New Jersey Reserve Study Law & Requirements: S2760 Compliance Guide (2025)

NJ Reserve Study Law Overview: Senate Bill S2760 & A4384

Understanding NJ Senate Bill S2760 and Assembly Bill A4384

Signed into law by Governor Phil Murphy on January 8, 2024, these companion bills amended N.J.S.A. 52:27D-132 to establish New Jersey's comprehensive reserve study framework. The legislation was passed in direct response to the 2021 Champlain Towers South collapse in Surfside, Florida, aiming to prevent similar tragedies in New Jersey through proactive reserve planning and structural integrity requirements.

The NJ reserve study law represents groundbreaking legislation that fundamentally changes how community associations manage their capital reserves. Unlike the previous voluntary approach, S2760 mandates regular reserve studies and establishes strict funding requirements to ensure associations maintain adequate reserves without relying on special assessments or loans.

Quick Reference: NJ Reserve Requirements

‍

Which NJ HOAs and Condos Need Reserve Studies?

The NJ reserve fund requirements apply to three categories of community associations:

1. All Condominiums - Every condominium association in New Jersey must complete reserve studies regardless of size or asset value.
2. All Cooperatives - Similar to condominiums, all cooperative associations require reserve studies under the NJ condo reserve law provisions.
3. Planned Real Estate Developments (HOAs) - Homeowners associations structured under PREDFDA must complete studies if they have $25,000 or more in common area capital assets. This threshold includes the total replacement cost of all reserve components, not just individual items.

Determining the $25,000 Threshold for HOAs

To determine if your HOA meets the threshold under NJ HOA reserve requirements:

• Calculate the total replacement cost of all common area capital assets
• Include major components like roofs, roads, pools, and clubhouses
• Exclude routine maintenance items funded through operations
• Consider getting a preliminary assessment from a reserve specialist

New Jersey Reserve Study Deadlines & Timeline Requirements

Current Compliance Status (As of September 2025)

The NJ reserve study law established several critical deadlines:

For Existing Associations:

• January 8, 2025: Initial deadline for associations without a study in the past 5 years (NOW PASSED)
• Ongoing: Studies must be updated every 5 years from completion date
• Immediate Action Needed: Non-compliant associations should commission studies immediately

For New Associations:

• Within 2 years of electing a majority homeowner-controlled board
• Even if developer provided a study, boards should consider updates after transition

Structural Inspection Requirements

In addition to reserve studies, certain buildings must complete structural integrity inspections:

• Buildings 15+ years old with load-bearing concrete, masonry, or steel structures
• Initial inspections due by end of 2025
• Re-inspections every 10 years or sooner if decay observed
• Within 60 days of observing structural decay to primary load-bearing systems

NJ Reserve Fund Contribution Requirements

Adequate Reserve Funding Standards

The NJ reserve fund requirements mandate "adequate" funding, defined as having sufficient reserves available when components need replacement without requiring:

• Special assessments
• Bank loans
• Deferred maintenance

Funding Timeline Based on Budget Impact

New Jersey law provides flexibility for associations to reach adequate funding levels:

If funding requires >10% budget increase:

• Deficiency must be corrected within 10 fiscal years
• Or by the date reserves would drop below zero (whichever is earlier)
• Annual increases must be equal across all years

If funding requires ≤10% budget increase:

• Deficiency must be corrected within 2 fiscal years
• Immediate action required for budget planning

Components Required in Reserve Studies

NJ reserve study requirements mandate inclusion of:

• All common area capital assets requiring periodic replacement
• Preventive maintenance costs (previously called deferred maintenance)
• Cost of future reserve studies (every 5 years)
• Structural inspection costs (if applicable)
• 30-year funding plan with detailed projections

How to Comply with New Jersey's Reserve Law

Step 1: Assess Your Current Status

Determine your association's compliance position:

• When was your last reserve study completed?
• Does it meet the new NJ standards?
• Are you currently funding at adequate levels?

