In response to the Champlain Tower South Condominium collapse in Florida, the New Jersey legislature and Governor Murphy enacted legislation effective January 8, 2024 to put in place procedures for inspecting, evaluating, and maintaining the structural integrity of certain residential structures within the State. The new laws are codified at N.J.S.A. 52:27D-132.2 et al, commonly known as the Structural Integrity Bill and an amendment to the Planned Real Estate Development Full Disclosure Act at N.J.S.A. 45:22A-44.2 and 44.3. The following is an overview of the new laws.
N.J.S.A. 52:27d-132.2 et al. applies to “covered buildings” which are defined as “a residential condominium or cooperative building that has a primary load bearing system that is comprised of a concrete, masonry, steel, or hybrid structure including, without limitation, heavy timber and a building with podium decks, [a structural slab or deck] but not including an excluded structure.” This description is commonly associated with mid- or high-rise buildings, but other structures may be included as well. Standard wood-frame buildings, such as single- family homes and typical townhouse projects are excluded. Consultation with an engineer is necessary to confirm whether the law applies.
“Covered buildings” are required to have a structural inspection of the “primary Load Bearing System” within one year of the 15th anniversary of the issuance of the Certificate of Occupancy (C.O.) of the building or within 60 days after observable damage to the Load Bearing System. For “covered buildings” that had its C.O. issued more than 15 years ago, the association must have a structural engineer perform an inspection within two years of the effective date of the statute. The inspections must be performed by licensed engineers with the appropriate credentials in accordance with standards established by the American Society of Civil Engineers. The inspector is required to issue a written report describing the condition of the primary load bearing system and set forth with specificity any required maintenance or repairs needed by the primary load bearing system. The inspector must also determine and report when the next inspection of the primary load bearing system must be which must be the earlier of:(a) 10 years after the initial inspection has taken place; or(b) not more than 60 days after there is observable damage to the primary load bearing system. (If the building is more than 20 years old, the inspection must occur within 5 years.) The report must be provided to the municipal authority, the construction official and the enforcing agency.
The statute provides that the covered building owner “shall undertake measures necessary to effectuate the covered maintenance, including, but not limited to, engaging the services of an architect or engineer licensed by the State and qualified in structural repairs or maintenance to create plans or specifications to implement the covered maintenance.” That obligation will be enforced by the municipal enforcing agency. Thus, the board is obligated to borrow and expend association funds for corrective measures noted in the report regardless of any limitation on board-authorized expenditures or the requirement of membership votes that may exist in the governing documents of the community.
The legislation (codified at N.J.S.A 45:22A-44.2 and 44.3) now makes it the law that reserve studies have to be performed and replacement reserve accounts be maintained according to the standards set forth therein. This legislation is applicable to all associations (not just those subject to the structural Integrity requirements) except those with less than $25,000 in common area capital assets. If no reserve study has ever been undertaken, it must be conducted within one year of January 8, 2024. If a reserve study has been undertaken, the next one must be done within 5 years. The association must have a 30-year funding plan “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 that in those cases in which a capital asset reaches the end of its established useful life earlier than predicted by the reserve study.” The study must be done by a reserve specialist who is credentialed through the Community Associations Institute or an engineer or architect who is licensed by the State. The law does not prohibit imposition of special assessments or obtaining loans.
The law now requires that when an expenditure of the reserve funds is required to repair or replace a component, the association is to use only the amount of reserve funds allocated by the reserve study to make the repair or replacement. However, the board can borrow from its reserve account provided “(1) the use of such additional funds from the reserve fund is not reasonably anticipated to prevent or interfere with the ability of the association to undertake additional repairs or replacements in the five years subsequent to the additional expenditure; and(2) the association’s executive board adopts a written resolution requiring that the expenditure of these additional funds shall be recovered within the following five fiscal years.” If a deficiency in the reserve account based on the study would require more than a 10% increase in the common expense assessment, then the association will have 10 years to catch up or the date predicted by the reserve study by which absent increased funding, the balance in the association’s reserve account would fall below zero. If any deficiency in the reserve account would increase the maintenance fee by less than 10%, then the association is required to eliminate the deficiency within the following two fiscal years.
This information should not be considered legal advice and is not intended as a substitute for consultation with an attorney. This website is an advertisement by the law firm of Radom & Wetter. No aspect of this advertisement has been approved by the Supreme Court of New Jersey. Radom & Wetter is a law firm in the state of New Jersey and serves the following communities; Atlantic County, Bergen County, Burlington County, Camden County, Cape May County, Cumberland County, Essex County, Gloucester County, Hudson County, Hunterdon County, Mercer County, Middlesex County, Monmouth County, Morris County, Ocean County, Passaic County, Salem County, Somerset County, Sussex County, Union County and Warren County.