New Law Updates: Structural Integrity and Reserve Funding Legislation (S3992)
On August 21, 2025, New Jersey Governor Phil Murphy signed S3992, a bill promoted by the Community Associations Institute Legislative Action Committee (“CAI LAC”). This bill modifies requirements of the New Jersey Structural Integrity and Reserves Law relating to capital reserve studies, 30-year funding plans, and capital reserve funds. Specifically, this bill permits an association’s capital reserve funds to reach a dollar balance of zero during their 30-year funding plan projection. Capital reserve studies can now provide additional funding plans so long as the reserve fund balance is not projected to fall below zero dollars.
S3992 also incorporates the following important changes to reserve study requirements:
Reserve fund contributions limited to 85%. Associations may limit their reserve contributions to 85% of whichever funding plan their board selects for the following five years. After five years elapses, the association is required to fully fund whichever funding plan the board has adopted. If an association and its members are capable of paying the full amount under the board’s chosen funding plan, Becker recommends continuing to fully fund in accordance with the chosen funding plan. Funding 85% will increase the required contribution starting in five years.
Notice to unit owners. Boards electing to limit their reserve contributions to 85% of a board-selected funding plan must provide notice to all unit owners. This notice must set forth in 20-point bold font that the executive board of the association has elected to fund the capital reserve fund at 85% of the funding plan recommended by the association’s capital reserve study and funding plan. If applicable, the notice must 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 will be required as a result of the decision by the executive board of the association.
Notice to buyers. Any owner selling a unit during the 85% reserve funding period must provide notice to their buyer of the underfunding. The unit owner must also provide a copy of the notice to unit owners received from the board containing the likelihood of a special assessment being imposed.
Clarification of terms. The bill clarifies the terms “adequate” and “adequacy” as defined to mean a funding of reserves not permitting the reserve account to fall below zero during the projected 30-year funding plan set forth in the reserve study.
Capital reserve study responsibility. The association is required to ensure that a capital reserve study is reviewed by a licensed architect, engineer, or credentialed reserve specialist. A capital reserve study must be conducted and reviewed at least once every five years.
Baseline funding plan. Reserve specialists preparing a reserve study must include a baseline (or zero percent threshold) funding plan when presenting a reserve study.
As associations undertake 2026 budget preparations, it is important to not only understand the new permissions under S3992, but to also be aware of the requirements and limitations this law provides.
This client alert is a brief overview of the new statute; however, it is not intended to set forth in detail every provision of the law.
Attorneys at Becker were instrumental in drafting this legislation, and should you have any questions concerning it, please feel free to contact your Becker attorney.
Becker’s New Jersey and New York area Condo, Co-Op, & HOA practice group assists boards and management in preparing for and conducting meetings, answering questions about documents and pertinent law, enforcing covenants and restrictions, and drafting and negotiating service contracts. For more information, visit the New Jersey Condo, Co-Op & HOA page.
[1] Bill S3992, New Jersey Legislature (June 19, 2025), https://www.njleg.state.nj.us/bill-search/2024/S3992/bill-text?f=S4000&n=3992_S3.
