CDD fees and HOA fees.

Community Help: Cdd Fee Vs Hoa Fee - Are People Getting Hosed?

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After researching new houses, I thought I would give a writeup on what I learned about homeowners association fee's (HOA) and this new CDD fee that many homeowners aren't really aware of or aren't aware of the impacts of it. Many new homes, especially in places like Florida, are tacking on both CDD fees and HOA fees both. My place currently does not have a CDD fee, so I've done alot of reading about this as I looked at new homes. You may see a yearly charge in your property taxes called "Non Ad valorem Assesments" for solidwaste or storm water, but this is not CDD.

Note that many builders like to play off CDD as no big deal, or not even mention it in any important way, even though you are basically locking into a long term contract to fund this, and that number can actually go higher. It doesn't matter if other foreclose or your community doesn't sell all the houses, you are still locked in to pay for this. This is money you will never get back and your only way out is to sell your home.

CDD Fees = In one sentence or less, money you have to pay for lights, roads, sewer, electric buildout, etc. HOA Fees = In one sentence or less, money you have to pay for your community landscaping, security guard, pool, gym, parking restrictions, yard restrictions, etc. If in a townhouse then the HOA normally takes care of all the yard maintenance and work, along with roofing or painting (for example new roof after 12 years).

Think of CDD as building out your area leading to your community, and HOA as internal for your community. If only one or the other exists, then they can cross over and mean similiar things, for example pool and gym.

The bottom line is the CDD is offloading the government costs via a bond that they pass on to the homeowners. Not all places have a CDD fee passed on to the homeowner. It's common to see CDD fee's around $200 a month. If you have BOTH a CDD fee and HOA fee, they you need to be on high alert, because some I looked at wanted a monthly CDD payment of $170, and a monthly HOA fee of $150. This is over $320 a month you are paying again and again that you will never get back, and these totals can also go HIGHER. This can greatly change whether or not its cost beneficial to buy a house in that area. Note also they often through in a "one time payment" at closing, that they probably wont mention until you close. When I dug into the details of this one place wanted $500 as an association "one time payment" at closing. As long as buyers are willing to keep taking on the CDD risk, and as long as buyers will continue signing to pay for both CDD and HOA, then these costs and risks will continue to be passed on to you.

I should also mention that I also think that one of them is reasonable, for example an HOA fee can be beneficial as parking regulations and security guards can greatly improve your community, but with both CDD and HOA, people need to realize what they are getting into. You need to ask and dig out all the details up front. You also need to be aware that there are communities that do not have CDD fees.