Written by: George C. Greatrex
On June 24, 2021, a high-rise beachfront condominium building in Surfside, Florida, partially collapsed, tragically killing nearly 100 people. Although the exact cause of the building collapse remains under investigation, it has been learned that the building was known to have major structural issues prior to its collapse. Additionally, the condo association did not have sufficient funds in reserve to properly and timely address those structural issues.
Many New Jersey common interest communities have similar multi-unit housing structures. A bill was introduced in the New Jersey Senate on June 2, 2022 (S2760) sponsored by Senators Troy Singleton (Burlington) and Linda R. Greenstein (Mercer and Middlesex) which would supplement the “State Uniform Construction Code Act” (UCCA) to require that certain covered buildings and plans be inspected and reviewed by a structural inspector during the building’s pre-construction, construction, and post-construction phases. In addition, this bill would supplement “The Planned Real Estate Development Full Disclosure Act” (PREDFDA) to assure that associations created under PREDFDA maintain adequate reserve funds to make certain required maintenance repairs to building components and common areas. A similar bill is expected to be introduced in the New Jersey Assembly soon.
A building covered by this legislation is defined in the bill as “a residential building that is categorized as use group R-1 or use group R-2, as those terms are defined in N.J.A.C.5:70-1.5, having load-bearing concrete, masonry, steel, a hybrid structure including, but not limited to, heavy timber, and a building with podium decks.” A “covered building owner” is defined in the bill to include “the association of a common interest community.”
This bill would require that an association created under PREDFDA commission a capital reserve study to identify and assess the adequacy of the association’s capital reserve funds to meet the anticipated costs associated with maintaining the structural integrity of the buildings which the association is obligated to maintain. In addition, this bill would require that the association creates and funds a plan (based on that study) to ensure adequate reserve funds are available to repair or replace one or more components of common elements and facilities which the association is obligated to maintain without need to create a special assessment or loan obligation. The bill would also allow an association’s executive board to adopt an assessment payable by the owners over one or more fiscal years or obtain a loan on such terms as the board determines to be reasonable, when necessary to fund the cost of corrective maintenance of the primary load-bearing system of the planned real estate development.
This Senate bill, and any Assembly counterpart, is not expected to be fully reviewed and debated in the legislature until later this year but given the public outcry resulting from the Florida tragedy and the similarity of buildings in our coastal state, it is likely that some form of this legislation will be voted on and passed into law. It is therefore recommended that all common interest communities in New Jersey with buildings covered by this proposed law not wait to begin preparing for its inevitable passage.
Contact the attorneys in the Community Associations Department of Hill Wallack LLP for any legal assistance you may need in preparing your community for these inspections and reserve requirements.