All condominiums and cooperatives require a reserve study. Planned real estate developments (ie homeowners associations) with at least $25,000 in common area capital assets are also required to complete a reserve study.
A reserve study must be updated every five (5) years.
Communities that have not had a reserve study in the past five (5) years must undertake an initial study by January 8th, 2025. Associations formed after January 2025 must undertake an initial study within two (2) years of electing a majority of the board. Those that have an existing reserve study must update it within five (5) years of its completion.
The reserve study must conform with the National Reserve Study Standards of CAI or similar industry standards by another recognized national organization. The study must be completed or overseen by a licensed Reserve Specialist (RS) or a New Jersey licensed Engineer or Architect.
Communities that are required to complete a reserve study are also required to adequately fund reserves. If an existing reserve fund deficiency would require a contribution increase that exceeds 10% of the annual budget, the community has 10 fiscal years to attain adequate funds through the use of proportionate annual increases or until the date projected in the reserve study that the reserve fund balance would fall below $0. If the reserve contribution increase is no more than 10% of the annual budget, a community has two (2) fiscal years to make up an existing deficiency.
