Reserve Study in NJ

• Reserve Specialist, RS (designated by CAI or similar);
• NJ Engineer;
• NJ Architect.

If an association has not had a qualified reserve study in the last 5 years, then it must be completed by Jan 8, 2025.

New associations should complete a qualified study after the board is established, but not longer than 2 years.

“Covered buildings” must be reviewed at least every 5 years by a licensed engineer, architect or certified Reserve Specialist.

The law does not specify for other non “Covered Buildings” - you should refer to your condo documents. Stone Building Solutions suggests revising the capital funding plan every 3-5 years.

When making repairs, the associations  in NJ can only use funds allocated to that specific item in study. The association does have the ability to borrow from other line items in the study if:

1. Those items do not have to be replaced in the next 5 years.
2. AND have written a voted plan to replace the funds within the next 5 years.

Associations  are required to fully fund reserves in NJ, unless they can’t. Lawmakers did a good thing here and provided a roadway to reserve funding for associations called a Glide Path.

If the increase in reserves is less than 10%, you are required to fund 100%.  Shortages are required to be made up within 2 years.

If the increase in reserves  is over 10%, the association may spread out increases over a 10-year period OR the length of time when the study says the money is needed (whichever is shorter). Associations must increase reserve funding by at least 10% annually until they are on target with their qualified reserve study.

This extension of reserve funding is being referred to as the Glide Path.

An example of the Glide Path in NJ:  if a roof replacement is required in 4 years, the money would be required to be available when the repairs are needed in 4 years, not in 10 years.

Nothing in the NJ law is intended to prevent the imposition of a special assessment or obtaining a loan in those cases where work needs to be done (building items have reached the end of their useful life even before the reserve study produced), or for items that need repaired or replaced earlier than the study predicts.

tone Building Solutions has named this the New Jersey No Vote Power. Regardless of what the association documents say, the board has the ability to approve an assessment or loan to fund corrective maintenance to the primary load-bearing system even without  a membership or developer vote.

In order to make this assessment without a vote, the Board of Directors first must hire a NJ engineer who must inspect the property and determine if failure to make repairs will:

1. Create an imminent safety risk, or
2. Violate the law, or
3. A delay will substantially increase the cost of repairs to each unit owner.

There is now a long list of disclosures, inspections, maintenance planning requirements; a Reserve Study must be done when 75% of the association has turned over to help the community establish maintenance plans and increase transparency.

The law took effect immediately, and began on January 8th, 2024.

The law specifically states it does not stop any CD claims.

What bill is this information included in:

Date: January 8, 2024.

Signed by: New Jersey Governor, Phil Murphy, signed protective legislation.

Bill Numbers:  S2760- ​​Identical Bill Number: A4384

Law: P.L. 2023, c.214

Primary Sponsor:

Singleton, Troy

Greenstein, Linda R.

Lopez, Yvonne

Wimberly, Benjie E.

Co-Sponsor: Johnson, Gordon M.