The purpose of this guide is to familiarize real estate professionals with the closing customs in the areas in which they will practice and to provide a resource when they are involved in a closing outside of their local area.
Much of Connecticut closing practice is done in accordance with the "custom of the bar" in the area in which the property is located. That custom, in some cases, has been formalized and published by the local or county bar association. When available, that information has been incorporated into this guide. If an area does not have formalized and/or published customs, but relies on the customs of another area, we have included a statement "See....County Customs." Otherwise, the information contained here was obtained from practicing real estate attorneys, secretaries and paralegals. We extend our grateful thanks to those who took time from their very busy schedules to respond to our questions and who went out of their way to verify the accuracy of the information given.
The focus of this guide is on residential real property. Many of the customary practices contained here may also apply to closings of commercial real estate; however, no attempt has been made to identify those practices or how or when they may differ.
Caveat
Real estate customs constantly change in response to lenders' and clients' demands. What we have attempted to do in this guide is to describe the most common practices in an area or those that have an impact on the greatest number of people or widest geographical area. In some cases, we have noted a custom and significant local variations. This was not possible in all cases where variations are too numerous.
You will undoubtedly encounter other local variations and even variations among individual law offices. In dealing with these variations, we recommend the following:
- Flexibility, accommodation, and patience. The impact of the variation in custom on your client should be assessed. In most cases, the impact will be minimal and the individual variation can be accommodated without harm to the client.
- Note the variations and exceptions for future use.
- If the variation is significant or indicates a change in previous custom, please let us know so that we can update this guide.
For a list of Towns by County, click here
For a list of all Connecticut municipalities with address, phone, hours of operation and special taxing districts, see Connecticut Municipal Information Guide
Click on a County name on the map below to go directly to closing customs in that County.
Contract and Pre-Closing Stage
1. Who prepares the real estate contract?
The seller's attorney, from a memorandum of sale or binder prepared by the real estate agent or broker.
Greenwich - brokers do not always use binders. Terms of offer may be transmitted to seller's attorney by telephone; contract is expected within 48 hours.
2. Is a binder or deposit required of the purchaser? In what amount and when is it paid?
Purchaser is expected to deposit 1% of the purchase price with the real estate agent or broker when memorandum of sale or binder is prepared, or when offer is made. A full deposit of 10% of the purchase price (which includes the amount already paid) is required at contract.
3. Who holds the deposit?
The seller's attorney. Occasionally, the real estate broker may hold the 1% binder.
4. How and when is the deposit released?
When the seller's attorney is notified that the mortgage contingency in the contract has been satisfied, the deposit is released to the seller. Occasionally, the real estate broker or agent will continue to hold the 1% binder until closing, when it will be released to seller or seller's attorney.
5. Is a preliminary or contract search done? By whom?
Bridgeport & Danbury areas - purchaser's attorney brings title down from deed into seller and checks encumbrances, especially on new construction, prior to client signing contract, if possible.
Greenwich, Stamford, Darien, New Canaan areas - seller's attorney brings title down in connection with preparing the contract. Purchaser's attorney may bring title down prior to client signing contract.
6. Who is responsible for ordering or performing the full title search? Who pays for the full title search?
The purchaser's attorney orders or performs the full title search. Purchaser pays for Purchaser's own search.
7. Adjustments:
All adjustments are based upon a 365-day year, and upon the actual number of days in the month, unless otherwise specified below. Adjustments are made on the basis of the purchaser owning the property on the date of the closing. Adjustments to the seller are made through the day immediately preceding the closing day.
Rent - rent adjustments are based on the actual number of days in the month.
Oil - the oil in the tank shall be adjusted in favor of the seller. Seller shall provide at the closing a reading from seller's oil company of the amount of oil in the tank read within 48 hours of the time of the closing and the current price of that company's oil.
Common Interest Communities, Adjustments of Working Capital Account Contributions - Contributions required to be made by the first purchaser of a unit in a common interest community to a working capital account, reserve account or any extra common charge payment to the community association are not subject to recoupment or other adjustment on subsequent resale of the unit.
Common Interest Communities, Special Assessments - Special assessments of a common interest community, not part of the regularly budgeted common expense assessments, are not subject to adjustment. If payment of all or any portion of the special assessment is due and payable prior to the original closing date stated in the contract, the amount then due (without regard to any grace period) is payable by the seller; if all or any portion of the special assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the purchaser's responsibility.
Common Interest Communities, Monthly Adjustment of Common Charges - Regularly budgeted common expense assessments are adjusted as if they were payable on the first day of the month in advance, whether such assessments are in fact made on an annual basis and payable monthly, or assessed on a monthly basis.
Sewer Assessment, Principal and Interest Adjustment at Time of Closing - In those instances where the purchaser has agreed to assume and pay any outstanding sewer assessment and payment of all or any portion of principal installment on account of said assessment is due and payable prior to the original closing date stated in the contract, such amount then due (without regard to any grace period) is payable by the seller; if all or any portion of a principal installment on account of said assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the purchaser's responsibility. Interest on sewer assessments shall be deemed paid in arrears. As a result, there will normally be an adjustment of interest in favor of the purchaser from the past due date to the date of closing. The purchaser shall receive a credit at the closing for interest owed but not paid at the time of closing. Interest only shall be adjusted as of the date of closing. Principal payments shall not be adjusted.
