Modifies capital reserve funding requirement for associations of planned real estate developments.

S4508

SENATE, No. 4508

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 24, 2026

Sponsored by:

Senator� VINCENT J. POLISTINA

District 2 (Atlantic)

SYNOPSIS

���� Modifies capital reserve funding requirement for
associations of planned real estate developments.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
modifying the capital reserve funding requirement for
associations of planned real estate developments and amending P.L.2023, c.214.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.� Section 6 of P.L.2023,
c.214 (C.45:22A-44.2) is amended to read:

���� 6. a. Any association of a
planned real estate development shall undertake and fund a capital reserve
study which shall determine or assess the adequacy of the association's capital
reserve funds to meet the anticipated costs of replacement or repair of the
capital assets of a common interest community that the association is obligated
to maintain.� All capital reserve studies shall be prepared in conformity with
the latest edition of the National Reserve Study Standards of the Community
Associations Institute or similar standards by another recognized national
organization.� A capital reserve study conducted pursuant to this section shall
be performed or overseen by a reserve specialist who is credentialed through
the Community Associations Institute or an engineer or architect who is
licensed by the State and shall include, but be not limited to, the following:

���� (1)�� the association's
capital reserve fund balances;

���� (2)�� the association's
anticipated income and expenses;

���� (3)�� an analysis of the
physical status and of the common area components of the buildings and other
common areas that the association is obligated to maintain;

���� (4)�� the anticipated costs
associated with the building maintenance, as well as the anticipated costs of
repair or replacement of common area building components, which are necessary
to maintain the structural integrity of the buildings and other common area components
that the association is obligated to maintain;

���� (5)�� a reasonable estimate of
the cost of:

���� (a)�� future reserve studies;

���� (b)�� reserve study updates;
and

���� (c)�� periodic structural
inspections required pursuant to section 3 of P.L.2023, c.214 (C.52:27D-132.4);

���� (6)�� a reasonable estimate of
the costs associated with implementing any corrective maintenance deemed
necessary pursuant to section 3 of P.L.2023, c.214 (C.52:27D-132.4);

���� (7)�� a proposed 30-year
,
or 35-year,
funding plan or plans, as described in section 7 of P.L.2023,
c.214 (C.45:22A-44.3), which establish the adequate proposed capital reserve
funding over a 30-year
, or 35-year,
time period, which shall include a
30-year
, or 35-year,
funding plan that allows the reserve fund to reach
a lowest dollar balance of zero during the 30-year
, or 35-year,
plan
projection.� Nothing in this section shall prohibit the reserve study from
including additional funding plans with a minimum fund balance greater than
zero, or funding plans with escalating annual contributions, provided the
reserve fund balance is not projected to fall below zero dollars; and

���� (8)�� any other information
necessary to perform an analysis of the adequacy of the association's capital
reserve funds relative to maintaining the structural integrity of buildings and
common areas which the association is obligated to maintain.

���� b.��� Associations which have
not undertaken a reserve study within five years of the effective date of
P.L.2023, c.214 (C.52:27D-132.2 et al.) shall undertake a reserve study within
one year of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.).� Associations
formed after the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.)
shall undertake a reserve study as soon as practicable after the election of a
majority of an executive board pursuant to section 5 of P.L.1983, c.30
(C.45:22A-47), but in no event shall such study be undertaken more than two
years following the election of a majority of the executive board under section
5 of P.L.1983, c.30 (C.45:22A-47).

���� c.���� An association of a
planned real estate development shall ensure that a capital reserve study
conducted pursuant to this section shall be reviewed by a licensed architect,
engineer, or credentialed reserve specialist and that a capital reserve study
be conducted and reviewed at least once every five years.

���� d.��� This section shall not
apply to an association of a planned real estate development with less than
$25,000 in total common area capital assets.

���� e.���� As used in sections 6
and 7 of P.L.2023, c.214 (C.45:22A-44.2 and C.45:22A-44.3):

���� "Adequate" or
"adequacy" means the same as those terms are defined pursuant to
section 2 of P.L.2023, c.214 (C.52:27D-132.3).

����
f.� An association may, on
or before the 12th month next following the effective date of P.L.��� , c.���
(pending before the Legislature as this bill), undertake and fund a new capital
reserve study pursuant to this section in order to adopt a 35-year funding
plan, as described in section 7 of P.L.2023, c.214 (C.45:22A-44.3), which
establishes the adequate proposed capital reserve funding over a 35-year time
period, which shall include a 35-year funding plan that allows the reserve fund
to reach a lowest dollar balance of zero during the 35-year plan projection.

