A winter new-construction closing can still fund with unfinished sod, landscaping, or exterior paint if the lender allows a completion escrow, the work fits that program's rules, and local rules allow occupancy. The held amount, deadline, and completion proof come from lender and settlement documents, not a verbal builder promise. Confirm the written escrow agreement before you wire.
Winter weather can push sod, landscaping, driveways, and exterior paint past a builder's settlement date.
A completion escrow is 1 funding path. It isn't the same job as a tax escrow, a closing credit, or a punch list with no money held.
This guide covers completion escrows on Richmond-area new construction. It isn't a resale repair-holdback explainer, and it isn't the full punch-list or delay guide. Confirm every figure with the lender and closing attorney on the file.
What's a completion escrow holdback on a new build?
A completion escrow holdback is money withheld at settlement, often from seller or builder proceeds, until listed unfinished items are completed and verified. The lender sets up the escrow, and the agreement says who holds the funds and how they're released.
It isn't:
- A tax or insurance escrow on the Closing Disclosure, which funds ongoing taxes and homeowners insurance after closing. See our new-construction closing-costs guide for that cash-to-close job.
- A closing-cost credit or price reduction, which changes cash or price now and doesn't by itself finish the work.
- A punch-list promise with no funds held. A punch list documents incomplete items. It isn't automatically an escrow.
On a financed purchase, the builder or seller, the buyer, and the buyer's lender usually all have to agree. A cash purchase removes the lender gate, but occupancy rules and the written contract still apply. Don't assume every builder uses holdbacks.
When does unfinished exterior work still allow closing?
A lender holdback doesn't replace a certificate of occupancy or a temporary certificate of occupancy when the locality requires it.
Under 13VAC5-63-160, a certificate of occupancy is generally required before occupancy, with listed exceptions. A temporary certificate of occupancy may be issued before full completion if the portion to be occupied can be used safely without endangering life or public safety. After final inspection approval, the building official issues the CO within 5 working days when the structure complies.
Local practice differs. Confirm with the county building department on the file:
| Locality | As of November 9, 2026 | Caution |
|---|---|---|
| Henrico | Temporary C/O application through Build Henrico. Fee $25.00 plus $0.50 state levy equals $25.50. Not guaranteed. Life-safety issues can block approval. Fee isn't refunded if denied. | See the Henrico temporary C/O page. |
| Chesterfield | Residential Temporary COs may be granted at the inspection supervisor's discretion. Fee $57.00 for initial issuance and each extension (residential fee schedule 7/1/2026 to 6/30/2027). Builder and buyer Environmental Engineering TCO request forms are used when final grading and stabilization aren't done. Rough grading plus all-weather access (driveway or sidewalk) must be completed first. A TCO recommended on those forms is valid for 90 days. | In Chesterfield, a driveway or sidewalk has to be in place before Environmental Engineering will recommend a TCO. |
| Hanover | Building Inspections fee schedule lists Temporary Certificate of Occupancy at $52.50, and each extension at $52.50. | Fee schedule only. Confirm process with Hanover Building Inspections. |
| Goochland | Residential permit fee sheet lists Temporary Certificate of Occupancy at $100.00. Residential inspection requirements say a Certificate of Occupancy is issued within 2 business days of an approved final inspection. | Confirm current residential practice with Goochland Building Inspection. |
County occupancy approval and lender funding can fail independently.
What do Fannie Mae and Freddie Mac allow on postponed new-construction items?
Lender overlays can be stricter than the investor guides.