Real Estate Taxes, Sewer Use Charges, Similar Charges - Real estate taxes, fire district taxes, sewer use charges, association dues, and taxes imposed by special tax districts (collectively referred to herein as real estate taxes) shall be adjusted as of the date of the closing unless otherwise agreed. The tax year shall be the fiscal year of the town in which the property is located. All Fairfield County towns are now on a fiscal year commencing July 1 and ending June 30. Real estate taxes assessed upon the List of preceding October 1 shall be considered to be applicable to the subsequent fiscal year.
The Town of Fairfield W.P.C.A. Annual Sewer Use Bill is mailed in September of each year and is payable in two (2) installments, which installments are due on October 1 and the following April 1. The October installment shall be deemed to cover the period from the preceding July 1 to the succeeding December 31. The installment due April 1 shall be deemed to cover the period from the preceding January 1 to the succeeding June 30. Therefore, if a closing was to occur on April 15 and the April 1 installment had not been paid by the seller, the purchaser would receive a credit from the preceding January 1 through April 14. If the April 1 installment had been paid, the seller would receive a credit from April 15 through the following June 30. If a closing occurs between July 1 and issuance of the September bill, the adjustment is based on the amount of the prior year's bill.
The Town of Trumbull Sewer Commission submits bills quarterly for sewer use charges applicable to a "Usage Period" consisting of approximately three (3) months preceding the Due Date of the bill. Adjustments are to be made based upon the Usage Period, notwithstanding the statement in the bill regarding the months covered by the "quarterly billing." The seller is responsible for payment of any outstanding bills for Usage Periods predating the date of closing and the purchaser should receive a credit from the last day of the preceding Usage Period to the date of closing. Therefore, if a closing was to occur on January 6, 2000, the seller would be responsible for payment of the preceding November bill covering the Usage Period from June, 1999 to September, 1999, and the purchaser would receive a credit for the period from the date following the end of the Usage Period to the date of closing with a per diem based upon the amount of the bill for the preceding quarter (the last bill). It is recommended that an effort be made to determine if a new Sewer Use Bill can be obtained from the Sewer Commission for the period from the date of the last bill to the date immediately preceding the date of closing.
Closing Stage
1. Where is the closing held?
At the office of the seller's attorney, unless lender or lender's attorney (if separate from purchaser's attorney) requires otherwise.
2. How are closing expenses and purchase price paid at closing?
At closing, purchaser shall tender to seller cashier's, bank treasurer's, certified check(s) or wired funds, payable or endorsed to seller's attorney as trustee for seller, for the balance of the purchase price due at closing as set forth in the sales contract adjusted in accordance with the sales contract and adjustments.
Mortgage company checks or similar holding company checks, unless certified, should not be accepted at the time of the closing (Caveat: Sec. 36a-758 of C.G.S. states that any financial institution may pay the proceeds of a loan by means of a wire transfer provided such payment is made to the mortgagor, to the mortgagor's attorney or to the mortgagee's attorney. Purchaser's attorney shall determine prior to the closing what form of funding he will receive from the mortgagee's attorney. Mortgagee's attorney shall provide certified or bank checks when the financial institution wire transfers mortgage proceeds to an attorney trustee account in accordance with the statute.)
3. Who provides the necessary release(s) of seller's liens?
In the event seller's title is encumbered, seller's attorney shall deliver to purchaser's attorney a release for each encumbrance required by the contract to be released, together with recording fees for all such releases. Seller's attorney shall immediately cause payoff proceeds to be delivered to each such encumbrancer.
4. What is the procedure if releases are not available at closing?
Notwithstanding the above, if seller's title is encumbered by mortgage lien(s) for which the seller's attorney is unable to deliver release(s) of mortgage at closing, the parties shall close the transaction, provided that the following procedure is followed with respect to each mortgage lien:
5. Who issues the title insurance policy or policies?
The purchaser's attorney. It is recommended that purchaser's attorney recommend that the owner obtain an owner's title insurance policy omitting all mortgages but the mortgage given to secure the purchase of the property.
6. Who is responsible for obtaining mechanic's lien waivers, if applicable?
The seller is obligated to deliver to purchaser completed, absolute mechanic's lien waivers at closing whenever any work has been performed or services have been provided during the 90-day period preceding the transfer of title for which a lien could be recorded.
Post-Closing Stage
1. Who records the documents?
Prior to disbursing any funds from the sale of the property, seller's attorney should allow purchaser's attorney a reasonable opportunity to record his documents on the land records.
2. Who is responsible for transmitting payoffs of mortgages, taxes and water and sewer bills due, and real estate commissions?
In the process of recording, purchaser's attorney customarily delivers payments of taxes and water and sewer bills due. The seller's attorney transmits the mortgage payoff and real estate commissions.
3. Who notifies tax collector/assessor and utilities of change in ownership of property?
Utility companies require that purchaser and seller call them directly. Tax assessor and collector are notified by the Town Clerk once documents are received for recording.
Contract and Pre-Closing Stage
1. Who prepares the real estate contract?
The real estate agent. If no real estate agent or broker is involved, the contract can be drafted by either the purchaser's or seller's attorney.
2. Is a binder or deposit required of the purchaser? In what amount and when is it paid?
Purchaser is expected to give a minimal deposit to the real estate agent or broker upon making the offer or upon seller's acceptance of offer. A further deposit may be required at mortgage commitment to bring the total to 5% - 10% of the purchase price.
3. Who holds the deposit?
The real estate broker or agent holds the deposit. If there is no real estate agent or broker involved in the transaction, the seller's attorney holds the deposit.
4. How and when is the deposit released?
The deposit is paid at closing by the real estate agent or broker or seller's attorney to the seller.
