| 1 | 1 | | ASSEMBLY, No. 5174 STATE OF NEW JERSEY 221st LEGISLATURE INTRODUCED JANUARY 14, 2025 |
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| 2 | 2 | | |
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| 3 | 3 | | ASSEMBLY, No. 5174 |
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| 5 | 5 | | STATE OF NEW JERSEY |
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| 7 | 7 | | 221st LEGISLATURE |
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| 10 | 10 | | |
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| 11 | 11 | | INTRODUCED JANUARY 14, 2025 |
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| 15 | 15 | | Sponsored by: Assemblywoman YVONNE LOPEZ District 19 (Middlesex) SYNOPSIS Modifies capital reserve funding requirements for planned real estate developments in certain circumstances. CURRENT VERSION OF TEXT As introduced. |
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| 19 | 19 | | Sponsored by: |
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| 20 | 20 | | |
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| 21 | 21 | | Assemblywoman YVONNE LOPEZ |
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| 22 | 22 | | |
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| 23 | 23 | | District 19 (Middlesex) |
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| 32 | 32 | | |
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| 33 | 33 | | SYNOPSIS |
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| 34 | 34 | | |
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| 35 | 35 | | Modifies capital reserve funding requirements for planned real estate developments in certain circumstances. |
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| 37 | 37 | | |
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| 38 | 38 | | |
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| 39 | 39 | | CURRENT VERSION OF TEXT |
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| 40 | 40 | | |
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| 41 | 41 | | As introduced. |
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| 44 | 44 | | |
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| 45 | 45 | | An Act concerning capital reserve funding requirements for planned real estate developments in certain circumstances and amending P.L.2023, c.214. Be It Enacted by the Senate and General Assembly of the State of New Jersey: 1. Section 2 of P.L.2023, c.214 (C.52:27D-132.3) is amended to read as follows: 2. As used in P.L.2023, c.214 (C.52:27D-132.2 et al.): "Adequate" or "adequacy" means a sum of money, however invested or held by an association of a planned real estate development, that, in accordance with the professional standards applied by the reserve specialist, architect, or engineer performing or overseeing the study, is sufficient so that the balance in the association's reserve fund, required pursuant to section 7 of P.L.2023, c.214 (C.45:22A-44.3), will not fall below zero dollars as set forth in the association's 30-year funding plan, prepared as part of a reserve study, regardless of whether the reserve study was conducted within five years of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.), or conducted pursuant to section 6 of P.L.2023, c.214 (C.45:22A-44.2). "Balcony" means an extension of the interior living space of the building that extends outwards from the facade of a covered building and is exposed to the elements. "Bureau" means the Bureau of Housing Inspection in the Department of Community Affairs. "Corrective maintenance" means maintenance to be undertaken following the detection of deterioration of the primary load bearing system with the goal of remediating the condition reported by the structural inspector. "Covered building" means a residential condominium or cooperative building that has a primary load bearing system that is comprised of a concrete, masonry, steel, or hybrid structure including, without limitation, heavy timber and a building with podium decks, but not including an excluded structure. "Covered building owner" means the owner of a covered building, whose name appears of record with the county clerk or register, or the association of a common interest community. "Excluded structure" means: (1) International Standardization Organization ISO Type 1 construction or frame-built construction with combustible walls or roofs, but not including a podium deck on which the frame-built construction is situated; (2) a building with ancillary elements that are not part of the primary load bearing system such as, but not limited to, elevator shafts or concrete, masonry, steel, or heavy timber that the primary load bearing system does not deliver a building's load to the foundation; (3) a building that is not a condominium or cooperative, and consists primarily of rental dwellings; or (4) a single-family dwelling. "Podium deck" means a structural slab or deck that transfers applied loads from the structure above to the structure below. "Primary load bearing system" means the assemblage of structural components within a building comprised of columns, beams, or bracing that by contiguous interconnection form a path by which external and internal forces applied to the building are delivered to the foundation. The foundation as well as any connected or attached balconies shall be included as part of the primary load bearing system evaluation. "Structural inspector" means: (1) a construction official, as that term is used in section 8 of P.L.1975, c.217 (C.52:27D-126), who is also an engineer licensed by the State; (2) an employee of the bureau who is also an engineer licensed by the State; or (3) an engineer licensed by the State who has the same qualifications required of an engineer under contract with the enforcing agency with whom the covered building owner contracts to perform inspections of covered buildings under section 3 of P.L.2023, c.214 (C.52:27D-132.4). (cf: P.L.2023, c.214, s.2) 2. Section 6 of P.L.2023, c.214 (C.45:22A-44.2) is amended to read as follows: 6. a Any association of a planned real estate development shall undertake and fund a capital reserve study which shall determine or assess the adequacy of the association's capital reserve funds to meet the anticipated costs of replacement or repair of the capital assets of a common interest community