In the event that there are deficiencies with the property you are buying or selling, and such deficiencies are not rectified as at the possession or closing date, then the lawyers will need to consider a holdback of a certain amount of funds until the matter is resolved. This is one of the most contentious issues between lawyers on possession date. In order to avoid this issue from arising, it is ALWAYS advisable that a specific amount to be held back is referenced in the Purchase/Sale Agreement, along with the party who will be holding such funds in trust (buyer or seller’s lawyer), as well as an indication of when the funds would be released back to the buyer should the seller fail to comply.
For example, if the seller promises to obtain a deck permit before the closing date but doesn’t, how much funds should be held back from the seller until he or she does what they contracted to do? The buyer’s lawyer will ask for a lot of money while the seller’s lawyer will want to minimize the amount being held back. The best way to resolve this issue is to ensure that the Purchase and Sale Agreement specifies the amount of money to be held back until such deficiencies are rectified. This is also why it is imperative to have issues rectified before the closing or possession date. You are urged to contact one of our Edmonton Real Estate lawyers prior to executing the offer to purchase or sell. We would be happy to walk you through the process.
Holdbacks due to deficiencies are often the result of eager buyers and sellers, or even their realtors, to ‘get the deal done’ without thinking about the repercussions and about the warranties and representations each party has made and is required to commit to prior to the closing date.
It is always advisable to contact your Alberta Real Estate Lawyer at the Edmonton Law Office and obtain their advice on how to resolve any potential issues before they even arise.