5. Is a preliminary or contract search done? By whom?
No.
6. Who is responsible for ordering or performing the full title search? Who pays for the full title search?
The purchaser's attorney orders or performs the full title search. Purchaser pays for purchaser's own search.
7. Adjustments:
All adjustments are based upon a 365-day year (366 in a leap year), and upon the actual number of days in the month. Adjustments are made on the basis of the purchaser owning the property for the entire day of the closing.
Oil - Adjustments for fuel oil shall be based on the full stated volume of the tank. Seller shall top the tank prior to closing and the adjustment for the entire tankful shall be based on the actual price paid for the oil obtained to top the tank.
Common Interest Communities, Adjustments of Working Capital Account Contributions - Contributions required to be made by the first purchaser of a unit in a common interest community to a working capital account or reserve account of the community association are not subject to recoupment or other adjustment on subsequent resale of the unit.
Common Interest Communities, Special Assessments - Special assessments of a common interest community, not part of the regularly budgeted common expense assessments, are not subject to adjustment. If payment of the special assessment is due in full prior to the original closing date stated in the contract, the special assessment is payable by the seller; if the special assessment is payable on or after the stated performance date, it becomes the purchaser's responsibility.
If a special assessment is payable on an installment basis, the purchaser assumes the installment payments due on or after original closing date, with no adjustment.
Common Interest Communities, Monthly Adjustment of Common Charges - Regularly budgeted common expense assessments are adjusted as if they were payable on the first day of the month in advance, whether such assessments are in fact made on an annual basis and payable monthly, or assessed on a monthly basis.
Sewer and Water Liens - Unless purchaser and seller otherwise agree in writing, all adjustments against the property for repairs or improvements which have resulted in the recording of an assessment, caveat or lien of a liquidated sum prior to the actual closing date, are to be paid in full by seller at or before the closing.
Adjustments on Certain Liens Assumed by Purchaser - If purchaser assumes the outstanding principal balance of any existing lien (e.g. lien for installation of sewer line, water line, or sidewalks) as part of the contract, then purchaser and seller shall adjust at closing only for interest on the outstanding principal balance as of the date of closing and not for the current installment of principal, unless otherwise agreed to in writing. Such adjustment shall be in advance or arrears in accordance with the manner in which interest is charged by the lienor.
Real Estate Taxes - Unless purchaser and seller otherwise agree in writing, current real property taxes shall be adjusted between the parties as of the date of the closing and in accordance with the Uniform Fiscal Year method of adjustment.
Tax Adjustment Involving Frozen Taxes - The adjustment of real property taxes for a transaction involving a seller who has received the benefit of a tax freeze pursuant to C.G.S. Sec. 12-129b shall be based only on the amount of tax paid directly by seller.
Tax Adjustment Involving "Circuit Breaker" Taxes - The adjustment of real property taxes for a transaction involving a seller who has received the benefit of a "circuit breaker" pursuant to C.G.S. Sec. 12-170aa shall be based only on the amount of tax paid directly by seller.
Closing Stage
1. Where is the closing held?
Unless the parties otherwise agree, or unless a lender otherwise requires, the closing shall take place at the office of the purchaser's attorney. If, however, the transaction involves only purchase-money financing in favor of seller, the closing shall take place at the office of seller's attorney.
2. How are closing expenses and purchase price paid at closing?
Unless lender or lender's counsel otherwise requires, counsel for the purchaser has the responsibility for cutting all checks for the closing.
The Hartford County Bar Association recognizes that net payment to sellers of real property and mortgage payoffs are often delivered and accepted in the form of trustee or client's funds checks notwithstanding provisions to the contrary in the purchase and sales agreement. In view of this practice, the Hartford County Bar Association recommends that attorneys representing sellers who desire such payments in good funds (e.g. bank or certified checks) so notify the issuing attorney or settlement agent sufficiently in advance of closing to ensure that proper arrangements for compliance may be made to avoid inconvenience and delay at the time of closing.
3. Who provides the necessary release(s) of seller's liens?
In the event seller's title is encumbered, seller's attorney shall deliver to purchaser's attorney a release for each encumbrance required by the contract to be released. Seller's attorney shall immediately cause payoff proceeds to be delivered to each such encumbrancer.
4. What is the procedure if releases are not available at closing?
Notwithstanding the above, if seller's title is encumbered by mortgage lien(s) for which the seller's attorney is unable to deliver release(s) of mortgage at closing, the parties shall close the transaction, provided that the following procedure is followed with respect to each mortgage lien:
5. Who issues the title insurance policy or policies?
The purchaser's attorney.
6. Who is responsible for obtaining mechanic's lien waivers, if applicable?
The seller is obligated to deliver to purchaser completed, absolute mechanic's lien waivers at closing whenever any work has been performed or services have been provided during the 90-day period preceding the transfer of title for which a lien could be recorded. The purchaser is not required to accept, in lieu of lien waivers, an indemnity agreement promising to hold purchaser harmless from the loss arising from seller's failure to provide the waivers.
7. Who is responsible for preparing any mortgage taken back by the seller?
When a seller, as part consideration for a deed, has agreed to take back a mortgage from the purchaser, the seller's attorney has the responsibility for drafting the appropriate documents relating to the mortgage. The seller absorbs the cost of preparation of the documents, and the purchaser is responsible for recording fees.
Post-Closing Stage
1. Who records the documents?
The attorney who does the title search, usually the purchaser's attorney.
