Quick Answer
New Jersey requires every association of a planned real estate development to get a capital reserve study with a 30-year funding plan (N.J.S.A. 45:22A-44.2) and to fund reserves according to it (N.J.S.A. 45:22A-44.3). The rules came from P.L.2023, c.214 (approved January 8, 2024) and were loosened by P.L.2025, c.132 (approved August 21, 2025). Existing associations may now fund 100 percent of a study plan or, for no more than five fiscal years, 85 percent if owners get a 20-point bold notice naming the year and amount of the expected special assessment or loan.
At a Glance
What the Law Says
The study (45:22A-44.2)
Any association of a planned real estate development "shall undertake and fund a capital reserve study" that determines or assesses "the adequacy of the association's capital reserve funds" to meet anticipated replacement or repair costs of capital assets the association must maintain. The study must follow the latest edition of national reserve study standards "or similar standards by another recognized national organization," and must be "performed or overseen by" a credentialed reserve specialist (the statute names the credentialing organization) or a State-licensed engineer or architect.
The study must include, at least:
- capital reserve fund balances;
- anticipated income and expenses;
- an analysis of the physical status of common area components;
- anticipated costs of building maintenance and of repair or replacement of components needed to maintain structural integrity;
- a reasonable estimate of the cost of future reserve studies, updates, and periodic structural inspections required by N.J.S.A. 52:27D-132.4;
- a reasonable estimate of the cost of any corrective maintenance deemed necessary under 52:27D-132.4;
- a proposed 30-year funding plan or plans; and
- any other information needed to analyze adequacy relative to structural integrity.
One funding plan must allow "the reserve fund to reach a lowest dollar balance of zero during the 30-year plan projection." The study may include other plans with a higher minimum balance or escalating annual contributions, so long as the balance "is not projected to fall below zero dollars."
Deadlines and review
- Associations that "have not undertaken a reserve study within five years of the effective date" of P.L.2023, c.214 must do one "within one year of the effective date."
- Associations formed after the effective date must do a study "as soon as practicable" after owners elect a majority of the executive board, and "in no event" more than two years after that election.
- The association must ensure the study is reviewed by a licensed architect, engineer or credentialed reserve specialist and "conducted and reviewed at least once every five years."
Funding (45:22A-44.3)
An association must "obtain a reserve study including a 30-year funding plan" so it has adequate reserve funds to repair or replace capital assets without a special assessment or loan obligation, "except as permitted pursuant to subsection e." Reserve funds are to be used for components that have reached the end of their useful life as set out in the most recent study.
"Adequate" means a sum that, under the professional standards applied by the preparer, means the reserve balance "will not fall below zero dollars as set forth in the association's 30-year funding plan."
Under subsection e., an association existing on the effective date of P.L.2023, c.214 must either:
- fund the reserve in accordance with one of the funding plans in its most recent study; or
- fund it at 85 percent of one of those plans, provided that before adopting the annual budget the association gives all owners a notice "in 20-point bold font" stating the board chose 85 percent funding, the year in which a special assessment or loan is anticipated, and the anticipated amount; and, before a contract to buy a residential unit is signed, the seller gives the buyer a copy of the most recent notice.
The 85 percent method "shall not be utilized by an association for more than five fiscal years of the association next following the effective date" of P.L.2025, c.132. Under subsection f., an association created after the original effective date must fund in line with one of its study's plans.
What was deleted
P.L.2025, c.132 deleted former subsections b., c. and d. of 45:22A-44.3. Those had limited use of reserve funds to the amount the study allocated (with a five-year recovery resolution for extra use), and set catch-up rules for underfunded reserves (equal annual increases over up to 10 fiscal years where the increase would exceed 10 percent of the prior year's assessment, or two years where it would be less). They are no longer in the statute.
What This Means in Practice
For boards
Our reading: the key date question is the study clock. Computed from the January 8, 2024 effective date, an association with no study done within the five-year window had until about January 8, 2025 to complete one, and every association needs a study conducted and reviewed at least every five years. Check the date of your last study now.
