longer vote to waive them for the structural items.

The consequence has been sharp increases in monthly dues and a wave of special assessments in older coastal buildings, some of them very large. It has also created a two-tier market: buildings that have completed their inspections and funded their reserves, and buildings that have not.

What should I ask before I sign?

Nine questions. All of them have documented answers, and all of them are cheaper to ask now than to discover later.

1. What are the HOA dues, and what do they include?
2. When were they last raised, and by how much?
3. Is there a CDD? What is the annual assessment, split between debt and operations?
4. How many years remain on the CDD bonds? Has this lot been paid off?
5. What does the reserve study say, and what percentage funded is the association?
6. Has a special assessment been levied in the last five years, or is one being discussed?
7. What are the leasing restrictions — minimum term, approval, waiting period after purchase?
8. For a condo: is the milestone inspection complete, and what did it find?
9. Is the association involved in litigation?