2. Who is responsible for transmitting payoffs of mortgages, taxes and water and sewer bills due, and real estate commissions?
In the process of recording, purchaser's attorney customarily delivers payments of taxes and water and sewer bills due. The seller's attorney transmits the mortgage payoff and real estate commissions.
3. Who notifies tax collector/assessor and utilities of change in ownership of property?
Utility companies require that purchaser and seller call them directly. Tax assessor and collector are notified by the Town Clerk once documents are received for recording.
Contract and Pre-Closing Stage
1. Who prepares the real estate contract?
The seller's attorney. The contract is prepared from a binder done by the real estate agent. A binding binder may also be prepared by the real estate agent and acts as a final contract. Often a contract is prepared by seller's attorney, and sent via mail, fax, or e-mail to purchaser's attorney for comment. When contract is finalized, copies are printed and executed by all parties.
2. Is a binder or deposit required of the purchaser? In what amount and when is it paid?
Purchaser is expected to deposit 1% of the purchase price upon signing the binder and pay an additional 9% deposit upon signing the formal contract or within two weeks if no formal contract is required.
3. Who holds the deposit?
The real estate broker or agent or seller's attorney holds the deposit as an escrow agent.
4. How and when is the deposit released?
The deposit is released from escrow and paid at closing to the seller's attorney who then cuts a check to seller for purchase price, including the deposit, less closing costs, mortgage payoff(s), etc., including real estate commissions.
5. Is a preliminary or contract search done? By whom?
The practice varies depending on the attorney. If done, it will be done before the client signs the contract in order to identify any title problems.
6. Who is responsible for ordering or performing the full title search? Who pays for the full title search?
The purchaser's attorney orders or performs the full title search. Purchaser pays for purchaser's own search. Watertown - customarily done by the seller's attorney.
7. Adjustments:
Real property taxes, rents, security deposits, fuel and condominium common charges - customarily adjusted. Elderly circuit breaker benefits are not customarily adjusted at closing. The tax adjustment is done on the basis of actual bill. Oil adjustments are made on a full or measured tank, dependent on the purchaser's wishes, and the ability to accurately measure the fuel levels in the tank(s).
Water and Sewer - New Milford - Where public water service exists, the water meter is read for closing and the seller pays the final bill prior to or at closing. The sewer use tax is billed semi-annually, in November and May, in advance. It is customarily an adjustment from purchaser to the seller on the bill paid.
Other Towns - Water and/or sewer is available in parts of Washington, Litchfield and other towns. Adjustment will vary depending on method of payment. Check with local water company or town tax collector for payment information and procedure upon the transfer of the property.
Per diems for adjustments are figured on a 365-day year. Leap years are not customarily treated differently. Adjustments are calculated using the exact number of days.
The date of closing is most frequently charged to seller.
The following towns have special taxing districts, fire or utility districts, which taxes are also adjusted (click on the town to view special taxing districts):
| Barkhamsted | Bethlehem | Cornwall |
| Goshen | Harwinton | Kent |
| Litchfield | Morris | New Hartford |
| New Milford | Norfolk | New Canaan |
| Plymouth | Salisbury | Torrington |
| Watertown |
The official in charge of the district should be contacted for billing and payment information.
Closing Stage
1. Where is the closing held?
At the office of seller's attorney unless otherwise requested by purchaser's lender, then at the office of lender or lender's attorney.
At the mutual agreement of seller's attorney and purchaser's attorney, the closing may be completed without a formal closing, documents being exchanged via mail or overnight delivery service.
2. How are closing expenses and purchase price paid at closing?
The purchaser is expected to bring the balance of the purchase price (net, after adjustments) due at closing in the form of wire transfer, bank check, or certified funds. These funds and the mortgage proceeds check are endorsed over to seller's attorney, who then issues checks for the seller's closing expenses and for the balance due to seller. All purchaser's closing costs (recording fees, attorney's fee, bank fees, etc.) are paid by purchaser at closing with wire transfer, bank check, certified check, or personal check provided purchaser's attorney has agreed to accept personal checks from purchaser.
3. Who provides the necessary release(s) of seller's liens?
In the event seller's title is encumbered, seller's attorney shall deliver to purchaser's attorney a release for each encumbrance required by the contract to be released. Seller's attorney shall immediately cause payoff proceeds to be delivered to each such encumbrancer.
4. What is the procedure if releases are not available at closing?
Notwithstanding the above, if seller's title is encumbered by mortgage lien(s) for which the seller's attorney is unable to deliver release(s) of mortgage at closing, the parties shall close the transaction, provided that the following procedure is followed with respect to each mortgage lien:
5. Who issues the title insurance policy or policies?
The purchaser's attorney.
Post-Closing Stage
1. Who records the documents?
The purchaser's attorney.
2. Who is responsible for transmitting payoffs of mortgages, taxes and water and sewer bills due, and real estate commissions?
The seller's attorney will transmit payments of the mortgages, water and sewer bills due, and real estate commissions. Tax payments which are due will normally be delivered to the tax collector by the purchaser's attorney at time of recording.
3. Who notifies tax collector/assessor and utilities of change in ownership of property?
The purchaser's attorney, typically by letter. The lender or lender's attorney may also notify the tax collector if lender is escrowing for taxes.
Contract and Pre-Closing Stage
1. Who prepares the real estate contract?
The real estate agent. If no real estate agent or broker is involved, the contract can be drafted by either the purchaser's or seller's attorney.
