Sometimes a purchase completes with part of the money still sitting in a lawyer's trust account. That arrangement is a holdback, and it exists for the situation where something agreed has not been done by the completion date.
What a holdback does
Normally the purchase funds go to the seller at completion and the transaction is finished.
A holdback keeps an agreed amount in trust instead. You take possession and the money waits until some specified event happens, usually a repair being finished or a person moving out. When the event happens, the funds are released to the seller. If it does not, the agreement says what occurs next.
The mechanism sounds simple. Almost all of the difficulty is in the drafting.
When buyers ask for one
The common trigger is the final walkthrough.
Something the seller agreed to repair has not been repaired. A tenant who was supposed to vacate is still there. Damage appeared during the move-out that nobody has time to address before the closing date. Our final walkthrough guide covers what to look at and when, and it is worth doing properly for exactly this reason.
Finding the problem two days before completion gives everyone room to arrange something. Finding it two hours before gives you a rushed conversation on a deadline.
You cannot impose one
This is the part that surprises buyers. A holdback requires the seller's agreement.
A buyer who announces on completion morning that they are withholding funds is not exercising a right. They are asking for a contract amendment from a seller who may have their own purchase closing the same day and who needs the money to fund it. That seller has no obligation to agree, and a delayed completion carries its own consequences.
So raise it as early as the problem is visible, through your agent and your lawyer, with a specific proposal rather than a general complaint.
What the agreement has to contain
A vague holdback is worse than none, because you end up holding money and arguing.
Five things need to be explicit. The amount. The exact event that releases the funds. Who decides whether that event has happened. A deadline. And what occurs if the deadline passes without the event.
"Released when the repair is completed" fails on three of those. Completed by whose assessment? By when? And then what? Compare that with an agreement naming a dollar figure, a named contractor's invoice as proof, a date, and a default that returns the money to the buyer. The second one resolves itself. The first one becomes a dispute.
Tell your lender and your lawyer early
Your lender is advancing money against this purchase. The conveyancing has a structure, and inserting a trust holdback into it is a change.
Your lawyer or notary is the one who holds the funds and who has to be able to act on the agreement. Our notary versus lawyer guide covers who does what at a BC closing. Your mortgage broker should know too, because the lender may have a view.
None of these people appreciate learning about a holdback on the day. Our closing day guide walks through how tight that day already is.
This is not a builders lien holdback
The words overlap and the concepts do not.
A builders lien holdback is a statutory requirement under BC's Builders Lien Act that applies in certain construction situations, and our builders lien guide covers what a buyer of a new home needs to know about it.
A completion holdback in a resale transaction is a negotiated term between two parties. No statute requires it and no statute governs how it works. What governs it is the document you sign.
The simpler alternative
Often the better answer is a price reduction.
If the problem can be priced, reducing the purchase price by that amount settles it at closing. Nobody has to verify work afterwards, nobody has to police a deadline, and no money sits in trust generating questions.
In our experience this is what both sides usually prefer once the option is on the table. A holdback makes sense when the thing genuinely cannot be priced yet, or when the event is a person vacating rather than a repair being done. For a known repair with a known cost, a reduction is cleaner and it ends the matter.
We are agents rather than lawyers, and none of this is legal advice. Your lawyer or notary drafts and holds the funds, and they are the right person to advise on whether a holdback suits your situation.
Key takeaways
- A holdback keeps part of the purchase price in trust after completion, pending an agreed event.
- It requires the seller's agreement. A buyer cannot impose one on completion day.
- The agreement needs an amount, a specific release event, a decision-maker, a deadline, and a default.
- Tell your lender, lawyer, and broker before completion rather than on the day.
- A price reduction is usually cleaner when the problem is a known repair with a known cost.
Frequently Asked Questions
What is a holdback at completion?
A holdback at completion is an arrangement where part of the purchase price stays in a lawyer's or notary's trust account after closing instead of going to the seller, pending some agreed event such as a repair being finished or a tenant moving out. You take possession and the money waits until the event happens, at which point the funds release to the seller. If the event does not happen by the agreed deadline, the holdback agreement sets out what occurs next. It requires the seller's agreement and cannot be imposed by the buyer alone.
When would a buyer ask for one?
