Residential subdivisions and condominiums often have common areas like community pools, parks, athletic courts, and many more. These facilities must be well-maintained to ensure the safety of residents who frequent them. Likewise, they require necessary repairs and improvements as they age.
It is the responsibility of homeowners associations (HOAs) in New Jersey to safeguard, maintain, and enhance these common areas. Consequently, they will need a New Jersey reserve study to have sufficient funds to do the job. A reserve study is an analysis of a property’s structural soundness and the condition of the capital reserve fund that will be used to cover the expenses of major capital improvements or replacement of different system components.
A structural engineer in New Jersey will perform a comprehensive engineering inspection and evaluation of the properties’ building components, providing a thorough written description of the site. This information is crucial in determining how much the HOA should set aside periodically to pay for the amenities’ expenses within the study’s duration.
Although New Jersey has not adopted specific laws on reserve studies, the standard industry practice is to conduct one at least every three years. Moreover, the study must be updated regularly to prevent special assessments from arising. These special assessments occur when repairs or replacements of common assets are needed immediately, but the current funds are inadequate to cover the expenditures.
Paying special assessments is often a hassle for homeowners, and they might entail poor management and budgeting from the HOA. Getting a reserve study ensures that HOAs will have sufficient funds to keep their community’s common areas in good condition without inconveniencing the residents.
For more information on when to get a new reserve study, an infographic from Lockatong Engineering is provided below.