A buyer contracts to purchase a mixed-use building in New Britain, Connecticut that previously housed a gas station on the ground floor. The purchase contract includes a Connecticut Transfer Act contingency. The environmental investigation reveals the property qualifies as a Form III transfer, meaning significant contamination is present and remediation is required. The seller refuses to remediate and insists on closing as-is. Under the Connecticut Transfer Act, what is the most accurate statement about how this situation is resolved?
Correct Answer
D) The Transfer Act allows transfer to occur with contamination present, provided the parties execute a Form III and the buyer assumes remediation responsibility under a covenant, but the buyer's contingency may allow termination if the contract so specifies
Under the Connecticut Transfer Act (CGS §§ 22a-134 through 22a-134e), a Form III transfer indicates that the property has significant contamination requiring remediation. Critically, the Transfer Act does NOT prohibit the transfer of contaminated property — it regulates HOW the transfer occurs. A Form III transfer can proceed if the transferee (buyer) executes a covenant with the Connecticut DEEP agreeing to investigate and remediate the contamination. However, if the purchase contract includes a Transfer Act contingency that allows the buyer to terminate if the environmental findings are unsatisfactory, the buyer may exercise that contingency and exit the contract rather than assuming remediation obligations.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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