that the association is obligated to maintain. All capital reserve studies shall be prepared in conformity with the latest edition of the National Reserve Study Standards of the Community Associations Institute or similar standards by another recognized national organization. A capital reserve study conducted pursuant to this section shall be performed or overseen by a reserve specialist who is credentialed through the Community Associations Institute or an engineer or architect who is licensed by the State and shall include, but be not limited to, the following: (1) the association's capital reserve fund balances; (2) the association's anticipated income and expenses; (3) an analysis of the physical status and of the common area components of the buildings and other common areas that the association is obligated to maintain; (4) the anticipated costs associated with the building maintenance, as well as the anticipated costs of repair or replacement of common area building components, which are necessary to maintain the structural integrity of the buildings and other common area components that the association is obligated to maintain; (5) a reasonable estimate of the cost of: (a) future reserve studies; (b) reserve study updates; and (c) periodic structural inspections required pursuant to section 3 of P.L.2023, c.214 (C.52:27D-132.4); (6) a reasonable estimate of the costs associated with implementing any corrective maintenance deemed necessary pursuant to section 3 of P.L.2023, c.214 (C.52:27D-132.4); (7) a proposed 30-year funding plan or plans, as described in section 7 of P.L.2023, c.214 (C.45:22A-44.3) [that establishes] , which establish the adequate proposed capital reserve funding over a 30-year time period, which shall include a 30-year funding plan that allows the reserve fund to reach a lowest dollar balance of zero during the 30-year plan projection. Nothing in this section shall prohibit the reserve study from including additional funding plans with a minimum fund balance greater than zero, or funding plans with escalating annual contributions, provided the reserve fund balance is not projected to fall below zero dollars; and (8) any other information necessary to perform an analysis of the adequacy of the association's capital reserve funds relative to maintaining the structural integrity of buildings and common areas which the association is obligated to maintain. b. Associations which have not undertaken a reserve study within five years of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) shall undertake a reserve study within one year of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.). Associations formed after the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) shall undertake a reserve study as soon as practicable after the election of a majority of an executive board pursuant to section 5 of P.L.1983, c.30 (C.45:22A-47), but in no event shall such study be undertaken more than two years following the election of a majority of the executive board under section 5 of P.L.1983, c.30 (C.45:22A-47). c. [A covered building owner, as defined in section 2 of P.L.2023, c.214 (C.52:27D-132.3),] An association of a planned real estate development shall ensure that a capital reserve study conducted pursuant to this section shall be reviewed by a licensed architect, engineer, or credentialed reserve specialist and that a capital reserve study be conducted and reviewed at least once every five years. d. This section shall not apply to an association of a planned real estate development with less than $25,000 in total common area capital assets. e. As used in sections 6 and 7 of P.L.2023, c.214 (C.45:22A-44.2 and C.45:22A-44.3): "Adequate" or "adequacy" means the same as those terms are defined pursuant to section 2 of P.L.2023, c.214 (C.52:27D-132.3). (cf: P.L.2023, c.214, s.6) 3. Section 7 of P.L.2023, c.214 (C.45:22A-44.3) is amended to read as follows: 7. a. An association of a planned real estate development shall obtain a reserve study including a 30-year funding plan in order to ensure that the association has adequate reserve funds available to repair or replace the capital assets located on the common elements and facilities that the association is obligated to maintain without need to create a special assessment or loan obligation, except that in those cases in which a capital asset reaches the end of its established useful life earlier than predicted by the reserve study, nothing herein is intended to prevent the imposition of a special assessment or obtaining a loan. These reserve funds shall be used for the repair or replacement of components that have reached the end of their established useful life as set forth in the most recent reserve study undertaken pursuant to section 6 of P.L.2023, c.214 (C.45:22A-44.2). b. When an expenditure of the reserve funds is required to repair or replace a component pursuant to subsection a. of this section, the association shall use only the amount of reserve funds allocated by the reserve study to make such repair or replacement, unless: (1) the use of such additional funds from the reserve fund is not reasonably anticipated to prevent or interfere with the ability of the association to undertake additional repairs or replacements in the five years subsequent to the additional expenditure; and (2) the association's executive board adopts a written resolution requiring that the expenditure of these additional funds shall be recovered within the following five fiscal years. c. If an association existing as of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) does not have an adequate reserve fund as described in subsection a. of this section, and the increase in the association's budget line item for reserve funding to render it adequate as set forth in the reserve study would, without reference to any other budget line item adjustments, require an increase of more than 10 percent of the previous year's common expense assessment, the deficiency shall be made adequate within the earlier of the following [10] 30 fiscal years, or the projected date predicted by the reserve study by which absent increased funding, the balance in the association's reserve account would fall below zero. In either case, the annual increase in reserve funding during the required period of time shall be an