On January 8, 2024, Governor Phil Murphy signed into law S2760/A4384, also known as the Structural Integrity Bill. This landmark legislation is designed to prevent building failures similar to the 2021 Champlain Towers South collapse in Florida. The law focuses on two critical areas for condominiums and cooperatives: structural integrity and reserve studies.
Structural Integrity Inspections
The new law introduces specific requirements for inspections of the Primary Load Bearing System (PLBS) in "covered buildings." These buildings are defined as residential condominium or cooperative structures that have a primary load-bearing system composed of concrete, steel, masonry, or hybrid structures. Buildings constructed primarily with wood frames, such as typical single-family homes, are excluded.
Key requirements for covered buildings:
- Buildings over 15 years old must undergo an initial structural inspection within two years (by January 8, 2026), while newer buildings must undergo inspection within a year of their 15th anniversary.
- Structural engineers must follow protocols established by the American Society of Civil Engineers (ASCE) during these inspections.
- If the inspection reveals any issues, repairs must be performed within a timeline set by the engineer, and reports must be filed with the local construction official and shared with residents.
Follow-up inspections are required every 10 years for buildings less than 20 years old and every five years for buildings older than 20 years. This ensures that buildings remain structurally sound over time, addressing potential risks early and mitigating hazards.
Reserve Study and Funding Requirements
The law also mandates that all condominium and cooperative associations undertake a reserve study, which is a financial analysis designed to ensure that associations have sufficient funds to cover long-term capital repairs and replacements for common elements such as roofing, elevators, and mechanical systems.
Key aspects of the reserve study requirement:
- Initial Reserve Study: All associations must conduct a reserve study if one has not been performed within the past five years. This must be completed within one year of the law’s enactment (by January 8, 2025).
- Ongoing Reserve Studies: Associations are required to update their reserve studies at least every five years. These studies must assess the adequacy of reserve funds to ensure that major repairs or replacements do not result in the need for special assessments or loans.
- Adequacy of Funds: The reserve study must project funding over a 30-year period. If the reserve fund is found inadequate to cover future repairs, associations must immediately begin corrective action. If a shortfall in reserves would result in an increase of more than 10% in maintenance fees, the association is allowed up to 10 years to make up the shortfall. If the increase required is less than 10%, the association must budget for the deficiency immediately.
The reserve funding plan chosen by the association’s governing board can take various forms, such as baseline funding or threshold funding. Baseline funding, which is considered the riskiest, ensures that funds are available for major repairs but may not cover all contingencies. Threshold funding requires higher reserves to provide more financial security.
Additional Provisions:
- The law allows associations to borrow from their reserve funds for emergencies, provided they have a plan to repay the funds within five years and that borrowing does not jeopardize the ability to fund other necessary repairs.
- Developers of new associations are required to prepare a preventative maintenance document, including an itemized schedule for required upkeep. This document must be accounted for in the association's budget from the start.
How This Affects Condo Associations
Condo associations in New Jersey will now face increased responsibilities regarding both building inspections and financial planning. Associations must proactively address the structural integrity of their buildings, ensuring that aging infrastructures are safely maintained through regular inspections. Additionally, associations must have the financial resources available to cover future maintenance costs, as failing to properly fund reserves can lead to costly repairs or special assessments down the road.
The implementation of the Structural Integrity Bill provides long-term protection for residents, ensuring that their homes are not only safe from structural failure but also financially secure in terms of future repairs. The law’s goal is to prevent a repeat of tragedies like the one in Surfside, while also promoting transparency and accountability in building maintenance and association governance.
In summary, this new law brings significant changes to how condominium associations manage both the physical upkeep of their buildings and their financial obligations. It sets higher standards for safety, requiring regular structural assessments and responsible financial planning through reserve studies, ultimately safeguarding residents and their investments in the long term.
For more detailed information, you can read the full bill text here.