Duval, Clay, and St. Johns Counties all have many pre-planned communities that charge the homeowners HOA or CDD fees. These two fees can feel confusing; what is the HOA money used for and what is the CDD money used for? And why do some communities charge both?
It’s important to know the difference between these fees and specifically how much they are in each community. Your Realtor should be giving you that information prior to shopping for homes because it could affect your ability to afford a home and its monthly payment.
What is an HOA?
HOA is short for Home Owners Association Fee. This is a fee that is determined by the governing body, or board, of the housing community in which your new home might be located. This association makes the rules for the neighborhood, which could include things like no commercial vehicles can be parked in front of homes, no boats can be stored on home property, and homes may only be painted a certain color(s).
The HOA is a mandatory fee, usually paid monthly, and is not typically paid along with your mortgage. Oftentimes these communities will have their own online payment portal but be prepared to write a monthly check just in case. Occasionally, these fees can be paid annually or on a different schedule set by your HOA.
The HOA fee can cover a variety of community services from maintenance to trash pickup. You’ll also find that this fee covers the landscaping of the community and regular upkeep of shared spaces like pools, clubhouses, or playgrounds. Ameni
Why buy a home in an HOA community?
HOAs provide a number of benefits. The first and most obvious is the amenities. Your HOA fee goes towards using all the amenities in your neighborhood (which could range from tennis courts to community swimming pools). It also covers the upkeep and maintenance of these shared spaces.
In general, you may find the communities with an HOA are cleaner than those without. Because these communities have rules in place for residential property upkeep, things like accumulating trash or overgrown lawns won’t be an issue.
Another fun perk of the HOA is social events. Some neighborhoods have monthly or even weekly events to get to know your neighbors, including food trucks and camp fires. If you’re someone who loves community, you’ll appreciate this aspect of the HOA.
What is a CDD?
CDD is short for Community Development District and exists in developments that assess and assign fees to be paid by the homeowners to cover things like infrastructure; think sidewalks, street lights, and other amenities. A CDD will often also cover roads, sewer systems, and the building or updating of the amenities you use.
This fee is essentially what the builder used to finance the development while it was under construction and passes some of that financing off to the homeowners. This fee usually takes the total amount of the builder’s bond, divides it by the total number of homes, and spreads the payments out over 15-30 years. Unlike an HOA, the CDD is designed to pay for itself and eventually, each property will pay off its portion of the CDD and owe no more.
The CDD fee is a mandatory fee and is added to your annual property tax bill so it will not be paid separately from your mortgage the way your HOA payment will be. It also does not come with the same rules and regulations as an HOA. The CDD fees tend to keep home prices lower because of the deferred infrastructure cost. Communities with a CDD but no HOA will not have the same restrictions.
Why buy a home with a CDD?
CDDs fees are typically less than HOA fees. They are also temporary, anywhere from 15-30 years so you could potentially pay off your CDD or purchase a home with the CDD already paid off. CDD fees are also tax deductible, which is a big bonus! Communities with CDD fees are typically well-planned and have amenities that you will enjoy.
There are some communities that have both HOA and CDD fees. In this case, speak with your Realtor and potentially some of the neighbors to see if they feel the cost of living there matches the level of living. Also, factor in what’s important to you. You may not be interested in amenities or the rules that come with these types of communities. Or, to the contrary, you may find that the cleanliness and convenience of a planned community fits your lifestyle and your needs!