The 85 percent choice is a board decision with disclosure consequences. The notice must come before the budget is adopted, and it must name the anticipated special assessment or loan year and amount. Sellers must hand the notice to buyers before contract. The five-fiscal-year limit starts counting from the fiscal years following August 21, 2025, and we did not compute the end date because the statute counts "fiscal years of the association."
For owners and buyers
Owners can expect the budget packet to show which funding plan the board chose. Buyers in an association using the 85 percent method should receive the notice before signing a contract.
Open questions
The statute does not say what happens if an association misses a study deadline, and states no penalty. It does not say whether the $25,000 exemption is measured by replacement cost or by book value, and the term "total common area capital assets" is not defined in these sections. We did not review any Department of Community Affairs guidance on these laws for this page. Confirm the exemption and any guidance with counsel.
Because the "except" language that once allowed a special assessment when an asset wore out early was deleted from 44.3(a), our reading is that the only stated exception to the no-special-assessment goal is the 85 percent option. Counsel should confirm how that interacts with the board's separate power to assess for corrective maintenance (see our structural inspection page).
Timeline
Related New Jersey Law
- Structural inspections and corrective maintenance assessments
- PREDFDA overview
- N.J.S.A. 45:22A-35, which authorizes DCA rules requiring budgets to provide for adequate reserves
- New Jersey HOA laws and regulations overview
Board Checklist
- Find the date of the last reserve study and confirm it was done or overseen by a credentialed reserve specialist or licensed engineer or architect.
- Calendar the next study and review, no more than five years from the last.
- Confirm the study includes a 30-year plan that reaches a lowest balance of zero without going below it.
- Confirm the study estimates the cost of periodic structural inspections and any corrective maintenance, if the community has covered buildings.
- Decide whether to fund at 100 percent of a plan or at 85 percent.
- If choosing 85 percent, prepare the 20-point bold notice naming the special assessment or loan year and amount before adopting the budget.
- Give sellers the notice so they can provide it to buyers before contract.
- Check whether the $25,000 exemption could apply, with counsel's help.
Frequently Asked Questions
Does every New Jersey HOA need a reserve study?
Every association of a planned real estate development must, except those with less than $25,000 in total common area capital assets.
How often must the study be done?
Under 45:22A-44.2(c), the association must ensure the study is conducted and reviewed at least once every five years.
Who may prepare the study?
The study must be performed or overseen by a credentialed reserve specialist or a State-licensed engineer or architect. The statute names the credentialing organization.
Can the board fund reserves at less than the study recommends?
An existing association may fund at 85 percent of a study plan for no more than five fiscal years following August 21, 2025, after giving the required 20-point bold notice.
What must the 85 percent notice say?
That the board elected 85 percent funding, the year in which a special assessment or loan is anticipated, and the anticipated amount.
Do sellers have to tell buyers?
Before a contract to buy a residential unit is executed, the seller must give the buyer a copy of the most recent notice (under the 85 percent option).
Is there a penalty for not getting a study?
None is stated in 45:22A-44.2 or 45:22A-44.3. Ask counsel about other consequences.
Did the 10 percent cap on reserve increases survive?
No. P.L.2025, c.132 deleted the former subsections that contained the 10 percent threshold and the equal annual increase rule.
Where This Comes From
We read the current Revised Statutes text of N.J.S.A. 45:22A-44.2 and 45:22A-44.3 (2025 edition), the chaptered text of P.L.2025, c.132 (Senate No. 3992, First Reprint) and the chaptered text of P.L.2023, c.214. The 2025 chaptered bill is at pub.njleg.gov.
How APM Helps
Association Property Managers provides remote HOA and condo management for associations in New Jersey, starting at a flat $99/month per community with no per-door fees or long-term contracts. See remote management in New Jersey, browse every New Jersey state-law guide, or request a free proposal, delivered within three business days. Laws and licensing rules differ by state, and we confirm the requirements for New Jersey when we build your proposal.
Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed New Jersey attorney before acting.
Ready to work with Association Property Managers?
Get a free, itemized proposal for your community — delivered within 3 business days.
Request a Free Proposal