New Jersey Assembly Bill A5844

New Jersey 2024-2025 Regular Session

• Introduced: 6/12/25
• Refer: 6/12/25
• Report Pass: 6/19/25

Caption

Modifies capital reserve funding requirements for certain planned real estate developments.

Impact

One of the notable impacts of A5844 is on existing associations, which are required to either adhere to the most recent reserve study or fund the reserve at 85% of the planned contributions for four years. This transitional allowance facilitates financial flexibility for established associations while still pushing towards stricter compliance with funding levels. Newly formed associations after the implementation will have to follow the full funding requirements from inception, aiming to prevent financial shortfalls before they occur.

Summary

Assembly Bill A5844, introduced in New Jersey, modifies the funding requirements for capital reserves of certain planned real estate developments. The bill aims to enhance the financial health of associations by mandating a comprehensive 30-year capital reserve funding plan that ensures funds are available for the repair and replacement of common facilities. It stipulates that associations must conduct and review a capital reserve study at least once every five years, with oversight from licensed professionals such as architects or engineers. This aims to maintain adequate funding standards so that the balance does not fall below zero, ensuring long-term financial stability for residential developments.

Contention

The bill has sparked discussions regarding the balance between financial responsibility and the affordability of housing within these developments. Critics may highlight concerns over the potential for increased fees or special assessments as a consequence of the mandatory funding rules. By imposing strict requirements on associations to maintain solvency within their capital reserves, A5844 could lead to tensions between associations wanting to keep dues low and the inevitability of costs associated with maintaining older structures. Overall, this bill represents a significant shift in the regulatory landscape of real estate developments, focusing on greater accountability and sustainability.