equal annual line item increase in the reserve fund until the reserve fund is made adequate, notwithstanding causing an increase of more than 10 percent in the annual common expense assessment. d. If an association existing as of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) does not have an adequate reserve fund as described in subsection a. of this section, and the increase in the association's budget line item for reserve funding to render it in conformity with the reserve study would, without reference to any other item adjustments, require an increase of less than 10 percent of the previous year's common expense assessment, the deficiency shall be made adequate within the following two fiscal years. (cf: P.L.2023, c.214, s.7) 4. This act shall take effect immediately. STATEMENT This bill modifies certain requirements concerning the capital reserve study, 30-year funding plan, and capital reserve fund of an association of a planned real estate development (association), required by recently enacted law, P.L.2023, c.214 (C.52:27D-132.2 et al.). Specifically, the bill requires a proposed 30-year capital reserve funding plan or plans within a capital reserve study, required pursuant to section 7 of P.L.2023, c.214 (C.45:22A-44.3), to allow a capital reserve fund of an association to reach a dollar balance of zero during the 30-year funding plan projection. The bill permits a capital reserve study to provide additional funding plans that have a minimum fund balance greater than zero, or funding plans with escalating annual contributions, provided the reserve fund balance is not projected to fall below zero dollars. The bill defines the terms "adequate" and "adequacy" to mean a sum of money, however invested or held by an association of a planned real estate development, that, in accordance with the professional standards applied by the reserve specialist, architect, or engineer performing or overseeing the study, is sufficient so that the balance in the association's reserve fund will not fall below zero dollars as set forth in the association's 30-year funding plan, prepared as part of a reserve study. Further, the bill requires that an inadequacy in a reserve fund--for which the increase in the association's budget line item for reserve funding to render the fund adequate as set forth in the reserve study would require an increase of more than 10 percent of the previous year's common expense assessment--to be made adequate within the earlier of: (1) 30 fiscal years, instead of 10 years; or (2) the projected date predicted by the reserve study by which absent increased funding, the balance in the association's reserve account would fall below zero. The bill also requires an association of a planned real estate development, instead of a covered building owner, to ensure that a capital reserve study is reviewed by a licensed architect, engineer, or credentialed reserve specialist and that a capital reserve study is conducted and reviewed at least once every five years. |
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| 46 | 46 | | |
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| 47 | 47 | | An Act concerning capital reserve funding requirements for planned real estate developments in certain circumstances and amending P.L.2023, c.214. |
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| 48 | 48 | | |
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| 49 | 49 | | |
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| 50 | 50 | | |
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| 51 | 51 | | Be It Enacted by the Senate and General Assembly of the State of New Jersey: |
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| 52 | 52 | | |
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| 53 | 53 | | |
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| 54 | 54 | | |
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| 55 | 55 | | 1. Section 2 of P.L.2023, c.214 (C.52:27D-132.3) is amended to read as follows: |
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| 56 | 56 | | |
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| 57 | 57 | | 2. As used in P.L.2023, c.214 (C.52:27D-132.2 et al.): |
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| 58 | 58 | | |
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| 59 | 59 | | "Adequate" or "adequacy" means a sum of money, however invested or held by an association of a planned real estate development, that, in accordance with the professional standards applied by the reserve specialist, architect, or engineer performing or overseeing the study, is sufficient so that the balance in the association's reserve fund, required pursuant to section 7 of P.L.2023, c.214 (C.45:22A-44.3), will not fall below zero dollars as set forth in the association's 30-year funding plan, prepared as part of a reserve study, regardless of whether the reserve study was conducted within five years of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.), or conducted pursuant to section 6 of P.L.2023, c.214 (C.45:22A-44.2). |
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| 60 | 60 | | |
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| 61 | 61 | | "Balcony" means an extension of the interior living space of the building that extends outwards from the facade of a covered building and is exposed to the elements. |
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| 62 | 62 | | |
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| 63 | 63 | | "Bureau" means the Bureau of Housing Inspection in the Department of Community Affairs. |
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| 64 | 64 | | |
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| 65 | 65 | | "Corrective maintenance" means maintenance to be undertaken following the detection of deterioration of the primary load bearing system with the goal of remediating the condition reported by the structural inspector. |
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| 66 | 66 | | |
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| 67 | 67 | | "Covered building" means a residential condominium or cooperative building that has a primary load bearing system that is comprised of a concrete, masonry, steel, or hybrid structure including, without limitation, heavy timber and a building with podium decks, but not including an excluded structure. |
