- An amount of money withheld by the lender during the progress of construction of a house to ensure that construction is satisfactory at every stage. The amount of hold-back is generally equivalent to the estimated cost to complete construction.
Related Terms and Acronyms
- Construction Budget — Definition,
- Money that the builder sets aside for building a structure.
- Construction Loan — Definition,
- A short-term interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
- Construction to Permanent Loan — Definition,
- A loan that finances the construction, then for a long-term, traditional mortgage, as distinct from a construction loan followed by a separate mortgage loan.
- Lien Holdback — Definition,
- The practice of mortgagees withholding up to 15% of mortgage monies advanced on new construction.
- Quantum Meruit — Definition,
- Used in contract law it means "reasonable value of services."