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General Assembly Substitute Bill No. 7027
January Session, 2025
AN ACT PERMITTING THE USE OF CONDOMINIUM DEPOSITS FOR
CONSTRUCTION AND DEVELOPMENT.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 47-271 of the general statutes is repealed and the 1
following is substituted in lieu thereof (Effective July 1, 2025): 2
(a) As used in this section, "actual costs" includes, but is not limited 3
to, expenditures for demolition, site clearing, permit fees, impact fees, 4
architectural, engineering and surveying fees, construction, 5
development, and design costs of furnishing and equipping the 6
condominium property, but excluding sale and marketing costs. 7
[(a)] (b) Any deposit made in connection with the purchase or 8
reservation of a unit from a person required to deliver a public offering 9
statement pursuant to subsection (c) of section 47-263 shall be placed in 10
escrow and held either in this state or in the state where the unit is 11
located in an account designated solely for that purpose by a licensed 12
title insurance company, an attorney, a licensed real estate broker, an 13
independent bonded escrow company or an institution whose accounts 14
are insured by a governmental agency or instrumentality until (1) 15
delivered to the declarant at closing; (2) delivered to the declarant 16
because of the purchaser's default under a contract to purchase the unit; 17
[or] (3) refunded to the purchaser; [.] or (4) used for the construction of 18
improvements, in accordance with subsection (d) of this section. 19 Substitute Bill No. 7027
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(c) Any deposit or other payment made prior to the closing for units 20
for which building permits have been issued after June 1, 2025, and with 21
respect to common elements of the condominium within which such 22
units are situated, related to the initial bona fide sale of each residential 23
condominium unit for residential occupancy by the purchaser, any 24
member of the purchaser's family or any employee of the purchaser, 25
shall be held in escrow. 26
(d) If the contract for the sale of the condominium unit so provides 27
and the purchaser under the purchase contract represents in the 28
purchase contract that such purchaser is an accredited investor as 29
defined in 17 CFR 230.501 et seq., as amended from time to time, at the 30
time the purchaser enters into the contract, the declarant may withdraw 31
escrow funds in excess of one per cent of the purchase price from the 32
escrow account required under subsection (b) of this section when the 33
construction of improvements has commenced. The declarant may 34
withdraw such funds from the escrow account as described in this 35
section for the actual costs incurred by the declarant after termination of 36
the cancellation period, as set forth in section 47-269, for the 37
construction, development and design of the condominium property in 38
which the unit to be sold is located. No part of such funds may be used 39
for salaries, commissions, expenses, real estate licensees or advertising 40
purposes. 41
(e) A purchase agreement which permits the use of the earnest money 42
deposit in accordance with the provisions of this section shall include 43
the following legend conspicuously printed or stamped in bold type on 44
the first page of the purchase agreement and immediately above the 45
place for the signature of the purchaser: "ANY PAYMENT IN EXCESS 46
OF ONE (1%) PER CENT TOWARDS THE PURCHASE PRICE MADE 47
TO THE DECLARANT PRIOR TO CLOSING PURSUANT TO THE 48
PURCHASE AGREEMENT MAY BE USED FOR ACTUAL COSTS OF 49
CONSTRUCTION, DEVELOPMENT, AND DESIGN, AS DEFINED IN 50
C.G.S. 47-271." 51
[(b)] (f) If such deposit is made in connection with the purchase or 52 Substitute Bill No. 7027
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reservation of a unit to be occupied by the purchaser and is placed in an 53
interest-bearing escrow account other than an account established and 54
maintained pursuant to section 51-81c, any interest which accrues 55
thereon from the date of such deposit until its disposition pursuant to 56
subdivision (1), (2), [or] (3) or (4) of subsection [(a)] (b) of this section 57
shall be distributed as follows: (1) If such deposit is delivered to the 58
declarant at closing or refunded to the purchaser, such interest shall be 59
divided equally between the purchaser and the declarant; and (2) if such 60
deposit is delivered to the declarant because of the purchaser's default 61
under a contract to purchase the unit, such interest shall be paid to the 62
declarant. 63
[(c)] (g) Any person who procures the wrongful release of any escrow 64
funds to the declarant or to a third party, with intent to defraud the 65
purchaser, shall be guilty of embezzlement and on conviction shall be 66
punished in the manner provided by law. 67
Sec. 2. Subdivision (13) of subsection (a) of section 47-264 of the 68
general statutes is repealed and the following is substituted in lieu 69
thereof (Effective July 1, 2025): 70
(13) A statement that any deposit made in connection with the 71
purchase of a unit will be (A) held in an escrow account until closing 72
and will be returned to the purchaser if the purchaser cancels the 73
contract pursuant to section 47-269, together with the name and address 74
of the escrow agent, or (B) withdrawn and used for authorized purposes 75
pursuant to section 47-271, as amended by this act; 76
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2025 47-271
Sec. 2 July 1, 2025 47-264(a)(13)
Statement of Legislative Commissioners:
In Section 1(b), "(c)" was changed to "(d)" for accuracy, in Sections 1(c),
and (e), references to "buyer" were changed to "purchaser" for Substitute Bill No. 7027
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consistency and in Section 1(d) "seller" was changed to "declarant" for
consistency.
HSG Joint Favorable Subst. -LCO