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| 68 | 68 | | |
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| 69 | 69 | | "Covered building owner" means the owner of a covered building, whose name appears of record with the county clerk or register, or the association of a common interest community. |
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| 70 | 70 | | |
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| 71 | 71 | | "Excluded structure" means: |
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| 72 | 72 | | |
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| 73 | 73 | | (1) International Standardization Organization ISO Type 1 construction or frame-built construction with combustible walls or roofs, but not including a podium deck on which the frame-built construction is situated; |
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| 74 | 74 | | |
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| 75 | 75 | | (2) a building with ancillary elements that are not part of the primary load bearing system such as, but not limited to, elevator shafts or concrete, masonry, steel, or heavy timber that the primary load bearing system does not deliver a building's load to the foundation; |
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| 76 | 76 | | |
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| 77 | 77 | | (3) a building that is not a condominium or cooperative, and consists primarily of rental dwellings; or |
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| 78 | 78 | | |
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| 79 | 79 | | (4) a single-family dwelling. |
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| 80 | 80 | | |
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| 81 | 81 | | "Podium deck" means a structural slab or deck that transfers applied loads from the structure above to the structure below. |
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| 82 | 82 | | |
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| 83 | 83 | | "Primary load bearing system" means the assemblage of structural components within a building comprised of columns, beams, or bracing that by contiguous interconnection form a path by which external and internal forces applied to the building are delivered to the foundation. The foundation as well as any connected or attached balconies shall be included as part of the primary load bearing system evaluation. |
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| 84 | 84 | | |
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| 85 | 85 | | "Structural inspector" means: |
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| 86 | 86 | | |
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| 87 | 87 | | (1) a construction official, as that term is used in section 8 of P.L.1975, c.217 (C.52:27D-126), who is also an engineer licensed by the State; |
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| 88 | 88 | | |
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| 89 | 89 | | (2) an employee of the bureau who is also an engineer licensed by the State; or |
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| 90 | 90 | | |
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| 91 | 91 | | (3) an engineer licensed by the State who has the same qualifications required of an engineer under contract with the enforcing agency with whom the covered building owner contracts to perform inspections of covered buildings under section 3 of P.L.2023, c.214 (C.52:27D-132.4). |
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| 92 | 92 | | |
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| 93 | 93 | | (cf: P.L.2023, c.214, s.2) |
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| 94 | 94 | | |
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| 95 | 95 | | |
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| 96 | 96 | | |
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| 97 | 97 | | 2. Section 6 of P.L.2023, c.214 (C.45:22A-44.2) is amended to read as follows: |
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| 98 | 98 | | |
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| 99 | 99 | | 6. a Any association of a planned real estate development shall undertake and fund a capital reserve study which shall determine or assess the adequacy of the association's capital reserve funds to meet the anticipated costs of replacement or repair of the capital assets of a common interest community that the association is obligated to maintain. All capital reserve studies shall be prepared in conformity with the latest edition of the National Reserve Study Standards of the Community Associations Institute or similar standards by another recognized national organization. A capital reserve study conducted pursuant to this section shall be performed or overseen by a reserve specialist who is credentialed through the Community Associations Institute or an engineer or architect who is licensed by the State and shall include, but be not limited to, the following: |
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| 100 | 100 | | |
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| 101 | 101 | | (1) the association's capital reserve fund balances; |
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| 102 | 102 | | |
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| 103 | 103 | | (2) the association's anticipated income and expenses; |
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| 104 | 104 | | |
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| 105 | 105 | | (3) an analysis of the physical status and of the common area components of the buildings and other common areas that the association is obligated to maintain; |
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| 106 | 106 | | |
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| 107 | 107 | | (4) the anticipated costs associated with the building maintenance, as well as the anticipated costs of repair or replacement of common area building components, which are necessary to maintain the structural integrity of the buildings and other common area components that the association is obligated to maintain; |
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| 108 | 108 | | |
