Property Management
What is a 'holdback' in a property management context and when is it used?
AA. Amounts withheld from the seller's proceeds at closing for repairs
BB. A portion of contractor payment retained until the work is verified complete and satisfactory✓ Correct
CC. Security deposit funds held back at the end of tenancy
DD. Commission withheld from an agent pending dispute resolution
Explanation
A holdback is a portion of a contractor's payment withheld until work is completed to satisfaction or until a warranty period passes. Property managers use holdbacks to ensure contractors complete work properly and to protect the property owner if defects are discovered after initial payment. It is standard practice for major renovation contracts.
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