New Jersey HOA Reserve Funding Compliance Checklist (2025)
We want to help clients and HOA board members prepare for the recent changes in the HOA Capital Reserve Law. To get ready for compliance: use this checklist as a guide and contact your Denali Property Manager with questions. They have the legal contacts to help you!
Reserve Study Requirements
- Conduct a capital reserve study that includes a 30-year funding plan.
- Ensure the plan maintains a reserve fund balance ≥ $0 at all times.
- Optionally include additional funding plans with higher minimum balances or escalating contributions.
Funding Options
- Decide whether to fund reserves at 100% or 85% of a selected plan.
- If choosing 85% funding, confirm:
- The board has formally adopted this decision.
- A notice in 20-point bold font is sent to all unit owners before the annual budget is adopted, including:
- Year of anticipated special assessment or loan.
- Estimated amount of assessment or loan.
- The 85% funding option is used for no more than 5 fiscal years. (After that, the plan must be funded at 100%.)
Unit Owner & Buyer Disclosures
- Notify all unit owners of their legal obligation to disclose the 85% funding notice to buyers.
- Provide a copy of the most recent 85% funding notice to any unit owner selling their unit.
Eliminated Provisions
- No need to phase in funding based on 10% budget increase thresholds and within a certain time period.
- No restriction on using reserve funds strictly per line-item allocations.
- No borrowing rules for reserve fund usage.
- No automatic allowance for special assessments if assets fail earlier than planned in the reserve study.
Get ready for compliance: use this checklist as a guide.
Reserve Study Requirements
- Conduct a capital reserve study that includes a 30-year funding plan.
- Ensure the plan maintains a reserve fund balance ≥ $0 at all times.
- Optionally include additional funding plans with higher minimum balances or escalating contributions.
Funding Options
- Decide whether to fund reserves at 100% or 85% of a selected plan.
- If choosing 85% funding, confirm:
- The board has formally adopted this decision.
- A notice in 20-point bold font is sent to all unit owners before the annual budget is adopted, including:
- Year of anticipated special assessment or loan.
- Estimated amount of assessment or loan.
- The 85% funding option is used for no more than 5 fiscal years. (After that, the plan must be funded at 100%.)
Unit Owner & Buyer Disclosures
- Notify all unit owners of their legal obligation to disclose the 85% funding notice to buyers.
- Provide a copy of the most recent 85% funding notice to any unit owner selling their unit.
Eliminated Provisions
- No need to phase in funding based on 10% budget increase thresholds and within a certain time period.
- No restriction on using reserve funds strictly per line-item allocations.
- No borrowing rules for reserve fund usage.
- No automatic allowance for special assessments if assets fail earlier than planned in the reserve study.