The State of Connecticut’s Department of Energy & Environmental Protection (DEEP) will soon retire its transaction-triggered Property Transfer Program (PTP) and transition to a Release-Based Cleanup Program (RBCP). After March 1, 2026, the sale of a property will no longer require Transfer Act filings—instead, discovered releases of contamination will trigger reporting, investigation, and cleanup duties on defined timelines, with new roles for environmental professionals and a risk-tier fee structure. Sites already in the Transfer Act program will continue toward verification under the existing PTP.

What’s changing?

Public Act 25-6 Section 2 changes the definition of “Transfer of Establishment” to transactions that occur before March 1, 2026. After that date, no new Transfer Act forms will be required for property transfers. (However, deals closing before that date may still require filings.) Sites already in the Transfer Program will continue to be worked through to verification.

What this all means is that the state will no longer mandate an environmental investigation at time of sale. The decision to investigate (through a Phase I or II) will become a business risk decision between the buyer, seller, and their lenders—but if a release is discovered, action is required under RBCP. [DE1] 

Under the new rule, releases of hazardous substances drive obligations and timelines. The RBCP sets reporting thresholds (e.g., oil spills greater than or equal to 5 gallons are reportable to DEEP, and those of greater than or equal to 10 gallons become an Emergent Reportable Release, whereby the owner/operator must report the spill to DEEP’s Emergency Response Unit immediately), Significant Existing Release (SER) timeframes (e.g., 24 hours if a drinking water well is impacted; 72 hours otherwise), and a cleanup tier-based fee structure for remediation that isn’t completed within one year of discovery.

The new regulations also establish a new category of professional called a PEP (Permitted Environmental Professional) who can certify certain soil-only and/or less-significant releases, whereas LEPs (Licensed Environmental Professionals) will continue to verify broader groundwater-impacted releases and oversee tiered cases. DEEP maintains the authority to audit submittals.

What this means for CT lenders

The sunsetting of the Transfer Act Rule and subsequent transition to RBCP will have several major impacts on lending operations:

• Closing certainty improves—but environmental risk shifts. Lenders should anticipate fewer closing delays with the elimination of Transfer Act paperwork but should place more emphasis on pre-closing due diligence to avoid inheriting a newly discovered “release” with reporting, cleanup obligations and potential tier fees if not closed out within a year.
• Policy updates are essential. Because environmental investigations will no longer be state-mandated at sale, your credit policy will hold the key to determining the appropriate level of environmental site assessments and borrower obligations.
• Time-bound compliance matters. Reporting and cleanup deadlines (24–72 hours for SER reporting; one-year to achieve closure before tiering) can create borrower operational stress and collateral risk if missed—especially for small businesses.
• Legacy Transfer Act sites must be handled and tracked separately. Properties already in the program must finish under Transfer Act rules (verification), while any future releases at those properties will fall under RBCP. Lenders must track these special properties in their collateral files.

What lenders should do now

March 1 is less than six months away, so any institution conducting real estate lending in Connecticut should begin preparing now for the transition. Follow this checklist to stay on track:

1. Update your environmental due diligence policies: We recommend keeping ASTM E1527-21 Phase I ESAs as the gold standard for due diligence of higher-risk collateral and requiring a Phase II ESA where recognized environmental conditions (RECs) are identified.

Add to your policy and procedures a CT-specific trigger matrix identifying RBCP reportable thresholds, SER definitions, and timelines so lenders and borrowers know when a discovery must be reported.

• Revise your loan docs and closing checklists: It’s critical that all loan closing documents and checklists adhere to the new requirements. Specifically:
• Add representations/warranties and affirmative covenants requiring borrowers to: (i) promptly notify the bank of any discovered release; (ii) submit required DEEP reports within RBCP deadlines (24–72 hours for SERs; other timelines as specified); (iii) engage a qualified environmental professional (PEP/LEP) and implement Immediate Actions as required; and (iv) pursue closure within one year where feasible to avoid tier assignment and fees.
• Include in your closing documents rights for the bank to approve the environmental professional (PEP/LEP) and review submittals (verifications/certifications, tier forms, Closure Reports).
• Add escrow or holdback options where a release is suspected or confirmed to cover response actions and potential tier fees if not closed in one year. (Tier fees currently range from $500–$3,000 at assignment, plus annual fees while in tier.)
• Refresh pre-closing environmental screens:
• Expand your Connecticut loan checklist to include checks for existing Transfer Act status, institutional controls, DEEP release records, and underground storage tank (UST) program status (UST releases stay under UST rules but must meet cleanup standards).
• Where diligence activities may discover a release, establish in writing which party will report and manage the response so that RBCP deadlines are not missed while moving toward closing.
• Train credit, special assets, and closing counsel: Provide your lending teams with RBCP training on:

• What counts as “discovery” (e.g., lab results, NAPL observations, multiple lines of evidence—not just reading old data),
• What constitutes a Significant Existing Release, and
• When Immediate Actions are required.

Also share the PEP vs. LEP roles and which closures require verification (LEP) versus certification (PEP).

• Track deals in your pipeline: Make sure to segregate all pending deals into two buckets:
• Deals closing on/after March 1, 2026 require no Transfer Act forms, but RBCP applies to any discovered release.
• Deals closing before March 1, 2026 may still require Transfer Act filings—be sure to coordinate early with counsel and consultants.
• Adjust timelines for Brownfield and redevelopment lending: RBCP’s “clean up within a year” incentive can pull forward response actions that formerly lingered until sale; build this into construction draws and covenants.

Begin now to ensure a clean transition to release-based cleanup requirements

Bottom line, with the pending transition to release-based cleanup requirements, Connecticut lenders can anticipate smoother closings without the burden of Transfer Act forms. However, this does usher in an era of additional operational risk if a release is discovered.

Start now updating all lending policies, documents, and training programs so borrowers can better understand their reporting and cleanup obligations, ensuring you can protect collateral and loan performance under RBCP.

Above all, use this opportunity to shore up your environmental due diligence processes and procedures as proactive risk management. It’s important to remember that lenders’ internal standards are replacing the state’s transaction trigger—now is no time to drop your guard.

Your environmental risk management experts at ORMS are ready to help ease you through this complex regulatory transition. Just give us a call!

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 [DE1]The industry drives the due diligence typically…all other states conduct environmental due diligence for the buyer typically…the state doesn’t mandate it anywhere else.