“Difference Between HOA and CDD Explained” – News-Press

“Difference Between HOA and CDD Explained” – News-Press

Exterior of a yellow building with a red door and a teal door.Q: What is the difference between a CDD and an HOA? (R.B., via e-mail)

A: A Community Development District, or CDD, is an independent special taxing district created under Chapter 190 of the Florida Statutes. A CDD is a type of government entity, usually created at the request of developers of large tracts of land, tasked with planning, financing, constructing, operating, and maintaining certain infrastructure like roads, street lighting, utilities, and amenities in a planned development.

A city or county ordinance creates the CDD and prescribes its specific structure and authority, which often includes the authority to promulgate rules and regulations governing the use of CDD facilities and the ability to impose and levy taxes and/or assessments to pay off bonds issued for the infrastructure.

The CDD is governed by a board of supervisors elected by landowners within the CDD. A CDD also allows the costs of certain improvements to theoretically be spread over the life of the issued bonds, rather than including these costs in the price of the initial home sale. If property to be purchased is part of a CDD, there is a mandatory disclosure advising of same in the purchase contract.

By comparison, a homeowners’ association, or HOA, is a private corporation responsible for the operation of an individual community in which the voting membership is made up of parcel owners or their agents, or a combination thereof. Each HOA will vary, but usually membership in the HOA is mandatory as a condition of property ownership. There are also voluntary HOAs.

Members of an HOA are usually subject to covenants, conditions, and restrictions that run with title to their property. When an HOA is mandatory, and the right to collect assessments levied against the parcel is secured by a right of lien, the association is governed by Chapter 720 of the Florida Statutes, known as the Florida Homeowners’ Association Act. There are likewise mandatory disclosure requirements in purchase contracts.

Some properties may be within both a CDD and an HOA, in which case they may be subject to HOA assessments and taxes or assessments to the CDD.

Q: I live in a condominium and my association told us that we need 75% of our owners to vote to paint the hallways a different color. Is that true? Our walls and doorways are an ugly and dated yellow and brown combination. We did an assessment to pay for it if that matters. (K.K., via e mail)

A: The source of the funds does not matter, the cost of the work might.

Generally, color changes are “material alterations” of the common elements and require approval of 75% of all owners unless the declaration of condominium contains a different procedure authorizing material alterations. Most likely yes, a member vote would be required, however, the voting threshold will depend on the specific language (or absence of language) of your association’s condominium documents. You should carefully review the specific language of your condominium documents to determine the specific voting threshold required.

Most declarations do contain a material alteration clause. Some require owner approval only if the alteration exceeds a certain dollar amount. When an owner vote is required, most declarations base the required vote on those who actually vote at a meeting (in person or by proxy), rather than situations where “non-votes” are “no votes,” but the specific language of the declaration will control.

Joseph Adams is a Board Certified Specialist in Condominium and Planned Development Law, and an Office Managing Shareholder with Becker & Poliakoff.  Please send your community association legal questions to jadams@beckerlawyers.com. Past editions of the Q&A may be viewed at floridacondohoalawblog.com.