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S 3992

Relates to racial and ethnic impact statements on bills

2025 Regular Session Introduced by Kevin Parker

The bill requires associations to fund reserves to avoid negative balances over 30 years, with independent reviews every five years and new funding/eligibility rules.

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Bill Summary · S 3992

Summary — S3992 (P.L.2025, c.132)

Title: Changes to capital reserve study, 30‑year funding plan, and reserve funding requirements for associations of planned real estate developments
Introduced: December 19, 2024 — Enacted: August 21, 2025 (P.L.2025, c.132)

Purpose

To clarify and modify statutory requirements (amending P.L.2023, c.214) governing capital reserve studies and 30‑year reserve funding plans for associations of planned real estate developments, including how “adequate” reserves are defined, who must obtain reviews, permissible funding options, and certain transitional funding relief for existing associations.

Key provisions

  • Defines “adequate” (or “adequacy”) to mean, per professional standards applied by the reserve specialist/architect/engineer, a reserve sum sufficient so the association’s reserve fund will not fall below zero dollars as shown in the association’s 30‑year funding plan prepared in the reserve study.
  • Requires each capital reserve study to include at least one proposed 30‑year funding plan that allows the reserve fund to reach a lowest dollar balance of zero during the 30‑year projection. Studies may also include alternative plans that maintain a minimum balance above zero or use escalating contributions, so long as no plan projects a negative balance.
  • Requires associations (rather than “covered building owners”) to ensure reserve studies are performed or overseen by a credentialed reserve specialist or a licensed engineer/architect and that the study be conducted and reviewed at least once every five years.
  • Transitional/funding relief for associations existing as of January 8, 2024:
    • May fund the reserve fund either (a) in accordance with the most recent reserve study/funding plan, or (b) at 85% of one of the association’s reserve funding plans.
    • If electing the 85% option, the association must notify unit owners of that decision and disclose the year and amount of any anticipated special assessment or loan that may result from reduced funding.
    • Sellers in such associations must provide prospective buyers a copy of the most recent notice about the 85% funding election.
    • The 85% funding option is limited to no more than five fiscal years.

  • Clarifies timing: associations without a reserve study within five years of the 2023 law must undertake one within one year; newly formed associations must undertake a study within two years of board election (or sooner as practicable).

  • Removes certain prior statutory language (from earlier drafts and floor amendments) that, for example, restricted special assessments or constrained how reserve funds are used in certain earlier‑than‑predicted failures.

Who is affected

  • Primary: associations of planned real estate developments (condominium/cooperative associations subject to P.L.2023, c.214), their boards, unit owners, sellers/buyers of units.
  • Secondary: reserve specialists, licensed architects and engineers who perform or review reserve studies.

Procedural history / timeline

  • Introduced in Senate: 12/19/2024; reported by Senate committee: 01/30/2025; Senate amendment 03/24/2025; passed Senate: 06/02/2025 (38–0).
  • Received in Assembly: 06/12/2025; reported out Assembly committee: 06/19/2025; passed Assembly: 06/30/2025 (78–0–1).
  • Substituted for A5844: 06/30/2025.
  • Approved as law: 08/21/2025 (P.L.2025, c.132).

Potential effects / considerations

  • Allows associations greater short‑term flexibility (a 30‑year plan may go to zero and some existing associations may temporarily fund at 85%), but could increase the likelihood of later special assessments or loans if projected costs occur as scheduled.
  • Strengthens professional standards and frequency of reviews by specifying credentialing and a five‑year review cycle.
  • Requires transparency to unit owners and buyers when an association elects reduced funding.

Compiled from official sources — confirm details with the bill’s official record.

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