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What does 'Retention' mean?

Retention

The use of a retention is often to allow exchange of contracts or even the completion of a sale (so the buyer can move in) when there are still matters outstanding. The retention funds are usually held by a solicitor.

Example One: The property is a flat and the seller owes some service charge payments but it is not clear how much as the managing agents books are out of date. The seller agrees that £5,000 should be held in retention to clear these debts when they are clarified. The balance - any amount left from the £5,000 - is then given to the seller.

Example Two: In a survey it is suggested that the roof of a house must be replaced but due to the unusual nature of the structure quotes from builders vary and none of the builders are prepared to guarantee their quotes. £50,000 is held in retention until the work is carried out by the buyer (after they move in). Any funds left over are then forwarded to the seller.

Search Results for 'retention' in How to Really Buy a Property

Chapter 17: The Property Buying Process in Theory

"...The surveyor may decide that the property is worth the money you are prepared to pay as long as he can be sure that a certain issue is not going to be a major problem. He may, for example, believe the roof is at the end of its natural life and will need to be replaced. This could cost over £10,000 and may affect the property value. He will therefore place a retention on the value. This may say, "I agree the property is worth £250,000 once the roof has been checked. Until this has been done I am not convinced the property is worth more than £230,000" ..."

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Chapter 20: What a Property Survey Really Means

"... types of survey and which ones are worth the cost; Why surveyors should never estimate the cost of potential works; Why retentions don't suggest the cost of repairs; The difference between rising damp and penetrating damp; How to check more than a structural survey covers and pay..."

"... on flats generally annoys the vendor who knows they can probably sell to someone else a little less awkward or a little less naive. - retentions in a Survey - If the surveyor, carrying out any of the above surveys, believes the property is worth the price you have agreed to pay for it all is..."

"...The retention can be a small amount or the total price agreed (usually in the case of suspected subsidence or other major structural issues). The best way to deal with them is as described in the remainder of this chapter. Take them in your stride, in most cases the issue is much smaller than the surveyor believes and retentions are removed after investigation of the issue. ..."

"...Sarah and Nicki had successfully offered on a two bedroom lower ground floor garden flat just off Islington Green in London. They had seen no end of properties and although this one was above their original budget they stretched to afford it. They then cut costs by going with a lender that had the lowest fees. The surveyor that looked at the property was a self employed individual who agreed that the property was worth £240,000 (their offer) but said £5,000 should be held back as a retention because of damp in the property. ..."

Search Results for 'retention' in Property FAQ

My surveyor has put a retention on the property value

Search Results for 'retention' in Property Terminology

Retention