Most Condo Buyers Don't Know They're Buying Into a Corporation. The Documents That Reveal What's Coming Are Often Ignored

Written by:

Alejandra Rodriguez

Date:

31 Jul 2026

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The standard condo listing tells a buyer about square footage, amenities, and monthly fees. What it doesn’t tell them is when the elevator needs replacing, whether the reserve fund can cover it, or how much they’ll personally owe when the bill comes due. That information exists – buried in hundreds of pages of governing documents, engineering reports, and budgets that most buyers never read closely and most lawyers review only for legal compliance, not financial forecasting.

The gap between what’s disclosed at listing and what’s discoverable in the documents is one of the more persistent blind spots in multifamily real estate. Condo fees are rising across North America, reserve fund shortfalls are becoming harder to ignore, and the cost of that blind spot is growing.

You’re Not Just Buying a Unit

Thomas Beattie, Co-Founder & CEO of Eli Report, which says it has analyzed close to 15,000 communities across North America since launching in 2019, frames the core misunderstanding directly: buyers think they’re purchasing a home, when they’re actually also purchasing a share of an association’s common assets.

“You are not just buying your unit, you are buying your share of everything else,” Beattie says. In a condo, that means plumbing systems, electrical infrastructure, parking garages, roofs, elevators, lobbies, and amenity spaces. In an HOA, this could include roads, security systems, and recreation facilities. Each of those capital assets has a replacement timeline and a cost, costs that are supposed to be funded collectively through reserves built up over time.

The mechanism for understanding those future costs is a reserve fund study, called by different names across jurisdictions (depreciation reports, reserve reports). These studies project what needs replacing, when, and how much it will cost. Not every state requires them. Where they aren’t mandated, buyers face what Beattie calls “a big question mark over your future costs.”

A handful of companies have built document-review platforms aimed at closing this gap, applying data analysis to the reserve studies and governing documents that most buyers and even most lawyers never examine closely. Eli Report is one such platform, providing benchmarks and insights in minutes based on the association documents.

The Underfunding Problem

The most consistent pattern across the documents Beattie’s team reviews is reserve underfunding. Communities that haven’t conducted engineering studies, or that have chosen to defer maintenance and keep fees low, are pushing costs onto future owners.

“Everybody wants lower fees. They think lower condo fees or HOA dues are a good thing,” Beattie says. “It’s not necessarily a good thing. That means that they’re pushing out projects, they’re not doing enough maintenance. That’s going to lead to bigger, nastier surprises in the future.”

Beattie says HOA dues have been rising rapidly over the past five-plus years since COVID – and they’re not finished. Communities are doing better than they were a few years ago, but they are still not properly funding everything yet.

The human cost is real. Older residents on fixed incomes are being forced out of communities where fees are rising faster than they can absorb. And the alternative – staying until a special assessment arrives – is often worse. Beattie argues that moving out while owners still have the means and with the knowledge of a project coming is far better than selling in the midst of construction with a massive outstanding balance. At that point, buyers are nervous, the community is mid-project, and sellers cannot get fair value.

The Governance Layer

Who runs a condo community matters as much as its physical condition. Boards are typically composed of volunteer owners who fall, as Beattie describes it, into two camps: retirees focused on keeping fees low and maintaining the status quo, and younger professionals eager to get things done quickly. Those interests don’t always align, and the community association manager – the professional hired to operate the building under the board’s direction – navigates the tension between them.

Well-governed buildings exist. But governance quality is hard to assess from the outside, and the documents are often the only window into how a community actually operates, what projects are being prioritized, how meetings are conducted, and whether reserve contributions are keeping pace with engineering recommendations.

Insurance as a Structural Constraint

Condo insurance conditions have drawn national attention, and Beattie says the headlines are not overstated. In states like Florida and California, carriers have left markets entirely, driving premiums and deductibles higher for those that remain. Within the documents, the effect shows up as rising insurance line items in HOA budgets, a line item that document-review services increasingly benchmark against peer buildings of similar type and age, to reveal whether a community’s insurance burden is unusually high or simply tracking with the broader hard market.

“In most cases, that insurance is mandatory, so you have no choice but to find it and pay it at any cost,” Beattie says. Insurance markets move in cycles, he notes – hard markets with limited capacity and rising prices eventually give way to soft markets with abundant capacity and falling premiums – but Florida and especially California remain in a hard market today.

Legal Review and Financial Forecasting

Legal review of condo documents is standard practice in most markets. But Beattie draws a distinction between legal review and understanding your community. Lawyers assess legal exposure. They are typically not benchmarking reserves against peers, projecting the timing of future special assessments, or evaluating whether lifestyle restrictions align with a buyer’s needs, work that requires financial analysis rather than legal review alone.

Beattie describes a case where a buyer walked away from a purchase after a document review revealed an expected $50,000 levy over the next couple of years, an amount beyond what they could afford. They found another home within weeks. “There’s nothing worse for a new buyer than spending the maximum they can to buy the condo of their dreams, and then within a year or two, get hit with a significant special assessment, sometimes tens – even hundreds – of thousands of dollars that they cannot afford to pay,” Beattie says.

Real estate agents who have access to this kind of document-level intelligence before negotiations gain leverage. Noticing that a building is out of alignment with its peers or has underfunded upcoming projects allows an agent to negotiate from a position of informed knowledge, creating better outcomes for their clients.

What’s Ahead

Reserve fund studies remain too infrequent and not widespread enough across the U.S., according to Beattie. He sees the regulatory direction as clear – more jurisdictions will eventually mandate them – but the transition is still underway. “The fees make the headlines,” he says. “The reserve fund studies power the intelligence.”

For buyers entering condo communities today, the practical implication is straightforward: the documents that reveal future financial obligations already exist in most cases. Requesting them, reading them, and understanding what they project is the difference between buying with open eyes and absorbing costs that were foreseeable but never examined.

About the Expert: Thomas Beattie is Co-Founder and CEO of condo intelligence company OctoAI Technologies, which offers Eli Report, a document review platform that has analyzed close to 15,000 condo communities across North America since launching in 2019.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.