In 2024, New Jersey mandated* that condominium associations such as ours periodically conduct a comprehensive capital reserve study. This study is a budget planning tool that identifies and describes the common area components that the Association is responsible to replace, and also provides a plan to fund the anticipated future replacement costs.
The study must include:
1) Physical Analysis: identifies the common physical components that the Association is responsible to replace, assesses the condition of the components, and estimates the life and valuation of each; and
2) Financial Analysis: evaluates the current status of reserves and recommends a Funding Plan, including the projected reserve income and expense over a period of time; this section includes the reserve contributions required from unit owners to keep the building structurally safe and prevent unexpected special assessments. Associations are legally required to fund their reserves at the levels determined by the reserve study.
The reserve study must be updated every five years.
The 2024 legislation requires that communities that had not performed a reserve study in the previous five (5) years had to undertake an initial study by January 8th, 2025. Your Board, anticipating this need, commissioned Kipcon Engineering of North Brunswick (
https://kipconengineering.com/) to conduct our study; Kipcon has over forty years of industry experience, and is credentialed by the Community Associations Institute (CAI;
https://www.caionline.org/) as a "Reserve Specialist".
The study was completed in 2024, and is a "Level I Full Reserve Study"; Level I is the most comprehensive, highest level of reserve study as defined by CAI. Board has since used the Kipcon reserve study as one reference for establishing our annual budget, guiding our spending, and setting our monthly maintenance fees to a level that will satisfy the law's reserve requirements.
To keep our compliance current, Parkside will redo the reserve study and the structural study in the second half of 2026.
* Generally: N.J.S.A. 45:22A-44.2 under the Planned Real Estate Development Full Disclosure Act (PREDFDA); more specifically: Senate Bill S2760 (established the original statewide funding framework) and Senate Bill S3992 (adjusted the funding requirements and responsibilities).
