Sept 2023

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STRUCTURAL INTEGRITY... from page 12.

manner. Also, many boards do not fund their reserves as defined in the reserve study they possess. S2760 will be the first statutory reserve study requirement that obligates own er-controlled boards to secure a replacement reserve study,

So that boards with the most knowledge of their build ing’s conditions and financial status can act as proper fidu ciaries, S2760 provides our boards with the power to levy a special assessment or borrow funds without membership approval, irrespective of what existing governing docu ments may currently require for approval. Such superseding of the governing documents is applied only for vital structur al repairs that are identified in an engineering report. S2760 requires that each engineering report that is issued must be provided to the municipal building inspec tor and be available to all owners and tenants of the CIC. Further, we suggest, with the demands being placed by Fannie and Freddie Mac, the value of having these engineering reports speak for themselves to address their criteria and can then be issued to the banks is important to the continuance of mortgage financing for the covered buildings in the legislation. For replacement reserve funding, S2760 requires that all NJ CICs possess or conduct a replacement reserve study in conformance with the CAI Reserve Standards. While most boards do act as fiduciaries and have reserve studies, many do not, or many do not update them in a timely and prudent

update it within a defined schedule of time, and require that funding levels be adequate to avoid spe cial assessments, loans, or allow funding to go below a zero-balance. The legislation recog nizes that some commu nities may not currently

“The legislation recognizes that some communities may not currently have reserve studies or are not adequately funding for reserves.”

have reserve studies or are not adequately funding for reserves. S2760 allows for two years to get the study con ducted and provides up to 10 years to catch up with the funding to the levels required. S2760 is critical legislation that guides boards toward safe buildings and stable financial management. With the vigi lance of structural inspections and maintaining proper reserve funding, CICs gain financial stability and cost containment through the life of the community and avoid the often unfair and significant assessments and costly loan financing that results from delayed action or outright inaction by boards. n

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SEPTEMBER 2023

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