As most New Jersey community association board members are undoubtedly aware, a law enacted in January 2024 imposed new and, some have said, onerous capital reserve funding and study requirements on almost all New Jersey community associations. To ease the compliance challenges these new obligations created, Gov. Phil Murphy recently signed into law amendments to those requirements.
The changes to S 3992, which became effective on August 21, 2025, the date of the governor’s signature, redefine and clarify the meaning of “adequate” as used with respect to reserve funding. The changes also modify the timing and content of mandated reserve studies.
“Adequate” Capital Reserve Funding Defined
The amendments define “adequate” capital reserve funding as:
A sum of money, however invested or held by an association of a planned real estate development, that, in accordance with the professional standards applied by the reserve specialist, architect, or engineer performing or overseeing the study, is sufficient so that the balance in the association’s reserve fund will not fall below zero dollars as set forth in the association’s 30-year funding plan, prepared as part of a reserve study, regardless of whether the reserve study was conducted within five years of the effective date of the January 2024 reserves law (P.L.2023) or conducted pursuant to the requirements of that law.
Reserves Study Requirements
The amendments require associations to prepare a proposed 30-year capital reserve funding plan or plans within a capital reserve study to allow a capital reserve fund of an association to reach a dollar balance of zero during the 30-year funding plan projection. Capital reserve studies may provide 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.
Additionally, the new law provides that the association of a planned real estate development, instead of a covered building owner, must ensure that a capital reserve study is reviewed by a licensed architect, engineer, or credentialed reserve specialist and that a capital reserve study is conducted and reviewed at least once every five years.
New Jersey’s community associations should consult with experienced community association counsel to determine whether these new amendments apply to their communities and what to do to ensure compliance. If you have questions or concerns, please contact one of the attorneys in Ansell Grimm & Aaron’s Community Association Law practice group.