NJ’s New Reserve Law Explained: What Every Condo Buyer and Owner Needs to Know

On August 21, 2025, New Jersey enacted S-3992, also called the Updated New Jersey Reserve Requirements 2025. This law completely changes how condominiums, HOAs, and retirement communities manage their long-term finances.

Reserves are no longer optional. The state now requires every covered community to have a professional reserve study prepared by a licensed engineer or a certified Reserve Specialist (RS). That study must guide how associations budget for future repairs and replacements.

What Communities Must Have a Reserve Study in NJ?

The law applies to:

  • All condominiums
  • All retirement communities
  • Townhome communities with common elements worth over $25,000 OR over 100 units
  • Single-family HOAs with common elements over $25,000 OR over 100 units

If you live in one of these, your board is legally required to follow the new rules.

What Does the NJ Reserve Law Require?

The NJ association reserve requirement 2025 sets clear funding standards:

  1. Baseline Funding Is Mandatory
    Every association must have a 30-year plan that never allows reserves to drop below zero. This is now the minimum definition of adequacy.

OPTION for Shortfalls:

  1. 85% Option with Assessment for up to 5 years
    If the shortfall exists, boards may temporarily fund at 85% of the recommended plan for up to five fiscal years and plan for a special assessment of the shortfall within no more than 5 years. 

The 85% funding comes with strict disclosures:

  • A 20-point bold-font notice to all owners.
  • Disclose the year and amount of any special assessment or loan.
  • The same notice must be given to every buyer before closing.

  1. New Associations Must Fund Immediately
    Any community created after August 21, 2025 must fully fund reserves from inception. The 85% option is not available.

  2. The Old Way Is Gone
    Boards can no longer “pay as you go” for major projects or push costs to the next generation of owners. Reserves are required, tracked, and enforceable. 

Why Does This Matter for Buyers and Owners?

Think of reserves as your community’s credit score. Banks, insurers, and buyers now look at the reserve study to decide whether your building is financially healthy.

  • If reserves are weak: banks may deny mortgages, leaving only cash buyers. That lowers demand and drives property values down.

  • If reserves are strong: banks approve more loans, buyers feel confident, and property values rise.

The law also creates real enforcement by requiring disclosures. If your board funds at 85%, every owner and every buyer will know when the special assessment is coming and how much it will be.

What Happens If Associations Don’t Comply?

Ignoring the Updated New Jersey Reserve Requirements 2025 is risky. Consequences include:

    • Regulatory enforcement for violating state law.
    • Loan denials or higher scrutiny from banks.
    • Insurance complications, including non-renewals.
  • Immediate special assessments to cover shortfalls.
  • Falling property values as buyers avoid underfunded communities.
  • Legal exposure for boards accused of breaching fiduciary duty.

Simply put, non-compliance can destabilize both the community and property values.

How to Comply With NJ Reserve Laws

To comply with the NJ association reserve requirement 2025, associations must:

  • Obtain a professional reserve study from a licensed engineer or Reserve Specialist (RS). Stone uses both an engineer and a RS on every study. 
  • Choose a funding method: full funding, or  85% with assessment option (disclosures required)
  • Budget accordingly to meet funding requirements.
  • Provide required disclosures if using the 85% option.
  • Update the reserve study at least every 5 years — though annual updates are strongly recommended.

 

Stone Building Solutions: More Than a Reserve Company

At Stone Building Solutions, we are the best choice for NJ reserve studies because we combine:

  • We use our team of Licensed engineers and certified reserve specialists 
  • Full-service expertise (engineering, reserve studies, insurance appraisals, property damage claims).
  • We provide multiple Funding strategies that help boards stay compliant while keeping contributions reasonable.
  • Reports that satisfy banks, insurers, and regulators — not just state law.

Get a Stone  FREE RESERVE AUDIT to see if your study is compliant and whether your dues can be lowered under the new rules.

https://stonebldg.com/proposal/ to schedule your FREE Reserve Audit today.