PUBLICATION

In response to the collapse of a high-rise building in Florida, a bill was introduced in 2022 in the New Jersey State Legislature to address requirements for structural integrity and capital reserve studies to be completed by developers of residential housing buildings (S. 2760, 2022 Sess. (N.J.). The bill was signed into law by Gov. Phil Murphy on Jan. 8, 2024 (effective date). The bill noted that the addition of structural integrity laws highlights the importance of structural integrity in New Jersey residential buildings and creates appropriate procedures for inspecting, evaluating and maintaining the structural integrity of residential housing structures in New Jersey.

In furtherance of these changes in the law, the New Jersey Department of Community Affairs (DCA) recently updated its annual report form, which must be filed by developers each year as is required under N.J.A.C 5:26-2.13 and the Planned Real Estate Development Full Disclosure Act until the developer receives an order terminating responsibility. While these requirements apply to developers for the annual report, associations should be aware of these requirements when taking over control of the association. These additions to the annual report require developers to obtain structural integrity inspections and capital reserve studies for their projects. After receiving the structural integrity inspections, developers must also set forth preventative maintenance tasks.

Developers should be aware of these new requirements and take the necessary actions to make sure they are compliant with the requirements set forth in the annual report. The four items added to the annual report are items 16 through 19 on the annual report. Item 16 is a requirement to provide a copy of the most recent capital reserve study. Item 17 is a requirement for a developer to advise if the structural integrity inspection is required to have been conducted pursuant to N.J.S.A. 52:27D-132.4. Item 18 is a requirement for the developer to advise whether it is in compliance with N.J.S.A. 45:22A-47.1. Item 19 is a requirement for the developer to advise whether it is in compliance with N.J.S.A 45:22A-43.1. These four additional parts of the annual report are discussed in more detail below.

The purpose of the capital reserve study is for the association to determine that it has sufficient funds to meet the anticipated cost of replacement or repair required at the property. Any association that did not undertake a reserve study within five years of the effective date was required to complete a reserve study within one year of the effective date, while any condominium association formed after the effective date must undertake a reserve study as soon as practicable, but no later than two years, after the election of a majority of the seats on of a condominium association’s an executive board by the individual condominium unit owners, (N.J. Stat. Ann. Section 45:22A-44.2(b) (2024)). The capital reserve study must be reviewed by a licensed architect, engineer, or credentialed reserve specialist and such review must be updated at least once every five years, (N.J. Stat. Ann. Section 45:22A-44.2(c) (2024)).

Items that must be included in the capital reserve study include, but are not limited to: (i) an analysis of the physical status and the common area components of the buildings and other common areas the association is obligated to maintain, (ii) the anticipated costs associated with 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 the association is obligated to maintain, (iii) a reasonable estimate of the costs of periodic structural inspections required, and (iv) 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, (N.J. Stat. Ann. Section 45:22A-44.2(a) (2024)). Developers should ensure they are timely when obtaining capital reserve studies in order to deliver the same with their annual report.

17. Structural Integrity Inspection Conducted Pursuant to N.J.S.A 52:27D-132.4.

N.J.S.A 52:27D-132.4 sets out the laws for the initial structural inspection for a building as well as requirements for the inspection. For all new buildings, following the issuance of a certificate of occupancy, an initial structural inspection of the building components forming the primary load bearing system of a covered building shall be undertaken by a post-occupancy structural inspection retained by the covered building owner within the earlier of (i) 15 years of the date which the building receives a certificate of occupancy or (ii) 60 days after observable damage to the primary load bearing system, (N.J. Stat. Ann. Section 52:27D-132.4(a) (2024)). For buildings that received a certificate of occupancy prior to the effective date, the initial structural inspection must be undertaken (i) within one year of the date 15 years following the issuance of the certificate of occupancy if the certificate of occupancy was received less than 15 years prior to the effective date or (ii) within two years after the effective date if the certificate of occupancy was received 15 or more years prior to the effective date, (N.J. Stat. Ann. Section 52:27D-132.4(b) (2024)). Buildings that have been converted to a condominium must follow these requirements as well, (N.J. Stat. Ann. Section 52:27D-132.4(c) (2024)).

After the inspection is complete, the inspector must issue a written report on the condition of the primary load bearing system, which should include required maintenance, when the next study should be performed, and provide other guidance for the structural integrity of the building, (N.J. Stat. Ann. Section 52:27D-132.4(d) (2024)). This report must also be provided to the municipal authority. If corrective maintenance is required, the report should specify the required maintenance, (N.J. Stat. Ann. Section 52:27D-132.4(e) (2024)). If a developer has not yet obtained an initial structural inspection, the developer should review when the certificate of occupancy was obtained or if there is observable damage to the primary load system to determine the date by which it must obtain an initial structural inspection and deliver the results to the necessary authorities in order to accurately respond on the annual report.

18. Compliance With N.J.S.A. 45:22A-47.1.

Within 60 days after the conveyance of 75% of the lots, parcels, units or interests in a residential condominium project, the developer must relinquish control of the majority of the seats on the board of the association to the unit owners, which seats the unit owners must accept (turnover), (N.J. Stat. Ann. Section 45:22A-47.1 (2024)). Pursuant to N.J.S.A. 45:22A-47.1, there are 19 items related to the condominium that must be delivered to the unit owners by the developer at the time of the turnover, to the extent same are in the developer’s possession. Included in this list are: (i) a preventative maintenance document or manuals created by the developer which sets forth a schedule for monitoring on a period basis the structural integrity of the building’s primary load bearing system (as further described below), (ii) a copy of the plans and specification utilized in the construction or remodeling of improvements (which must include plans setting forth all field changes impacting any component of the primary load bearing system, with an affidavit from the developer or an architect or engineer, (iii) copies of certificates of occupancy, (iv) any other permits issued by governmental bodies, and (v) all written warranties of the contractor, subcontractor, suppliers and manufactures that are still effective. Developers must ensure they have these items readily available for turnover to comply with these requirements and to accurately respond on the annual report.

19. Compliance With N.J.S.A 45:22A-43.1.

N.J.S.A 45:22A-43.1 sets forth the requirement for developers to prepare a document that sets forth the preventative maintenance tasks to be undertaken by the association over the life of the common area components. The document must provide the maintenance schedule and timing for preventative maintenance, including, but not limited to, periodic inspections of the structural components of the buildings or common areas which the association is obligated to maintain, (N.J. Stat. Ann. Section 45:22A-43.1 (2024)). N.J.S.A 45:22A-43.1 also requires developers to include in its budget all operating expenses associated with the preventative maintenance. The preventative maintenance document must be updated when structural inspections are completed in order to address additional maintenance. Developers must prepare and update this document to respond accurately on the annual report.

These new laws adopted by the state of New Jersey are important for the safety of residents in New Jersey residential buildings, and New Jersey has put the onus on developers to make sure they are properly reporting and documenting the structural integrity and capital reserve requirements for their projects. It is important for developers of residential condominium projects to be aware of these new requirements for the yearly annual report so that the developer is not in violation of its annual reporting requirements pursuant to N.J.A.C 5:26-2.13, as these new structural integrity laws.

Reprinted with permission from the April 14, 2025 issue of the New Jersey Law Journal. © 2025. ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.