On January 8, 2024, Governor Phil Murphy signed the Structural Integrity and Safety in Shared Interest Communities Act (commonly referred to as the Structural Integrity Bill), mandating stricter reserve requirements for condominiums, cooperatives, and Homeowners Associations in New Jersey. This law, inspired by national concerns over building safety following incidents like the Champlain Towers South condominium collapse in Surfside, Florida, aims to ensure financial readiness for long-term structural repairs and maintenance in aging buildings.

Key Provisions

1. Mandatory Reserve Studies Focused on Structural Integrity
   The law requires shared interest communities to conduct reserve studies every five years, focusing on critical structural components of "Covered Buildings" like roofs, foundations, and balconies. "Covered Buildings" shall generally include mid or high-rise condominium buildings, but other structures may be included as well. These studies, performed by licensed engineers or architects, assess the lifespan of key elements and project repair costs. By January 8, 2025, all communities must have a current reserve study in place.
2. Increased Reserve Funding Requirements
   Communities must now maintain adequate reserve funds based on the estimated costs of structural repairs identified in the reserve studies. Boards are required to ensure reserves cover anticipated expenses for the next 20 years, adjusted for inflation.
3. Regular Inspections and Transparency
   Buildings over 30 years old must undergo structural inspections every 10 years. Boards are also required to disclose inspection results and reserve fund balances to residents annually.
4. Penalties for Non-Compliance
   Communities failing to meet these requirements by the January 8, 2025 deadline may face state-imposed fines, loss of board authority, and legal action from residents. Board members can also be held personally liable for neglecting structural safety or underfunding reserves. Notably, a community with less than $25,000 in total common area capital assets, apartments, and single-family homes are all exempt from the above reserve study requirements.

The Structural Integrity Bill represents a significant shift in how shared interest communities in New Jersey manage the financial and structural aspects of their properties. By focusing on reserve funding for critical structural elements and mandating regular inspections, the law seeks to protect residents and ensure the long-term safety of buildings. While the requirements may place additional burdens on boards and property managers, the benefits of preventing catastrophic building failures and avoiding financial crises are clear. As shared interest communities adapt to these new regulations, legal guidance will be essential to ensure compliance and safeguard the rights of all parties involved.

Disclaimer: This Blog Post provides a brief summary of the Structural Integrity and Safety in Shared Interest Communities Act and is not intended to serve as legal advice, nor does this constitute an acceptance of representation by our firm.