2. Is a binder or deposit required of the purchaser? In what amount and when is it paid?
There is no fixed custom. Typically, the purchaser is expected to deposit 1% of the purchase price at the time the offer is made, and some additional amount specified by contract at the time of the seller's acceptance of the offer.
3. Who holds the deposit?
The real estate broker or agent holds the deposit. If there is no real estate agent or broker involved in the transaction, the seller's attorney holds the deposit.
4. How and when is the deposit released?
The deposit is paid at closing by the real estate agent or broker or seller's attorney to the seller or occasionally to the seller's attorney.
5. Is a preliminary or contract search done? By whom?
No.
6. Who is responsible for ordering or performing the full title search? Who pays for the full title search?
The purchaser's attorney orders or performs the full title search. Purchaser pays for purchaser's own search.
7. Adjustments:
Adjustments are made on the basis of the purchaser owning the property on the date of the closing. Adjustments to the seller are made through the day immediately preceding the closing day.
Rent - Rent adjustments are based on the number of days in the month of the sale.
Oil - The oil in the tank shall be adjusted in favor of the seller. Seller shall provide at the closing a reading from seller's oil company of the amount of oil in the tank within 48 hours of the time of the closing and the current price of that oil.
Common Interest Communities, Adjustments of Working Capital Account Contributions - Contributions required to be made by the first purchaser of a unit in a common interest community to a working capital account or reserve account of the community association are not subject to recoupment or other adjustment on subsequent resale of the unit.
Common Interest Communities, Special Assessments - Special assessments of a common interest community, not part of the regularly budgeted common expense assessments, are not subject to adjustment. If payment of all or any portion of the special assessment is due and payable prior to the original closing date stated in the contract, the amount then due (without regard to any grace period) is payable by the seller; if all or any portion of the special assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the purchaser's responsibility.
Common Interest Communities, Monthly Adjustment of Common Charges - Regularly budgeted common expense assessments are adjusted as if they were payable on the first day of the month in advance, whether such assessments are in fact made on an annual basis and payable monthly, or assessed on a monthly basis.
Sewer Assessment - In those instances where the purchaser has agreed to assume and pay any outstanding sewer assessment and payment of all or any portion of a principal installment on account of said assessment is due and payable prior to the original closing date stated in the contract, such amount then due (without regard to any grace period) is payable by the seller; if all or any portion of a principal installment on account of said assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the purchaser's responsibility. Typically, interest on sewer assessments is paid in arrears. This custom would then provide for the purchaser to receive a credit at the closing for which interest has been paid to the date of the closing. Interest only shall be adjusted pro rata as of the date of closing. Principal payments would not be prorated.
Real Estate Taxes - Real estate taxes shall be adjusted as of the date of the closing unless otherwise agreed. The tax year shall be the fiscal year of the town in which the property is located. All New Haven County towns are now on a fiscal year commencing July 1 and ending June 30. (Note that as of the date of this publication, the Towns of Beacon Falls, Meriden and Wallingford are assessment year towns.) Real estate taxes assessed upon the List of October 1 shall be considered to be applicable to the subsequent fiscal year. This method of tax adjustment would also apply to any other taxes levied upon the same grand list, for example, fire district taxes and association taxes. Such adjustments are made on the basis of a 365-day year.
Water and Sewer -
Waterbury - water is billed quarterly. Quarters begin in January, February, or March depending on the section of the city. Bills are considered to be paid in arrears. Adjustments run from seller to purchaser. Sewer use is part of the property tax bill and included in that adjustment.
Meriden/Wallingford - Town water departments read the meter for closing. Water charges are treated as billed in arrears.
Meriden - Final reading is treated as an adjustment from seller to purchaser. No final bill will be issued. Water charges are billed twice each year, in June and December. The purchaser pays the bill when received.
Wallingford - A final bill will be issued and paid by seller at closing; sewer use charges are included in the water bill; sewer assessments/iens - preference is that seller pays in full. May be assumed by contract or agreement. Where assumed, adjustment may be done which will vary depending on payment method.
New Haven area - South Central Connecticut Water Authority (formerly New Haven Water company)_ is primary provider. Water is billed quarterly in arrears; in City of New Haven, bills sent in March, June, September, and December. Quarters vary in towns around New Haven. Water charges are adjusted from seller to purchaser, based on last bill. Purchaser pays new bill. Sewer usage is also adjusted on basis of last bill; check with water authority for billing and payment information.
Other towns - Check with individual water company or local water and sewer department(s) for procedures upon transfer of property.
Closing Stage
1. Where is the closing held?
Waterbury area - in the office of the purchaser's attorney.
Meriden/Wallingford area - in the office of the lender or lender's attorney (who may also be representing the purchaser). If no lender is involved, in the office of the seller's attorney.
New Haven area - custom is same as Meriden/Wallingford, except real estate broker's form contract may specify closing at office of seller's attorney. Lender requirements override contract provisions.
2. How are closing expenses and purchase price paid at closing?
At closing, purchaser shall tender to seller cashier's, teller's or certified check(s) payable to seller's attorney as Trustee for seller, for the balance of the purchase price due at closing as set forth in the Buy/Sell Agreement adjusted in accordance with the Buy/Sell Agreement and these local customs.
3. Who provides the necessary release(s) of seller's liens?
In the event seller's title is encumbered by one or more liens, seller's attorney shall deliver to purchaser's attorney a release for each such lien together with recording fees for all such releases. Seller's attorney shall immediately cause payoff proceeds to be delivered to each such lien holder.
