Understanding the Increased Inspection and Funding Duties for Community Associations
On Monday, January 8, 2024, New Jersey Governor, Phil Murphy, signed S.2760 / A.4384. This law, which has been approved as P.L.2023, c.214, was motivated by the building collapse in Surfside, Florida in 2021. This new law provides new and additional procedures for inspecting, evaluating, and maintaining the structural integrity of certain residential housing structures.
The law requires initial and subsequent inspections of the primary load-bearing systems of covered buildings. Inspections are mandated within 15 years of receiving a certificate of occupancy or within 60 days after observable damage. For buildings with older certificates of occupancy, specific timelines are set for the first inspection based on the building’s age. Additionally, condominium or cooperative conversions must adhere to these inspection schedules. Inspection reports must detail the condition of the load-bearing systems, necessary maintenance, and schedule the next inspection. The law ensures that these reports are shared with building owners, residents, and relevant authorities, and allows for these inspections to be conducted alongside other required building inspections, ensuring continuous assessment of building integrity.
In addition, this law mandates that community associations conduct and fund capital reserve studies to assess the adequacy of their capital reserve funds. These studies must comply with standards set by organizations like the Community Associations Institute. They should include an analysis of physical status, anticipated maintenance costs, and a 30-year funding plan. Associations must ensure these studies are reviewed by qualified professionals and are updated every five years. The law exempts associations with less than $25,000 in total common area capital assets from these requirements. The law additionally requires community associations to obtain a reserve study, including a 30-year funding plan, to ensure adequate reserve funds for repairing or replacing capital assets without needing special assessments or loans. The law specifies conditions for using reserve funds and provisions for associations with inadequate reserve funds to gradually achieve adequacy.
The law allows the association boards to adopt assessments or obtain loans to fund corrective maintenance of primary load-bearing systems, even without owner consent or developer approval. This is applicable when such actions are necessary for maintaining structural integrity, addressing health or safety hazards, or preventing increased costs due to delayed maintenance. The law further requires developers to prepare a document outlining preventive maintenance tasks for the association’s common area components. Likewise, the developer must turn over certain documentation to the Association as part of the transition process.
These changes represent a significant shift in how condominiums and community associations manage building safety and maintenance. It calls for more diligent planning and budgeting to accommodate the inspection schedules and any necessary remediation work that might arise from these inspections. The overall goal of the legislation is to enhance the safety and integrity of residential buildings, providing peace of mind for residents and stakeholders alike.
If you believe this new law could affect you and have questions or concerns, Griffin Alexander, P.C., can help. Our attorneys are experienced in all aspects of Community Association and Landlord-Tenant law. We can help ensure that your property remains in compliance with any and all laws and amendments.
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.