Generally, a purchaser will be unable negotiate a hold back for a portion of the purchase price on the closing date. For example, suppose that you, as purchaser, are taking possession of your new house today and you find that the dishwasher does not work, the front window is now broken or a giant stain has appeared in the carpet. You assume that these things have happened recently because you didn’t notice them when you were last through the house. Your real estate inspector didn’t make note of those things when he was in the house to prepare his report. What now?
You go to your lawyer and ask him to hold back some monies to repair the damages. You know that if your lawyer doesn’t hold those monies back now, you’ll have a hard time collecting them later.
However, your lawyer tells you that there will be no hold backs allowed unless the real estate purchase contract specifically allows you to hold back money.
When you entered into the real estate purchase agreement you didn’t think to negotiate a term allowing you to hold back a reasonable sum of money to repair deficiencies noted at the possession date. Perhaps you’ll want to think about that and discuss the matter with your realtor when you are negotiating a purchase contract.
Photo courtesy of Flickr and David365