Step 2: Hire a Qualified Professional

The NJ reserve study law requires studies be conducted by:

• Reserve Specialists (RS) - Credentialed by Community Associations Institute (CAI)
• New Jersey Licensed Professional Engineers - With structural assessment experience
• New Jersey Licensed Architects - Qualified in building assessment

Step 3: Conduct the Reserve Study

The study must conform to:

• Latest edition of CAI's National Reserve Study Standards
• Or similar standards from recognized national organizations
• Include physical analysis of all components
• Provide 30-year funding projections

Step 4: Implement Funding Recommendations

Based on the study results:

• Review recommended funding levels
• Calculate required assessment increases
• Develop implementation timeline (2-10 years based on impact)
• Communicate changes to homeowners

Step 5: Maintain Ongoing Compliance

• Schedule next study within 5 years
• Monitor reserve fund performance annually
• Adjust contributions as needed
• Document all reserve-related decisions

Consequences of Non-Compliance with NJ Reserve Law

Legal and Financial Risks

Associations that fail to comply with NJ HOA reserve law face several consequences:

Board Member Liability:

• Loss of business judgment rule protection
• Potential personal liability for inadequate reserves
• Fiduciary duty breach claims

Municipal Enforcement:

• Possible certificate of occupancy actions
• Building department violations
• Local enforcement varies by municipality

Financial Consequences:

• Emergency special assessments
• Difficulty obtaining loans
• Reduced property values
• Increased insurance costs

Getting Back Into Compliance

For associations past the January 8, 2025 deadline:

1. Immediately engage a qualified reserve specialist
2. Document efforts to achieve compliance
3. Communicate with homeowners about the situation
4. Implement catch-up funding plans as required
5. Consult legal counsel regarding liability mitigation

Working with Reserve Study Professionals in New Jersey

Selecting the Right Professional

When choosing a provider for NJ reserve study requirements, several key factors deserve careful consideration. Start by verifying the professional's credentials, ensuring they hold either the RS (Reserve Specialist) designation from CAI or maintain a current New Jersey professional engineer or architect license. Their experience with similar communities is crucial—request sample reports and references from associations of comparable size and type to yours. Most importantly, confirm their specific knowledge of New Jersey's unique requirements under S2760, as state-specific expertise can make the difference between compliance and costly oversights. Finally, compare pricing and service levels across multiple providers to ensure you're receiving comprehensive value for your investment.

Cost Considerations

Reserve study costs in New Jersey vary significantly based on association size and complexity. Small associations with fewer than 50 units typically invest between $3,000 and $5,000 for a comprehensive study, while medium-sized communities of 50 to 150 units should budget $5,000 to $8,000. Large associations exceeding 150 units often face costs ranging from $8,000 to $15,000 or more, particularly for high-rise buildings or communities with extensive amenities. The good news is that subsequent updates, required every five years, typically cost only 50-70% of the initial full study, making ongoing compliance more manageable from a budgetary perspective.

Next Steps for Your Association

Immediate Action Items

1. Verify Compliance Status - Check when your last reserve study was completed
2. Schedule Professional Assessment - Contact qualified reserve specialists immediately if non-compliant
3. Review Current Funding - Assess whether current reserves meet adequacy standards
4. Plan Budget Adjustments - Prepare for potential assessment increases
5. Communicate with Owners - Keep homeowners informed about compliance efforts

Long-Term Planning

Successful reserve management extends well beyond initial compliance. Associations should establish a reserve study update calendar to ensure timely five-year renewals, while developing clear funding adjustment policies that align with the law's 2-to-10-year implementation windows. Consider creating reserve investment strategies that maximize returns while maintaining appropriate liquidity for planned expenditures. Integration with your existing capital planning processes ensures consistency between reserve studies and actual maintenance practices. Additionally, staying informed about legislative updates helps associations adapt to any future changes in requirements or enforcement.

PropFusion Solutions for NJ Associations

PropFusion offers comprehensive reserve study management tools designed specifically for New Jersey's requirements, including automated funding calculations, 30-year projection models, and compliance tracking features. Our platform helps associations maintain proper documentation and meet all state-mandated reporting requirements, streamlining the complex process of reserve management into an intuitive digital experience.