What is CDD in Real Estate?

If you're in the market to find a new home or are looking to purchase a home as a property owner in a certain part of the country, you may come across something called CDD fees and be wondering what exactly they are.

The term means Community Development District and it's an entity responsible for developing land, providing infrastructure and public facilities, community amenities, and community improvements as well as protecting communities, and enhancing residents' lifestyles, all for the best.

CDD communities are considered to be appealing neighborhoods and are often closed neighborhoods that are quite luxurious. They are places where singles, retirees as well as those with families like to reside because they can offer privacy, many amenities, and perks that everyone who lives in a CDD can enjoy year-round.

Typically, homeowners will find CDD fees in various communities that have lots of amenities. This is because the CDD fees help to finance the upkeep and development of certain

The Role of a CDD

If you pay a Community Development District fee, you might want to know what kind of amenities you expect as well as what day-to-day operations are provided. Typically, CDDs take care of and develop common areas with services that imitate big resorts such as nice swimming pools, clean dog parks, fun playgrounds, and community centers in the CDD locality or the amenity-rich master-planned community.

The CDDs work to keep and help maintain the common areas of a neighborhood or community infrastructure for both homeowners and board standards.

One of the main benefits of living in a Community Development District for a property owner is that it offers aesthetically pleasing neighborhoods with many recreational and practical amenities for a price comparable to non-CDD communities.

CDD Fees Meaning

Usually, CDD fees will include the repayment of the bond debt or bond payment as well as expenses for operation and maintenance. The bond debt portion is typically used to cover costs associated with infrastructure building, recreational areas, and other activities related to development, which should be paid off over roughly 20 to 30 years.

The Community Development District fees operations and maintenance cover the running of amenities in the CDD neighborhood, with the amount being subject to change annually.

CDD fees are included in the annual property tax bill that is usually escrowed with the monthly mortgage payment. Thus, paying CDD fees is trouble-free and you won't need to pay out of pocket.

CDD Structure

Like many other local governments, a CDD has a legislative branch usually comprised of a five-member board of supervisors who promulgate the laws and regulations set by the state.

CDD vs. HOA

Homeowners Associations, aka HOA boards or boards of supervisors on them, are elected and are tasked with enforcing community rules, taking care of communal areas, as well as other common amenities (if it's a non-CDD association).

In a CDD community, the Homeowners Association or HOA board typically acts as an intermediary between the homeowners and the CDD board. Typically, HOAs in these communities don't perform any maintenance.

What are some common questions home buyers should ask when trying to decipher between an HOA and a CDD?

Examples include if the home they're interested in requires CDD or HOA fees as well as:

How do HOA and CDD differ in this community?

Which would be the most beneficial for me, HOA or CDD?

What are the services included in a CDD fee in this community?

As mentioned, CDD fees can help finance great amenities like community pools, beach clubs, trash pick up, tennis courts, playgrounds, and other common areas.

Here are some of the other expenses CDD fees can cover:

Community features such as swimming pools or parks;

Building and community-wide infrastructures and construction projects like roads, building clubhouses, and sidewalks;

Routine upkeep; and

Sewage and water systems.

Benefits of Choosing a CDD

Homeowners may opt for a CDD because those homes are typically priced lower and their fees are tax-deductible, unlike HOA fees. Moreover, regulations in a CDD community may be less strict than in an HOA.

When looking at homes with a qualified real estate agent, it's important to understand what the difference is between an HOA and a CDD community. The real estate agent should be well-versed in any additional charges for community features.

A real estate agent with experience in the real estate sector should be able to provide useful information on the requisite conditions that come with buying a home.

Be sure you know what you're getting into before signing on the dotted line when buying a home in a community that has CDD fees so you're not surprised after you've unpacked.

‍