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| 109 | 109 | | (5) a reasonable estimate of the cost of: |
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| 110 | 110 | | |
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| 111 | 111 | | (a) future reserve studies; |
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| 112 | 112 | | |
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| 113 | 113 | | (b) reserve study updates; and |
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| 114 | 114 | | |
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| 115 | 115 | | (c) periodic structural inspections required pursuant to section 3 of P.L.2023, c.214 (C.52:27D-132.4); |
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| 116 | 116 | | |
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| 117 | 117 | | (6) a reasonable estimate of the costs associated with implementing any corrective maintenance deemed necessary pursuant to section 3 of P.L.2023, c.214 (C.52:27D-132.4); |
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| 118 | 118 | | |
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| 119 | 119 | | (7) a proposed 30-year funding plan or plans, as described in section 7 of P.L.2023, c.214 (C.45:22A-44.3) [that establishes] , which establish the adequate proposed capital reserve funding over a 30-year time period, which shall include a 30-year funding plan that allows the reserve fund to reach a lowest dollar balance of zero during the 30-year plan projection. Nothing in this section shall prohibit the reserve study from including additional funding plans with a minimum fund balance greater than zero, or funding plans with escalating annual contributions, provided the reserve fund balance is not projected to fall below zero dollars; and |
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| 120 | 120 | | |
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| 121 | 121 | | (8) any other information necessary to perform an analysis of the adequacy of the association's capital reserve funds relative to maintaining the structural integrity of buildings and common areas which the association is obligated to maintain. |
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| 122 | 122 | | |
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| 123 | 123 | | b. Associations which have not undertaken a reserve study within five years of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) shall undertake a reserve study within one year of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.). Associations formed after the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) shall undertake a reserve study as soon as practicable after the election of a majority of an executive board pursuant to section 5 of P.L.1983, c.30 (C.45:22A-47), but in no event shall such study be undertaken more than two years following the election of a majority of the executive board under section 5 of P.L.1983, c.30 (C.45:22A-47). |
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| 124 | 124 | | |
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| 125 | 125 | | c. [A covered building owner, as defined in section 2 of P.L.2023, c.214 (C.52:27D-132.3),] An association of a planned real estate development shall ensure that a capital reserve study conducted pursuant to this section shall be reviewed by a licensed architect, engineer, or credentialed reserve specialist and that a capital reserve study be conducted and reviewed at least once every five years. |
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| 126 | 126 | | |
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| 127 | 127 | | d. This section shall not apply to an association of a planned real estate development with less than $25,000 in total common area capital assets. |
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| 128 | 128 | | |
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| 129 | 129 | | e. As used in sections 6 and 7 of P.L.2023, c.214 (C.45:22A-44.2 and C.45:22A-44.3): |
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| 130 | 130 | | |
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| 131 | 131 | | "Adequate" or "adequacy" means the same as those terms are defined pursuant to section 2 of P.L.2023, c.214 (C.52:27D-132.3). |
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| 132 | 132 | | |
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| 133 | 133 | | (cf: P.L.2023, c.214, s.6) |
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| 134 | 134 | | |
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| 135 | 135 | | |
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| 136 | 136 | | |
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| 137 | 137 | | 3. Section 7 of P.L.2023, c.214 (C.45:22A-44.3) is amended to read as follows: |
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| 138 | 138 | | |
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| 139 | 139 | | 7. a. An association of a planned real estate development shall obtain a reserve study including a 30-year funding plan in order to ensure that the association has adequate reserve funds available to repair or replace the capital assets located on the common elements and facilities that the association is obligated to maintain without need to create a special assessment or loan obligation, except that in those cases in which a capital asset reaches the end of its established useful life earlier than predicted by the reserve study, nothing herein is intended to prevent the imposition of a special assessment or obtaining a loan. These reserve funds shall be used for the repair or replacement of components that have reached the end of their established useful life as set forth in the most recent reserve study undertaken pursuant to section 6 of P.L.2023, c.214 (C.45:22A-44.2). |
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| 140 | 140 | | |
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| 141 | 141 | | b. When an expenditure of the reserve funds is required to repair or replace a component pursuant to subsection a. of this section, the association shall use only the amount of reserve funds allocated by the reserve study to make such repair or replacement, unless: |
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| 142 | 142 | | |