| Topic | Fannie Mae Selling Guide B4-1.2-05 | Freddie Mac Guide 5601.3 |
|---|---|---|
| Completion window | Postponed improvements must be completed within 180 days of the note date | Incomplete items or repairs must be completed no more than 365 days after the Note Date (extended from 180 days in Bulletin 2025-15) |
| Cost cap | Cost of completing improvements must not represent more than 10% of the "as completed" appraised value | Cost to complete must not exceed 10% of the "as completed" value (or, with a PDR, 10% of purchase price or estimated value, as applicable) |
| Escrow amount | Withhold 120% of the estimated cost, unless the contractor or builder offers a guaranteed fixed-price contract, in which case the escrow equals the full contract price | The lender must set up a completion escrow account, and the lender and borrower sign a written escrow agreement. Freddie's Guide doesn't publish a withhold multiplier. Confirm the escrow amount with your lender under the Guide and overlays. |
| Other gates | Items must be part of the sales contract (third-party contracts not permissible), postponed for a valid reason such as inclement weather or a shortage of building materials, and must not affect the ability to obtain an occupancy permit | Incomplete improvements must not be consistent with a C6 condition rating. Bulletin 2026-7 clarified newly built and existing site-built eligibility under 5601.3. |
| Completion proof | Form 1004D or an acceptable completion alternative | Verification of completion under Guide Section 5605.9 |
Primary pages: Fannie Mae B4-1.2-05 (page label 12/10/2025) and Freddie Mac Guide 5601.3 with Bulletins 2025-15 and 2026-7. Call the loan officer with the unfinished-item list and cost estimate first. An appraisal made "subject to" completion is different from a low-appraisal price dispute. See our low-appraisal new-construction guide.
What about FHA, VA, and USDA loans?
FHA / HUD Handbook 4000.1 (Update 18, Last Revised 8/12/2026). The mortgagee may establish a repair escrow for incomplete construction, or for alterations and repairs that can't be completed before closing, if the housing is habitable and safe for occupancy at closing. Funds must be sufficient to cover the cost. Borrower labor may not be included. Closing uses form HUD-92300. Completion uses form HUD-92051. After the escrow account is closed, the lender must complete the Escrow Closeout Certification in FHAC within 30 days. Don't paste Fannie's 120% onto an FHA file.
VA Pamphlet 26-7, Chapter 9, Topic 10 (change date July 30, 2019), KnowVA Chapter 9. Examples include walkways, driveways, retaining walls, exterior painting, landscaping, and garages. An escrow withholds 1.5 times a third-party cost estimate from seller proceeds and releases funds when the work is completed. Conditions include a dwelling suitable for immediate occupancy, postponement beyond builder or seller control, a duration that isn't unreasonable (usually 90 to 120 days), and escrow of at least 1.5 times the estimate. Lenders aren't required to escrow when incomplete work is limited to landscaping due to weather, the estimate isn't greater than $2,500, and there's adequate assurance of timely completion (usually 90 to 120 days). Forms include VA Form 26-1849 and VA Form 26-1839, or permitted lender certification plus Veteran satisfaction language for minor non-structural work.
USDA / 7 CFR 3555.202(c). This paragraph doesn't apply to combination construction-and-permanent loans under 3555.101(c). If a dwelling is complete except for interior or exterior development work, Rural Development may issue the Loan Note Guarantee when incomplete work doesn't affect habitability or health and safety, remaining work cost isn't greater than 10% of the final loan amount, an escrow is funded at least at 100% of completion cost (and may be higher if the lender determines it's needed), and the builder or licensed contractor contracts to finish within 180 days of loan closing. Release funds only after a final inspection report acknowledged by the borrower. A narrow borrower self-completion waiver exists for existing dwellings under stated conditions. Don't stretch that waiver onto a production-builder sale without reading the regulation.
How does the holdback usually work at the settlement table?
- Get a cost estimate from a party the lender accepts (builder fixed-price completion contract, third-party estimate, or appraiser cost-to-complete).
- Set the escrow amount from the program rules above and any lender overlays. Prefer a builder guaranteed fixed-price completion commitment when Fannie's fixed-price alternative would use 100% of the contract price instead of the 120% cushion, but only if the lender accepts it.
- Sign a written escrow agreement that lists unfinished work, the dollar amount, who holds funds, the completion deadline, who inspects, how funds release, what happens to excess funds, and what happens if work is late or incomplete.
- Plan completion proof by channel: Form 1004D or a Fannie-allowed alternative, Freddie verification under 5605.9, HUD-92051, VA Form 26-1839 or permitted lender and Veteran certification, or a USDA final inspection acknowledged by the borrower.
- Ask the settlement agent how title will treat postponed items. Unfinished work can create mechanic's lien exposure. Fannie requires a clean final title picture or endorsement protecting lien priority.
Certificate of occupancy timing can also affect later tax bills. See our new-construction property-tax guide.
What should you put in writing with the builder before a winter closing?
Ask before relying on a holdback:
- Exactly which items will remain unfinished at settlement?
- Is each unfinished item listed in the sales contract, specs, or change orders the lender will see?
