Who this actually affects

Very few residential purchasers. The accredited-investor test excludes ordinary buyers by design, so a Connecticut consumer buying a unit off plan retains the escrow protection unchanged.

The buyers it reaches are investors taking units in new development — and, in practice, the earliest committed capital in a project. That is the point of it. A developer who can deploy accredited investors' deposits into construction has working capital that would otherwise sit idle until closing.

What it means for the association that eventually forms

The association does not exist when these deposits are taken, which is exactly why this matters to whoever ends up on its first board.

The declarant's capital structure becomes the association's inheritance. A project part-funded by spent deposits is a project with less cushion if costs run over. Where that produces incomplete common elements or deferred work at the point of transition from declarant control, it is the association that carries the consequence.

Investor-heavy early ownership has downstream effects. Units sold to accredited investors are disproportionately likely to be rented rather than owner-occupied. That bears on insurance — carriers price investor concentration — and, until recently, on mortgage eligibility. Fannie Mae and Freddie Mac eliminated the 50% investor-concentration limit for established projects under full review in March 2026, which eases one constraint while the insurance one remains.

The recourse question is worth asking early. A first board reviewing the declarant's records should establish what deposits were taken, under what contract terms, and what was done with them. That is ordinary records work at transition, and it is easier to do then than later.

The act it arrived in

Public Act 25-146 began as House Bill 7027 and passed both chambers on June 4, 2025 — the final day of the long session. Its full title covers three unrelated subjects: the use of condominium deposits for construction and development, accounting of rental charges, and a working group to develop a uniform statutory definition of “affordable housing.”¹

The condominium deposit provisions are §§ 1 and 2, effective July 1, 2025.

Read alongside the developer-failure problem

Connecticut has a live illustration of what happens when a residential developer fails mid-project. Reporting through 2026 followed a Farmington Valley builder who died in March 2026 facing larceny and new-home-construction charges over unreturned deposits, leaving half-built homes, improper utility connections, and purchasers whose deposits were lost when the town foreclosed.³

That case involved retail buyers and ordinary deposits, not the accredited-investor exception. It is a reminder of what escrow is protecting against, and of why the legislature drew the exception around a class of buyer rather than around a class of project.

What to watch next

The open question is contractual rather than statutory: what disclosure accompanies the contract term permitting deposits to be spent. The act requires the contract to allow it; it does not prescribe how prominently the term must be presented, or what the purchaser must be told about the developer's finances.

The second is whether the exception stays where it is. An exception defined by buyer sophistication is stable only while the definition holds. Any broadening — to all purchasers in projects above a size threshold, say — would be a materially different measure, and nothing in the 2026 session proposed one.