Confusion over the New Connecticut Law Regarding Smoke and Carbon Monoxide Detectors
There is a lot of confusion over the law passed in Connecticut that requires smoke and carbon monoxide detectors in residential buildings before a title can be transferred, I had written a blog back in early January as a reminder to CT real estate professionals that there was a new law and for some transactions, it would be necessary to do some more work before we could close a sale. George Souto also wrote a recent blog detailing the issues with lenders over poor interpretation of the affidavit requiring inclusion on the HUD.
One word contained in the law that seems to be overlooked is the word ‘certain’. The law reads: An Act Requiring Smoke and Carbon Monoxide Detectors in Certain Residential Buildings at the time Title is transferred. (HB 6160,P.A. 13-272)
I have closed a few transactions already this year and there have been conversations in advance of these transactions that have demonstrated that not only are people unfamiliar with the law, but also don’t know how it is relevant in particular cases.
First the exemptions:
A transfer from one of more co-owners to just one co-owner
Transfers made to a spouse or direct family member where no consideration is paid
Transfer pursuant to a court order
Transfers by the federal government
Transfers by deed-in-lieu
Transfer generated by a refinancing
Transfer to secure a debt where there was a pre-existing debt secured by mortgage
Transfers made by executors, administrators, or trustees.
Requirements: The law and the affidavit that must be signed at closing states that there must be a smoke detector installed in the vicinity of the bedrooms, not in the bedrooms, which is a municipal requirement for many towns. This has generated confusion as some buyers feel that the municipal law should supersede the state requirement. Although this has logic, the affidavit and the law make no consideration to allow municipal law to govern. All equipment must be installed according to manufacturers’ instructions and can be either hard wired or battery powered.
Carbon monoxide detectors are required in any residence that has an open flame appliance such as a fireplace, fuel burning furnace or an attached garage. This would mean that a standalone residential property, all electric heated with no fireplace and a detached garage, would need neither according to the law. This would not be the case with many municipalities, however.
Affidavit: At closing, sellers must sign before a notary, attesting that they comply with the law. If not, they are required to credit $250 at closing, to be applied to closing costs. This would be noted on the HUD-1 document for closing. This should also be done well in advance of closing as George Souto noted in his blog, as the HUD must be approved at least 48 hours prior to closing.
I have had issues with lenders on short sales that are not yet aware of the law and need the act and affidavit sent to them so as to allow the value to appear on the closing HUD. One of my buyers is closing on a HUD home, and the agent had already included the credit on the bank contract, which means that some REO agents prefer to acknowledge the credit so as to not delay the sale.
The law applies to residential single or two family homes, and makes no distinction between a residence and a condo, yet the same hazards can be found there as well. My presumption is the term residence would be generic, and it would be advisable to have the equipment present as municipal law would certainly make more sense, and for sure an insurance company would insist on the equipment as a prerequisite to getting homeowners insurance.
There will be many more issues with this new Connecticut law, directed at safety. Until the affidavit is corrected, or the law modified to allow municipal law to regulate compliance, taking the high ground with sellers would be the best path.
Confusion over the New Connecticut Law Regarding Smoke and Carbon Monoxide Detectors
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