(cf: P.L.2025, c.132, s.2)

���� 2.� Section 7 of P.L.2023,
c.214 (C.45:22A-44.3) is amended to read:

���� 7. a. An association of a
planned real estate development shall obtain a reserve study including a
30-year
, or 35-year,
funding plan in order to ensure that the
association has adequate reserve funds available to repair or replace the
capital assets located on the common elements and facilities that the
association is obligated to maintain without need to create a special
assessment or loan obligation, except as permitted pursuant to subsection e. of
this section.� These reserve funds shall be used for the repair or replacement
of components that have reached the end of their established useful life as set
forth in the most recent reserve study undertaken pursuant to section 6 of
P.L.2023, c.214 (C.45:22A-44.2).

���� b.��� (Deleted by amendment,
P.L.2025, c.132)

���� c.���� (Deleted by amendment,
P.L.2025, c.132)

���� d.��� (Deleted by amendment,
P.L.2025, c.132)

���� e.���� An association existing
as of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) shall, to
fund the association�s capital reserve fund, either:

���� (1) fund the capital reserve
fund in accordance with one of the funding plans set forth in the most recent
capital reserve study prepared on behalf of the association pursuant to
paragraph (7) of subsection a. of section 6 of P.L.2023, c.214 (C.45:22A-44.2);
or

���� (2) fund the capital reserve
fund in an amount equal to 85 percent of one of the capital reserve funding
plans pursuant to paragraph (7) of subsection a. of section 6 of P.L.2023,
c.214 (C.45:22A-44.2), and set forth in the most recent capital reserve study
prepared on behalf of the association, provided that:

���� (a) prior to the adoption of
an annual budget to fund the capital reserve fund account pursuant to this
paragraph, the association shall provide a notice to all unit owners of the
association in 20-point bold font, which specifies that the executive board of
the association has elected to fund the capital reserve fund at 85 percent of
the funding plan recommended by the association�s 30-year
, or 35-year,
capital
reserve study and funding plan.� The notice shall provide the year in which a
special assessment or loan is anticipated as a result of the reduced funding of
the capital reserve fund and the anticipated amount of the special assessment
or loan that shall be required as a result of the decision by the executive
board of the association; and

���� (b) prior to the execution of
a contract for the purchase of a residential unit in the planned real estate
development, the seller of the unit shall provide to the buyer a copy of the
most recent notice provided to the unit owners of the association pursuant to
subparagraph (a) of this paragraph.

���� (3) The funding method
authorized pursuant to paragraph (2) of this subsection shall not be utilized
by an association for more than five fiscal years of the association next
following the
[
effective
date of P.L.2025, c.132
]

adoption of the 30-year, or 35-year, funding plan
.

���� f.���� An association created
after the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) shall fund
its capital reserve fund account in accordance with one of the capital reserve
funding plans set forth in the association�s most recent capital reserve study.

(cf: P.L.2025, c.132, s.3)

���� 3.� The Department of
Community Affairs shall, in accordance with the "Administrative Procedure
Act," P.L.1968, c.410 (C.52:14B-1 et seq.), publish updated guidance for
associations in complying with the provisions of P.L.2023, c.214 (C.45:22A-44.2
et seq.), as amended by P.L.2025, c.132 and P.L.��� , c.��� (pending before the
Legislature as this bill).

���� 4.� This act shall take effect
immediately.

STATEMENT

���� This bill modifies the planned
real estate development capital reserve funding requirement to allow an
association to elect to adopt a 35-year funding plan instead of a 30-year
funding plan, exclusively required under current law.� The bill specifies that
an association may undertake and fund a subsequent capital reserve study, which
is to include a proposed 35-year funding plan, and fund its capital reserve
fund in accordance with the 35-year funding plan.� The bill permits an
association, without action by the association, to maintain its current 30-year
funding plan.

���� The bill additionally provides
that the existing provision allowing certain associations to fund their capital
reserve fund in an amount equal to 85 percent of one of the capital reserve
funding plans may be utilized for no more than five fiscal years from the date
of the adoption of the funding plan and not five fiscal years from the
effective date of P.L.2025, c.132.

���� The bill additionally directs
the Department of Community Affairs to publish updated guidance for
associations in complying with the provisions of laws concerning the planned
real estate development capital reserve funding requirement.

���� The intent of the bill is to
alleviate financial strain on associations while maintaining funding
requirements by allowing an association to achieve adequacy over the longer
periods detailed in the bill.� This allows for lower annual increases to
assessments paid by homeowners, reducing financial demands and preventing
unpaid assessments, liens, and potential foreclosure of homes.