Neufeld Legal describes a holdback as money controlled by the buyer, and escrow as money held by a third-party agent. In its explanation, release follows joint written instructions or the escrow agreement’s terms.
The SEC-filed Alumicor share-purchase document dated November 5, 2013 includes a Form of Escrow Agreement. Under that form, a properly notified claim and timely written objection stating its basis can keep the disputed amount reserved; retention does not establish the buyer’s eventual payment.
Consider a fictional arrangement with one assumed release point: no earlier payouts, interest, fees, other claims or other release conditions. Assume the entire C$40,000 claim is properly notified and fully disputed in time, with all process requirements met.
Of C$100,000 held at that point, C$40,000 stays reserved and C$60,000 goes to the seller. Later, the escrow agent receives a valid joint written direction from the buyer and sellers’ agent settling the claim and authorizing C$25,000 to the buyer and C$15,000 to the seller. Seller releases total C$75,000.
In your agreement, what keeps money reserved, and what instruction authorizes its release?