4. What is the procedure if releases are not available at closing?
In the event Seller's title is encumbered by a mortgage lien(s) for which seller's attorney is unable to deliver a release of mortgage at closing, the parties shall close the transaction, provided seller's attorney delivers the following:
5. Who issues the title insurance policy or policies?
The purchaser's attorney.
6. Who is responsible for obtaining mechanic's lien waivers, if applicable?
The seller is obligated to deliver to purchaser completed, absolute mechanic's lien waivers at closing whenever any work has been performed or services have been provided during the 90-day period preceding the transfer of title for which a lien could be recorded. The purchaser is not required to accept, in lieu of lien waivers, an indemnity agreement promising to hold purchaser harmless from the loss arising from seller's failure to provide the waivers.
7. Who is responsible for preparing any mortgage taken back by the seller?
When a seller, as part consideration for a deed, has agreed to take back a mortgage from the purchaser, the seller's attorney has the responsibility for drafting the appropriate documents relating to the mortgage. The seller absorbs the cost of preparation of the documents, and the purchaser is responsible for recording fees.
Post-Closing Stage
1. Who records the documents?
The attorney who does the title search, usually the purchaser's attorney.
2. Who is responsible for transmitting payoffs of mortgages, taxes and water and sewer bills due, and real estate commissions?
In the process of recording, purchaser's attorney customarily delivers payments of taxes and water and sewer bills due. The seller's attorney transmits the mortgage payoff and real estate commissions.
3. Who notifies tax collector/assessor and utilities of change in ownership of property?
Utility companies require that purchaser and seller call them directly. Tax assessor and collector are notified by the Town Clerk once documents are received for recording.
Contract and Pre-Closing Stage
1. Who prepares the real estate contract?
The real estate agent or broker.
2. Is a binder or deposit required of the purchaser? In what amount and when is it paid?
The purchaser is expected to deposit at least $1,000 with the real estate agent or broker when the contract is signed, and an additional $1,000 or more when the contract is accepted by the seller.
3. Who holds the deposit?
The real estate agent or broker.
4. How and when is the deposit released?
The deposit is customarily paid over at closing by the real estate agent or broker directly to the seller. Occasionally, the agent or broker will pay it to the purchaser's attorney, who then issues a check for the full purchase price.
5. Is a preliminary or contract search done? By whom?
No.
6. Who is responsible for ordering or performing the full title search? Who pays for the full title search?
Purchaser will pay for purchaser's own title search.
7. Adjustments
Adjustments are made on the basis of the Purchaser owning the property on the date of the closing. Adjustments to the Seller are made through the day immediately preceding the closing day.
Rent - Rent adjustments are based on the number of days in the month of the sale. This is true with respect to rents back as agreed to by the parties and with respect to tenants in the premises. Security Deposits are also to be adjusted from the Sellers to the Purchasers. The amount of the security deposit shall be calculated by adding to the security deposit interest from the date of the last payment of interest to the tenant or if no such payment has been made then adding interest from the date the security deposit was placed with the Sellers. Interest shall be at the rate set by the Department of Banking for the State of Connecticut as adjusted from time to time. The parties shall, if requested by Purchasers' counsel, execute a form in substantially the same form as is attached hereto as Exhibit "A".
Oil in the Tank - The oil in the tank shall be adjusted in favor of the Seller. Seller shall provide at the closing a reading from seller's oil company of the amount of oil in the tank on or before the time of the closing and the current price of that oil from the last provider. When the tank is a 275 gallon tank the parties shall adjust based on a full tank containing 260 gallons of oil. In circumstances where the Sellers of property are to maintain possession after closing, oil adjustments shall be made between the parties on the date occupancy is taken by the Purchasers.
Common Interest Communities, Adjustments of Working Capital Account Contributions - Contributions required to be made by the first purchaser of a unit in a common interest community to a working capital account or reserve account of the community association are not subject to recoupment or other adjustment on subsequent resale of the unit.
Common Interest Communities - Special Assessments - Special assessments of a common interest community, not part of the regularly budgeted common expense assessments, are not subject to adjustment. If payment of all or any portion of the special assessments is due and payable prior to the original closing date stated in the contract, the amount then due (without regard to any grace period) is payable by the Seller; if all or any portion of the special assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the Purchasers responsibility.
Common Interest Communities - Monthly Adjustment of Common Charges - Regularly budgeted common expense assessments are adjusted as if they were payable on the first day of the month in advance, whether such assessments are in fact made on an annual basis and payable monthly, or assessed on a monthly basis.
Sewer and Water Assessment Adjustment - In those instances where the purchaser has agreed to assume and pay any outstanding sewer assessment and payment of all or any portion of a principal installment on account of said assessment is due and payable prior to the original closing date stated in the contract, such amount then due (without regard to any grace period) is payable by the Seller; if all or any portion of a principal installment on account of said assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the purchaser's responsibility. Interest on sewer assessments is paid in arrears. This custom would then provide for the purchaser to receive a credit at the closing for interest on the outstanding principal balance from the date to which interest has been paid to the date of the closing. Interest only shall be adjusted pro rata as of the date of closing. Principal payments would not be prorated. In the event the contract is silent as to the existence of or payment for a sewer or water assessment, the seller shall payoff said assessment in full.
