No, they do not have the right to withhold any of your money, require an escrow, or require you to upgrade or pay for a system at this time. Once they close on the house, they buy it in the shape or condition it is in at that time; they cannot, after closing, insist on a credit, payment, escrow, changes, etc. If they refuse to give you the money, you can sue them for it, for breach of contract (for violating their obligation to pay for the house, once you turn it over to them)--even a code violation (assuming, for the sakeof argument, that there is a violation) allows this, since by closing after doing a walk through, they took the house subject to that violation.The only exception to the above: if there was a problem which *couldn't* be perceived pre-closing (not merely that they did not happen to perceive it, but it was hidden in some fashion, so they could not reasonably have been able to perceive it, often called a "latent" defect) *and* you knew of the issue, but knowing of it, intentionally misrepresented (e.g. lied about or hid) the problem, that may be fraud; and fraud would give them grounds to recover money from you.