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An escrow holdback is basically a term that describes the order to stop the release of funds from an escrow account to a party who was supposed to receive it.
In real estate transactions, an escrow account is usually used by a third party to hold funds for the transaction.
The funds contained in the account would designate the receivers and how much who would receive upon the satisfaction of certain milestones of conditions.
When for one reason or another, a buyer finds good reason to justify holding onto funds in the account rather than release them, an escrow holdback can be ordered.
This most often occurs when a home seller has failed to satisfy promises to repair the property before closing, or when contractors fail to adequately repair certain damages in a satisfactory manner.
The majority of lenders are against escrow holdbacks due to regulatory reasons.
However, it is up to the escrow service provider via the order of the buyer, whether to do so.
Do note that if a would-be receiver find that a holdback is unreasonable, both the buyer and escrow company can be taken to court for the release of the funds.
To ensure that one does not fall on the wrong side of the law home buyers can actually request for escrow holdback agreements with the parties they are dealing with.
And when the terms of that agreement are breached, the buyer will then have the legal to call a holdback.