What is a holdback and when is it used?
Quick Answer
Short answer: A holdback is money retained by lawyers after closing to ensure completion of repairs or receipt of missing documents.
Detailed Explanation
If the seller hasn't finished agreed-upon work (e.g., shingle replacement) or hasn't produced a compliant RPR, parties may negotiate a monetary holdback—often 1.5× the estimated cost—kept in trust until proof is supplied. If obligations aren't met by a set date, funds are released to the buyer to complete the task.
Holdbacks are common on new-construction walk-through deficiencies and rural water-well tests.
- Amount and conditions must be clearly documented
- Deadline for completion typically 30-60 days
- Mutual consent required to release funds early
Disclaimer: This page is for general information only and does not constitute legal, financial, or real estate advice. Always verify details with a licensed Alberta REALTOR®, mortgage professional, or lawyer before making decisions. Buy in Edmonton assumes no liability for actions taken based on this content.
Tim Grover, RE/MAX Excellence • 780-288-5144 • 5607 199 Street NW, Edmonton, AB
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