Real Estate Taxes - Real estate taxes shall be adjusted as of the date of the closing unless otherwise agreed. The tax year shall be the fiscal year of the town in which the property is located. All New London County towns are now on a fiscal year commencing July 1 and ending June 30. Real estate taxes assessed upon the List of the preceding October 1 " shall be considered to be applicable to the subsequent fiscal year. " This method of tax adjustment would also apply to any other taxes levied upon the same grand list, for example fire district taxes and association taxes. Such adjustments are made on the basis of a 365-day year. Taxes shall only be adjusted on the basis of actual taxes paid by the Sellers in advance in those circumstances where taxes have been reduced or adjusted pursuant to C.G.S. § 12-129b or C.G.S. §l70aa.
When closings take place during the months of July and January it shall be the responsibility of the Sellers to prove the payment of taxes or adjustments shall be made by having the Purchasers pay the taxes and adjust to the Purchasers for the actual taxes paid. In the event a Sellers' mortgagee has "disbursed" taxes and the tax collector has not yet received such payment the Sellers shall deliver to Purchasers' counsel a sum equal to the taxes due plus two (2) months interest on said bill. Upon proof that the taxes have been paid the Purchasers counsel shall release such sums to the Sellers. In the event taxes remain unpaid on August 20 for the July bill or February 20 for the January bill the Purchaser's counsel shall have the right to use the escrowed sums to pay the taxes due. Taxes shall be adjusted in favor of the Sellers under this circumstance.
Closing Stage
1. Where is the closing held?
The closing shall be held in an office designated by the purchaser's attorney and located in New London County (unless purchaser's lender requires otherwise). It is the custom of New London County to allow the Sellers and their counsel to complete their side of the transaction and be released even though the Purchasers may have significant loan documentation to complete.
2. How are closing expenses and purchase price paid at closing?
At closing purchaser shall tender to sellers an attorney trustee check, cashier's, teller's or certified check(s), payable to sellers for the balance of the purchase price due, at closing, as set forth in the Buy/Sell Agreement adjusted in accordance with the Buy/Sell Agreement and these local customs. The settlement agent shall be considered the issuing agent for all checks to be cut with respect to the transaction. As such the settlement agent shall issue all checks for payoffs of the sellers' mortgage obligations as well as all other seller obligations due in accordance with the purchase and sale contract. All checks issued shall be in accordance with disbursements listed on the HUD1 Settlement Statement. All funds shall be delivered to sellers' counsel in escrow pending Purchasers' counsel having the opportunity to deposit funds necessary for closing and to perform a rundown of title prior to recording the closing documents. sellers' counsel shall, if requested, execute an Escrow Agreement in substantially the same form as is attached hereto as Exhibit "B".
3. Who provides the necessary release(s) of seller's liens?
In the event seller's title is encumbered by one or more liens, seller's attorney shall deliver to Purchaser's attorney a release for each such lien together with recording fees for all such releases. Seller's attorney shall immediately cause payoff proceeds to be delivered to each lienholder. The settlement agent shall be entitled to a fee of Twenty Dollars ($20.00) as compensation for compliance with the notification law under C.G.S. §49-10b for each such Mortgage on the property to be paid at the time of closing.
4. What is the procedure if releases are not available at closing?
In the event sellers' title is encumbered by a mortgage lien(s) for which seller's attorney is unable to deliver a release of mortgage at closing, the parties shall close the transaction, provided Seller's attorney delivers the following:
If the debt secured by the mortgage lien previously has been paid but the lien is not released from the Land Records at the time of the closing:
If the debt secured by the mortgage lien is to be paid at the time of the closing by the Seller's attorney:
5. Who issues the title insurance policy or policies?
The purchaser's attorney.
6. Who is responsible for obtaining mechanic's lien waivers, if applicable?
A seller of property is obligated to deliver to the purchasers or the purchasers' counsel completed absolute lien waivers at the closing whenever work has been performed or services have been provided during the ninety (90) days preceding the transfer of title. The purchasers or counsel for purchasers shall not be obligated to accept, in lieu of lien waivers any indemnity agreement promising to hold purchasers or counsel harmless from the loss arising from sellers' failure to provide such waivers.
7. Who is responsible for the release of estate tax liens?
A seller of property subject to an estate tax lien to the State of Connecticut shall provide to purchasers' counsel either of the following:
Miscellaneous Customs
Execution and Delivery of Documents -It is commonly understood that certain documents to be executed by the parties at closing are required by a lender to a transaction as well as by the Settlement Agent in order to comply with law and/or custom. Such documents to be executed by the respective parties include a Hazardous Waste Affidavit specific to the property referenced, a Non-Foreign Affidavit, a Title Insurance Affidavit, a Utility Affidavit, and a Form 1099 or its alternative. A copy of the HUD1 shall also be delivered to each Realtor.
Escrow for Fire District Taxes or Water Bills -In the event counsel is unable to obtain information for either fire district taxes or final water readings for use at closing the custom in New London County is to escrow two (2) times the last fire district tax bill plus interest and/or two (2) times the last water bill. In the event counsel is unable to determine the last water bill with any certainty it shall be assumed that the amount to be escrowed shall be equal to two (2) times Two Hundred Dollars ($200.00) per housing unit being sold. Such sums shall be held by the Sellers' counsel until such time as the bills are determined and appropriate checks cut to pay the outstanding amount, if any, with the balance returned to the Sellers.
Closing Cost Credits - Whenever a contract for purchase calls for a closing cost credit and the items to be used to determine the credit are not specifically identified in the contract, a closing cost shall be defined by reference to that allowance that the Purchasers' mortgage lender attributes to the term. The intent of this section is, in circumstances where the terms of the closing cost credit are not specifically defined, to be as liberal in construing the term "closing cost" as a Purchasers' lender will allow without regard to each parties' understanding of the meaning of the term. In general terms it is the intent of this section that closing costs could be everything other than the sale price in the event a lender allows all such items to be considered closing costs. Absent guidance from a lender, and where a contract is not specific, a closing cost is anything other than the sale price.