A buyer usually asks for a completion holdback when something agreed was not done by completion. Common triggers are a repair the seller promised that is not finished, a tenant who was supposed to vacate but has not moved out, or damage found at the final walkthrough that nobody has time to address before the closing date. Finding the problem two days before completion gives everyone room to arrange a holdback or another fix. Finding it two hours before gives you a rushed conversation on a deadline instead.
Can I just demand a holdback on completion day?
No. A completion holdback needs the seller's agreement, and the terms need to be in writing before it takes effect. A buyer who announces on completion morning that they are withholding funds is asking for a contract amendment from a seller who may have their own purchase closing the same day and needs the money to fund it. That seller has no obligation to agree, and raising it that late is how closings get delayed. Raise a specific proposal as soon as the problem becomes visible.
Who holds the money?
Typically the lawyer or notary handling the conveyancing holds the holdback funds in trust rather than the buyer or the seller directly. The holdback agreement sets out what the trust holder can and cannot do with the money, including when it releases to the seller and what happens if the triggering event never occurs. Your lawyer or notary needs to know about a planned holdback early, since they are the one who has to be able to act on the agreement once completion happens.
What has to be in the agreement?
A completion holdback agreement needs five things spelled out explicitly: the amount held back, exactly what event releases the funds, who decides whether that event has happened, a deadline, and what happens if the deadline passes without the event occurring. A phrase like "released when the repair is completed" fails on most of those points, since it does not say who judges completion, by when, or what happens next. Vague release conditions are where holdbacks go wrong and where buyers end up holding money and arguing about it.
Is a holdback the same as a builders lien holdback?
No, they are different tools despite the shared name. A builders lien holdback is a statutory requirement under BC's Builders Lien Act that applies in certain construction situations, and no negotiation is involved since the statute governs it directly. A completion holdback in a resale transaction is a negotiated term between a buyer and a seller, with no statute requiring it or governing how it works. What governs a completion holdback is entirely the document the two parties sign.
Will my lender allow a holdback?
Ask early, since your lender is advancing funds against this purchase and the conveyancing has a structure that a trust holdback changes. Your mortgage broker should know about a planned holdback because the lender may have a view on it, and your lawyer or notary needs to know because they are the one who holds the funds and has to be able to act on the agreement. None of these people appreciate learning about a holdback on completion day itself, so raise it as soon as the underlying issue appears.
What if the seller never does the work?
That is exactly what the deadline and default terms in a completion holdback agreement are for. A well-drafted agreement names a deadline and states what happens to the held funds if that deadline passes without the work being done, often returning the money to the buyer. Without those terms spelled out, you may end up simply holding money and arguing with the seller about whether the work still needs to happen, which is a worse position than it sounds. This is why a vague holdback is worse than none.
Is a price reduction simpler than a holdback?
Often, yes. If the problem behind a proposed holdback can be priced, reducing the purchase price by that amount settles it at closing instead of leaving a completion holdback to administer afterward. Nobody has to verify work later, nobody has to police a deadline, and no money sits in trust generating questions. In our experience this is the option both sides usually prefer once it is on the table, particularly for a known repair with a known cost rather than an open-ended issue.
Do I still need my final walkthrough?
Yes, and it matters more when a holdback might be part of your closing. The walkthrough is when you find the issues a holdback might address, whether that is an unfinished repair, a tenant still in place, or damage from the seller's move. Finding an issue a day before completion gives everyone, your agent, your lawyer, and the seller's side, more room to arrange something workable than finding it an hour before keys change hands. Do it properly rather than treating it as a formality.
Sources
Verified September 12, 2026. General information only, not legal advice. Your lawyer or notary drafts and holds completion funds. Consult them about a specific transaction.
Related FRIVE guides
- Final walkthrough, where holdback conversations usually start
- Builders lien holdbacks, the statutory version and how it differs
- Closing day, how tight the day already is
- Notary vs lawyer, who holds the funds
- Closing a home purchase, the full sequence
Next Steps: Work with FRIVE
If your walkthrough turns up something unfinished, the useful move is a specific proposal early rather than a general objection on completion morning.
Start a conversation with the FRIVE team and we will help you frame it, or browse current Fraser Valley listings.
Sources
- Builders Lien Act, BC Laws
Related guides
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