Skip to Content
Structural Integrity Bill
By September 10, 2025 Posted in Community Association Law Share
Dear all,
As you may be aware, the Structural Integrity Bill was signed into law on January 8, 2024 (S2760), which provided various requirements Association’s must follow regarding their capital reserve study, such as when the study should be conducted, how to fund the Association’s reserve account, etc.
Please note that on August 21, 2025, Governor Murphy signed Senate Bill No. 3992 into law which amends language in the initial Structural Integrity Bill S2760.
This new legislation (S3992)/Amendment provides some of the following important points:
- The new legislation added the definition of “adequate” or “adequacy” when referencing the Association’s appropriate funding obligations. Therefore, “adequate” or “adequacy” means a sum of money, that 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 that is prepared as part of the reserve study.
- The new legislation removed language (specifically section 7(b) – (d) from the initial Bill) which provided that the Board had to follow certain practices when using an amount of reserve funds that were not allocated by the reserve study, such as adopting a resolution requiring the funds to be recovered within the following 5 fiscal years and ensuring the use of additional funds did not interfere with the Association’s ability to make additional repairs or replacements.
- Pursuant to the new legislation, an Association existing as of the effective date of the legislation has two options when funding their capital reserve fund. The Association can either:
- 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; or
- Fund the capital reserve fund in an amount equal to 85% of one of the capital reserve funding plans and set forth in the most recent capital reserve study.
- If an Association’s Board has decided to fund the reserve fund at an 85% funding level, prior to the adoption of an annual budget to fund the reserve account at 85% funding, the Association must provide notice to all Unit Owners of the Association in 20-point bold font specifying that the Board has elected to fund the capital reserve fund at 85% of the funding plan recommended by the Association’s 30-year capital reserve study and funding plan. The notice shall also 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 Board.
- Prior to the execution of a contract for the purchase of a residential unit, 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.
- The 85% funding method shall not be utilized by an Association for more than 5 fiscal years following the effective date of this new legislation.
- An Association created after the effective date of the Structural Integrity Bill 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.
If you would like to discuss this new legislation and the impact it may have on your community, please let us know and we would be happy to arrange a call and provide more information.
The information in this Client Alert is provided solely for information purposes. It should not be construed as legal advice on any specific matter and is not intended to create an attorney-client relationship. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular circumstances. Each legal matter is unique, and prior results do not guarantee a similar outcome.