Tuesday October 20, 2026
What are condominium reserves?
Condominium reserves are funds set aside for major repairs and replacements that the association expects to handle over time. Rather than paying for these projects entirely through the annual operating budget, the association contributes to reserves so money is available as common area components reach the end of their useful lives.Under NJ condo reserve laws, covered associations must use a professional reserve study and long-term funding plan to guide this planning.
NJ condo reserve laws
Key NJ condo reserve laws include:
- Associations with $25,000 or more in total common area capital assets generally must complete and fund a capital reserve study (N.J.S.A. 45:22A-44.2(d)).
- The reserve study must be performed or overseen by a credentialed reserve specialist, New Jersey-licensed engineer, or New Jersey-licensed architect (N.J.S.A. 45:22A-44.2(a)).
- Associations must have the reserve study conducted and reviewed at least once every five years (N.J.S.A. 45:22A-44.2(c)).
- The study must include a 30-year funding plan for maintaining and replacing the association’s common area assets (N.J.S.A. 45:22A-44.2(a)(7); 45:22A-44.3(a)).
- Associations that existed on January 8, 2024 may temporarily contribute 85% of the annual reserve funding amount recommended in their reserve study, instead of the full recommended amount, for up to five fiscal years following August 21, 2025, if they meet the requirements (N.J.S.A. 45:22A-44.3(e)).
- Associations created after January 8, 2024 do not have that temporary 85% option. They must fund reserves according to one of the funding plans in their most recent reserve study (N.J.S.A. 45:22A-44.3(f)).
Who must comply with NJ condo reserve laws?
NJ condo reserve laws generally apply to condominium associations and associations of other planned real estate developments with at least $25,000 in common area capital assets (N.J.S.A. 45:22A-44.2(d)).What must a New Jersey condo reserve study include?
Under NJ condo reserve laws, the reserve study generally must include:- The condition of the common area capital assets the association maintains
- Expected repair and replacement costs
- Current reserve funding
- Anticipated long-term financial needs
- A 30-year funding plan that keeps the projected reserve balance from falling below zero
- Compliance with reserve study standards from the Community Associations Institute (CAI) or another recognized national organization
How often does a New Jersey condo need a reserve study?
Covered associations must have a reserve study conducted and reviewed at least once every five years under N.J.S.A. 45:22A-44.2(c).Boards should still review reserve planning as part of the annual budget process rather than waiting five years to look at it again. Major repairs, changing project costs, or unexpected deterioration can affect the assumptions in a study well before the next required update.
Who can prepare a New Jersey condo reserve study?
Under NJ condo reserve laws, the study must be performed or overseen by a reserve specialist credentialed through the Community Associations Institute, a New Jersey-licensed engineer, or a New Jersey-licensed architect (N.J.S.A. 45:22A-44.2(a)).Tips for board members
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Know what your condo association is responsible for
Start with a clear picture of the capital assets the condo association is responsible for maintaining. That helps the reserve professional build a study around the right components and gives the board a better understanding of what future projects may require. Review the governing documents alongside the physical property so responsibility for major repairs is clear before those costs are built into the reserve plan.
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Connect the reserve study to the annual budget
A reserve study should be a working planning tool, not something the board reviews once every five years and files away. Use its recommendations when preparing each annual budget and compare them with upcoming maintenance and capital improvement projects. Regular review can help the board see where costs or project timing have changed and keep long-term planning connected to the community’s current priorities.
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Plan ahead for the five-year update
NJ condo reserve laws require a reserve study to be conducted and reviewed at least every five years, so track the association’s next deadline well in advance. Starting early gives the board time to select a qualified professional and gather useful property information. It can also make the process easier if the association has completed major projects since the previous study.
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Keep a clear record of major repairs and replacements
Keep an organized history of major repairs, replacements, warranties, and project costs. This information can make future reserve studies more accurate and help the board see how actual project timing and expenses compare with earlier assumptions. A clear record also gives future board members useful context when planning upcoming capital work.
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Keep reserve planning connected to maintenance
Preventive maintenance and reserve planning work best when they support each other. Current maintenance information can help the board understand whether a major component is performing as expected or may need attention sooner. Coordinate the reserve study with ongoing property inspections and capital projects so long-term funding assumptions reflect what is actually happening throughout the community.
How FirstService Residential can help
As North America’s leading property management company, FirstService Residential helps New Jersey boards simplify reserve planning and support compliance with NJ condo reserve laws.Our local teams can help boards track reserve study timelines, coordinate qualified professionals, build reserve priorities into the annual budget, manage preventive maintenance, and keep upcoming capital projects moving forward. Through our affiliate FirstService Financial, managed communities can also access financial services designed to support long-term financial health.
Contact a member of our team today to learn more.
This information is provided for general informational purposes only and is not intended to constitute, and should not be relied upon as, legal, regulatory, financial, or operational advice, or as a representation or guarantee of any specific services, capabilities, or outcomes. Property management needs, regulatory requirements, market conditions, and available services vary by jurisdiction, property type, and community. FirstService Residential provides services through locally based affiliates and associates, and services and results may vary by community, region, contractual terms, and applicable law.