Imagine a world with no HOAs, and where homeowners pay fewer property taxes. That’s the world that Florida legislators envisioned with two proposals in Florida this past legislative session. Luckily, they both failed, because if they had passed, the utopia they aimed to create would have turned dystopian quickly as communities failed to receive municipal services, property values fell, and nobody was held responsible.
Though they didn’t pass this year, there is no doubt we’ll see them again in the future. If and when that happens, community associations should be aware of the unspoken complications Florida HOAs may face against changes like these.
Here’s what Florida communities should know:
HB 657 – Community Association Termination
This proposal would have made it easier for homeowners to terminate their HOA. While it passed through all House committees and was moved to the Senate for review, the legislative session concluded before the Senate could review it.
The Premise
If enough owners vote to end the HOA, the association could be dissolved.
At first glance, this sounds reasonable. Many people feel frustrated with HOA rules, fines, and fees. Giving owners the ability to end the HOA may feel like restoring freedom–people should have a voice in how their community is governed, shouldn’t they?
The Problem
In practice, terminating an HOA may create more problems than it solves.
An HOA is not just a set of rules written in a document. It is the organization that manages the shared parts of the community. It maintains roads, sidewalks, entry gates, walls, landscaping, drainage systems, and sometimes even stormwater management. It also carries insurance and signs contracts for services that keep the neighborhood functioning.
If the HOA disappears, those responsibilities do not disappear with it.
Someone still has to maintain the roads. Someone must insure shared property. Someone must pay for repairs when infrastructure breaks. Without a clear structure in place, those duties can quickly become unclear. When responsibility becomes unclear, disputes often follow.
The Potential Future Fallout
Without an HOA, the neighborhood could face a patchwork of responsibility where no one agrees on who should pay or manage the work.
- Property values may be affected. The security and reliability of a community association lifestyle can impact property value.
- Buyers and lenders like clarity. They want to know who maintains the neighborhood, who carries insurance, and how shared property is managed. If that structure disappears, lenders may become cautious.
- Insurance companies may ask difficult questions. In some cases, mortgages could become harder to obtain.
- Frivolous termination requests may become the new norm. A motivated group of owners may push for termination driven by short-term frustration without every homeowner fully understanding the consequences.
- Termination is a door that may only swing one way. Once an HOA is dissolved, rebuilding it later could be extremely difficult, if not impossible.
HJR 203 – Elimination of Non-school Property for Homesteads
This proposal would eliminate or dramatically reduce property taxes for homesteaded homeowners. HJR 203 was a constitutional amendment that could eliminate most non-school property taxes on homesteaded homes in Florida.
The Premise
If enacted, the policy would have represented one of the most significant structural changes to Florida’s local tax system in modern history.
House Joint Resolution 203 (HJR 203) was a constitutional amendment that would have eliminated most non-school property taxes on homesteaded homes in Florida if voters approve it. And there was a real chance they would have because it could have reshaped how local government is funded across the state.
Taxes on investment properties, commercial real estate, and second homes would likely have remained intact. School taxes may have continued as well, but many local government levies could disappear.
The Problem
For homeowners, the proposal may sound like a simple win: lower taxes and greater housing affordability. But for those of us working inside the ecosystem of community associations, the implications are far more complex. Large policy shifts rarely operate in a vacuum or in isolation.
Whenever the financial landscape shifts, associations benefit from better visibility into ownership and property activity. Changes in tax policy can accelerate property transfers, ownership restructuring, increased use of living trusts, land trusts, corporate entity ownership, and investor turnover. Florida communities lose visibility into who actually owns what. That’s when problems compound.
Though this proposition did not pass, it’s a conversation that has been happening in Tallahassee for years now, and, should it come up again in the future, it will be important to consider not only the benefits to individual homeowners, but also the long-term stability of the communities in which they live.
The Potential Future Fallout
It’s an appealing idea. We understand why homeowners respond to it. But the historical record on eliminating property taxes is not encouraging. Other states have tried similar changes with mixed results; mostly not good.
Michigan had a major tax reduction in 1994, and it caused local sales taxes to increase. In 1978, Proposition 13 in California capped property taxes, has seen a fair amount of dislike in the Golden State ever since.
One misconception about eliminating property taxes is that it automatically improves everyone’s financial situation, but community association assessments operate under an entirely different framework.
Community associations represent millions of Floridians and billions of dollars in shared infrastructure. Any change to the broader tax ecosystem inevitably touches the financial health of these communities, and there is where we will see unintended consequences.
Where Does This Leave Florida Communities?
For now, nothing changes. The utopia Florida legislators imagined this session didn’t materialize — and that’s genuinely good news for the communities that would have lived with the consequences. But the ideas behind both proposals aren’t going away. They’ll come back in some form, and when they do, the communities that understood what was really being proposed will be the ones that respond effectively.
But, Florida homeowners, Board members, and community association managers should all be vigilant when future legislation like these two are proposed (and trust me, they will come ‘round again!) Staying informed about upcoming potential legislation and knowing how to vote in the best interests of your community as new resolutions are proposed are crucial.
If your community is concerned about upcoming changes to state or federal obligations, or looking to stay compliant with laws related to HOA collections, Axela is happy to be of help. Contact us today to learn how our team of experts and our HOA collections technology platform help communities like yours stay legally compliant every day.