Escrow, Escrow Agents and Escrow Agreements -The handling of escrows at closing has become an issue after the Appellate Court decision in Galvanek v. Skibitchy and the enactment of Public Act No. 00-74. This section is adopted in consideration of the foregoing while balancing the ethical implications of attempts to hold escrow agents harmless from their responsibilities as escrow agents while recognizing their obligations as attorney for one of the parties. Connecticut Bar Association Informal Opinion 99-17 requires that any limitation of liability with respect to an escrow agents responsibilities may be considered an attempt to limit prospective liability for malpractice and such a limitation can be made only if the client consents after solicitation of independent representation. As a result, and in an attempt to balance the practicalities of the practice of real estate law with the case law, statutory authority and ethical obligations, these closing customs permit the handling of an escrow by one of the parties' attorneys upon the signing of an escrow agreement in substantially the same form as attached hereto as Exhibit "D" for escrows in an amount less than the small claims limit of Twenty Five Hundred and 00/1 00 ($2,500.00) Dollars. For any escrows in excess of the small claims limit of Twenty Five Hundred and 00/100 ($2,500.00) Dollars it is believed that given the nature of any anticipated litigation that an independent escrow agent should be engaged. Caveat: The New London County Bar Association has adopted a new standard governing the use of escrows.
Post-Closing Stage
1. Who records the documents?
The purchaser's attorney
2. Who is responsible for transmitting payoffs of mortgages, taxes and water and sewer bills due, and real estate commissions?
The purchaser's attorney.
3. Who notifies tax collector/assessor and utilities of change in ownership of property?
Clients are expected to contact utility companies themselves. The tax collector and assessor are not customarily notified by the closing attorneys.
Contract and Pre-Closing Stage
1. Who prepares the real estate contract?
The real estate agent or broker using a form contract.
2. Is a binder or deposit required of the purchaser? In what amount and when is it paid?
Purchaser is expected to give a deposit of some amount to the real estate agent or broker upon making the offer or upon seller's acceptance of offer. The most common amount is $1,000; however, the deposit may be more or less.
3. Who holds the deposit?
The real estate broker or agent holds the deposit.
4. How and when is the deposit released?
The deposit is paid at closing by the real estate agent or broker to the seller.
5. Is a preliminary or contract search done? By whom?
No.
6. Who is responsible for ordering or performing the full title search? Who pays for the full title search?
The purchaser's attorney orders or performs the full title search. Purchaser pays for purchaser's own search.
7. Adjustments:
All adjustments are based upon a 365-day year (366 in a leap year). Adjustments are calculated using the exact number of days. The date of closing is customarily charged to the Seller.
Fuel - Customarily paid by separate check between purchaser and seller. Tank is customarily topped, but can be read or measured by agreement.
Sewer and Water Liens - Where public water and sewer are available, payment methods vary and adjustments are not uniform throughout the county. Check with local water company for billing and payment method.
Real Estate Taxes - Unless purchaser and seller otherwise agree in writing, current real property taxes shall be adjusted between the parties as of the date of the closing. The following towns have special taxing, fire or utility districts, which taxes are also adjusted: Ashford, Brooklyn, Killingly, Plainfield, Pomfret, Putnam, Sterling, Windham and Woodstock. The official in charge of the district should be contacted for billing and payment information.
Elderly circuit breaker benefits are not customarily adjusted at closing. Adjustments are based on actual tax bill paid.
Closing Stage
1. Where is the closing held?
At the office of the purchaser's attorney, unless the lender or lender's attorney requires otherwise.
2. How are closing expenses and purchase price paid at closing?
The purchaser's attorney collects all funds due at closing and writes all checks including lender's seller's and purchaser's expenses, from trustee or clients' fund account. Purchaser is expected to bring balance due at closing in the form of bank or certified funds.
3. Who provides the necessary release(s) of seller's liens?
In the event seller's title is encumbered, seller's attorney shall deliver to purchaser's attorney a release for each encumbrance required by the contract to be released. Seller's attorney shall immediately cause payoff proceeds to be delivered to each such encumbrancer(s).
4. What is the procedure if releases are not available at closing?
Notwithstanding the above, if seller's title is encumbered by mortgage lien(s) for which the seller's attorney is unable to deliver release(s) of mortgage(s) at closing, the parties shall close the transaction, provided that the following procedure is followed with respect to each mortgage lien:
5. Who issues the title insurance policy or policies?
The purchaser's attorney.
6. Who is responsible for obtaining mechanic's liens waivers, if applicable?
The seller is obligated to deliver to purchaser completed, absolute mechanic's lien waivers at closing whenever any work has been performed or services have been provided during the 90-day period preceding the transfer of title for which a lien could be recorded.
Post Closing Stage
1. Who records the documents?
The purchaser's attorney.
2. Who is responsible for transmitting payoffs of mortgages, taxes and water and sewer bills due, and real estate commissions?
The seller's attorney customarily transmits the mortgage payoff and real estate commissions. The purchaser's attorney customarily delivers payment of taxes and water and sewer bills due at time of recording.
3. Who notifies tax collector/assessor and utilities of change in ownerhip of property?
Customarily, the purchaser's attorney notifies the assessor/collector. Both purchaser's and seller's attorney notify water and sewer company. Purchaser and seller notify other utilities.