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| 143 | 143 | | (1) the use of such additional funds from the reserve fund is not reasonably anticipated to prevent or interfere with the ability of the association to undertake additional repairs or replacements in the five years subsequent to the additional expenditure; and |
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| 144 | 144 | | |
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| 145 | 145 | | (2) the association's executive board adopts a written resolution requiring that the expenditure of these additional funds shall be recovered within the following five fiscal years. |
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| 146 | 146 | | |
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| 147 | 147 | | c. If an association existing as of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) does not have an adequate reserve fund as described in subsection a. of this section, and the increase in the association's budget line item for reserve funding to render it adequate as set forth in the reserve study would, without reference to any other budget line item adjustments, require an increase of more than 10 percent of the previous year's common expense assessment, the deficiency shall be made adequate within the earlier of the following [10] 30 fiscal years, or the projected date predicted by the reserve study by which absent increased funding, the balance in the association's reserve account would fall below zero. In either case, the annual increase in reserve funding during the required period of time shall be an equal annual line item increase in the reserve fund until the reserve fund is made adequate, notwithstanding causing an increase of more than 10 percent in the annual common expense assessment. |
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| 148 | 148 | | |
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| 149 | 149 | | d. If an association existing as of the effective date of P.L.2023, c.214 (C.52:27D-132.2 et al.) does not have an adequate reserve fund as described in subsection a. of this section, and the increase in the association's budget line item for reserve funding to render it in conformity with the reserve study would, without reference to any other item adjustments, require an increase of less than 10 percent of the previous year's common expense assessment, the deficiency shall be made adequate within the following two fiscal years. |
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| 150 | 150 | | |
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| 151 | 151 | | (cf: P.L.2023, c.214, s.7) |
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| 152 | 152 | | |
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| 153 | 153 | | |
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| 154 | 154 | | |
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| 155 | 155 | | 4. This act shall take effect immediately. |
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| 156 | 156 | | |
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| 157 | 157 | | |
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| 158 | 158 | | |
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| 159 | 159 | | |
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| 160 | 160 | | |
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| 161 | 161 | | STATEMENT |
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| 162 | 162 | | |
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| 163 | 163 | | |
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| 164 | 164 | | |
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| 165 | 165 | | This bill modifies certain requirements concerning the capital reserve study, 30-year funding plan, and capital reserve fund of an association of a planned real estate development (association), required by recently enacted law, P.L.2023, c.214 (C.52:27D-132.2 et al.). |
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| 166 | 166 | | |
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| 167 | 167 | | Specifically, the bill requires a proposed 30-year capital reserve funding plan or plans within a capital reserve study, required pursuant to section 7 of P.L.2023, c.214 (C.45:22A-44.3), to allow a capital reserve fund of an association to reach a dollar balance of zero during the 30-year funding plan projection. The bill permits a capital reserve study to provide additional funding plans that have a minimum fund balance greater than zero, or funding plans with escalating annual contributions, provided the reserve fund balance is not projected to fall below zero dollars. |
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| 168 | 168 | | |
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| 169 | 169 | | The bill defines the terms "adequate" and "adequacy" to mean a sum of money, however invested or held by an association of a planned real estate development, that, in accordance with the professional standards applied by the reserve specialist, architect, or engineer performing or overseeing the study, is sufficient so that the balance in the association's reserve fund will not fall below zero dollars as set forth in the association's 30-year funding plan, prepared as part of a reserve study. |
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| 170 | 170 | | |
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| 171 | 171 | | Further, the bill requires that an inadequacy in a reserve fund--for which the increase in the association's budget line item for reserve funding to render the fund adequate as set forth in the reserve study would require an increase of more than 10 percent of the previous year's common expense assessment--to be made adequate within the earlier of: (1) 30 fiscal years, instead of 10 years; or (2) the projected date predicted by the reserve study by which absent increased funding, the balance in the association's reserve account would fall below zero. The bill also requires an association of a planned real estate development, instead of a covered building owner, to ensure that a capital reserve study is reviewed by a licensed architect, engineer, or credentialed reserve specialist and that a capital reserve study is conducted and reviewed at least once every five years. |
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