- Will the builder sign a guaranteed fixed-price completion agreement with a calendar deadline?
- Who pays if costs overrun the escrow?
- Who schedules and pays for the completion inspection, 1004D, or compliance report?
- What happens to unused escrow funds?
- How does unfinished work intersect with the builder's limited warranty and later warranty visit? See our builder warranties comparison.
- If the lender refuses a holdback, what are the written options: move the closing, finish the work first, or another contract remedy? See our Bon Air builder-contract guide. Don't invent statutory refunds.
- Representation: builders may offer compensation to a buyer's agent, but whether any compensation is offered, how much, and who pays depends on the builder and the contract. Confirm it in writing. Representation isn't automatically free.
Start with the new-construction buyer checklist. Preferred-lender package questions belong in our builder preferred-lender comparison.
Holdback vs credit vs delayed closing vs punch list
| Path | What it does | What it doesn't do |
|---|---|---|
| Completion escrow holdback | Parks funds to finish listed work after closing | Replace occupancy approval or guarantee every unfinished item qualifies |
| Credit or price change | Changes cash or price now | Finish the work by itself |
| Delayed closing | May be required if the lender or locality won't allow funding or occupancy with items open | Clear unfinished work without a new schedule |
| Punch list | Documents incomplete or deficient items | Automatically create an escrow |
The options above cover how unfinished exterior items get documented and funded. If a holdback is refused, moving the closing date can be the clean alternative.
For help reviewing an unfinished-item list before a winter builder settlement, book a consultation with Daniel Yoon, REALTOR®, eXp Realty.
Frequently asked questions
Can you close on a new construction home if the landscaping isn't finished?
Yes, sometimes. A lender may allow a completion escrow when unfinished landscaping fits the loan program's postponed-improvement rules and the home can be occupied under local building rules. A holdback isn't automatic. Get the unfinished list, cost estimate, and written escrow terms from the lender and settlement agent before relying on it.
How much money is held in an escrow holdback on a new build?
It depends on the loan. Fannie Mae requires 120% of the estimated cost, or 100% of a guaranteed fixed-price contract. Freddie requires escrow under Guide 5601.3 without a published withhold multiplier. Confirm the amount with your lender. FHA needs funds sufficient to cover cost. VA requires at least 1.5 times a third-party estimate. USDA needs at least 100% of cost.
How long do you have to finish postponed improvements after closing?
Deadlines differ by investor. Fannie Mae generally requires postponed improvements within 180 days of the note date. Freddie Mac allows up to 365 days after the Note Date under Guide 5601.3 after Bulletin 2025-15. USDA points to completion within 180 days of loan closing. VA often cites 90 to 120 days. Confirm the written escrow deadline on the file.
What's the difference between a tax escrow and a completion escrow holdback?
A tax or insurance escrow on the Closing Disclosure funds ongoing property taxes and homeowners insurance after closing. A completion escrow holdback parks funds to finish listed unfinished work after settlement. They solve different problems. See our new-construction closing-costs guide for cash-to-close budgeting, and keep completion holdback terms in a separate written escrow agreement.
Do FHA, VA, and USDA loans allow escrow holdbacks for unfinished exterior work?
Yes, when each program's own rules are met. FHA requires the housing to be habitable and safe at closing. VA may escrow unfinished exterior items when the dwelling is suitable for occupancy. USDA allows escrow for remaining work that doesn't affect habitability or health and safety. Don't paste 1 program's percentage onto another file.
Do I need a temporary certificate of occupancy to close on a Richmond-area new build in winter?
Maybe. Virginia's building code allows a temporary certificate of occupancy when the portion to be occupied can be used safely. Local fees and practices differ across Henrico, Chesterfield, Hanover, and Goochland. A temporary CO doesn't by itself force a lender to fund unfinished work. Confirm both the county building department and the lender on the same unfinished-item list.
Compare written escrow terms, occupancy status, and completion proof before wiring. We can help organize the unfinished-item questions. Book a pre-closing consultation with Daniel Yoon, REALTOR®, eXp Realty.
Educational information only, not legal, tax, or lending advice. Confirm every program rule, escrow amount, deadline, and occupancy requirement with your lender and closing attorney on the specific file. Building officials decide certificates of occupancy. Terms depend on the signed documents and investor overlays.