Payment schedules on a custom estate exist to keep money and work in step. When they are built properly the owner never pays for something that has not been verified, and the builder is never funding the project out of its own working capital. Both failures are expensive, and both are avoidable in drafting.
Key takeaways
- How should the schedule be structured?
Payment schedules on a South Florida custom estate are structured against a schedule of values that mirrors the scope exhibit, released on verified progress rather than calendar dates, with retainage withheld and lien waivers collected at each draw. - What is paid before construction starts?
Before construction starts in South Florida you pay design and engineering fees, survey and geotechnical work, permit and impact fees, and long-lead procurement deposits for items with delivery times measured in months. - How should each draw be sized?
Each draw is sized so that the value of completed work always exceeds the money paid. Front-loading, round numbers, and large mobilization payments all break that rule. - What is retainage actually for?
Retainage exists to fund completion if the work stops, and to give the punch list commercial weight at the end.
How should the schedule be structured?
Payment schedules on a South Florida custom estate are structured against a schedule of values that mirrors the scope exhibit, released on verified progress rather than calendar dates, with retainage withheld and lien waivers collected at each draw. Payment schedules tied to dates rather than completed work transfer the owner’s leverage in the first month.
The agreement that carries it is described in construction contracts for high end residential work.
What is paid before construction starts?
Before construction starts in South Florida you pay design and engineering fees, survey and geotechnical work, permit and impact fees, and long-lead procurement deposits for items with delivery times measured in months. These are real costs, and payment schedules should show them as a preconstruction phase rather than folding them into the first draw.
Preconstruction payment schedules carry these costs, listed in soft costs in luxury home construction.
How should each draw be sized?
Each draw is sized so that the value of completed work always exceeds the money paid. Front-loading, round numbers, and large mobilization payments all break that rule. Well-built payment schedules keep the owner marginally ahead of the builder at every point in the job.
The release mechanics, including escrow, are described in escrow milestone payments.
What is retainage actually for?
Retainage exists to fund completion if the work stops, and to give the punch list commercial weight at the end. The contract should state the percentage, whether it reduces at substantial completion, and exactly what must be delivered before final release.
What has to arrive at handover is listed in warranties and guarantees luxury homeowners should demand, and retainage interacts with lien procedure under Chapter 713 of the Florida Statutes.
How do allowances behave?
On a Florida luxury build an allowance is a placeholder for an undecided selection, and it moves the moment the real product is chosen. Test each one against three selections you would actually accept before signing, because payment schedules built on optimistic allowances look affordable and finish otherwise.
The wider pattern that distorts payment schedules is described in luxury construction cost overruns.
How much contingency, and who holds it?
Contingency is held in two separate pots: a construction contingency for unknowns and an owner reserve for upgrades, each with a stated balance reported monthly. The owner should hold the reserve. Merging them makes every upgrade look like an overrun and hides the real position.
Material and market exposure moves payment schedules, and is covered in protecting your build budget from inflation and price spikes.
What changes when a lender is involved?
When a lender is involved, the lender’s inspector and draw cycle set the pace, so the contract schedule and the loan schedule must agree on milestones, documentation, and timing. Payment schedules that ignore the lender’s requirements create gaps the builder funds and eventually charges for.
Cross-border banking arrangements are covered in banking, financing, and wire transfer practices.
How do changes affect the schedule of payments?
Every approved change on a South Florida estate should be added to the schedule of values as its own line, with its own value and its own progress measurement. Absorbing changes into existing lines destroys the audit trail that payment schedules depend on.
The change register that keeps payment schedules straight is described in change order abuse in luxury construction.
How does Kass Construction & Development report it?
Kass Construction & Development reports it monthly, in writing, with a forecast to completion. Kass Construction & Development is a state-licensed (CGC1529472) boutique luxury builder in East Fort Lauderdale led by Mitch Kass, a licensed general contractor and attorney, with 100+ luxury residences delivered by Mitchell Kass and the firms he has led across Broward, Palm Beach, and Miami-Dade, and payment schedules here are reconciled against verified work rather than against the calendar.
A custom build often runs 18 to 36 months and a high-end renovation often 6 to 12 months. Contact Kass Construction & Development or call 954-607-4335.
| Stage | What is paid | What must be verified |
|---|---|---|
| Preconstruction | Design, engineering, survey, permits, long-lead deposits | Documented invoices and procurement records |
| Site and foundation | Clearing, groundwork, foundation | Passed inspections and updated schedule of values |
| Structure and envelope | Framing, roof, windows, waterproofing | Dried in, with product approvals on file |
| Rough-ins | Mechanical, electrical, plumbing, low voltage | Inspections passed before concealment |
| Finishes | Millwork, stone, tile, fittings, equipment | Approved mockups and delivered selections |
| Completion | Retainage release and final payment | Punch closed, permits closed, closeout package delivered |
What does a milestone-based payment schedule look like on a custom estate?
Payment schedules on a custom estate are built from verified milestones rather than calendar dates, and the table below is the shape of a milestone schedule for a South Florida luxury home, with what is verified before each draw is released.
| Draw | Milestone | Verified before release | Documents collected |
|---|---|---|---|
| Deposit | Contract signing | Contract, exhibits, insurance certificates, Notice of Commencement ready | Executed agreement |
| 1 | Mobilization, site work, demolition | Site prepared; permits posted; erosion control in place | Pay application, releases from site contractors |
| 2 | Piles and foundation | Pile logs; cap and grade beam inspections passed; construction-stage elevation certificate | Inspection records, releases |
| 3 | Slab and structure to tie beams | Slab and masonry inspections passed; photographs before cover | Inspection records, releases |
| 4 | Roof structure and dry-in | Roof deck and dry-in inspections; underlayment and flashing photographed | Inspection records, product approvals, releases |
| 5 | Windows, doors and rough-ins | Openings installed per approvals; rough MEP and low-voltage inspections passed; 360-degree capture | Inspection records, releases |
| 6 | Insulation, drywall, exterior finish | Envelope inspections; stucco and waterproofing checked | Inspection records, releases |
| 7 | Interior finishes | Stone, millwork, flooring and fixtures installed to specification; mock-ups matched | Releases; allowance reconciliation |
| 8 | Exterior, pool, landscape, systems | Systems commissioned; pool and site inspections passed | Releases; commissioning records |
| Retainage | Substantial completion and punch list closed | Final inspections, certificate of occupancy, warranties and documents delivered | Final unconditional releases; contractor’s final affidavit |
Lien releases and the owner’s rights at each payment are governed by Chapter 713, Florida Statutes. The escrow version of the same schedule is in escrow and milestone payments, and the contract terms around it in construction contracts for high-end residential builds.
How should contingency be sized and held?
Payment schedules and contingency work together, and the sequence below is how the reserves on a custom estate are sized, held and released so that money and work stay in step.
- Separate the reserves: a design contingency during design, an owner’s construction contingency, a builder’s contingency inside a GMP where one exists, an escalation reserve, and an owner upgrade reserve kept apart from all of them.
- Size each to its risk: larger construction contingency on renovations and waterfront lots; escalation reserve tied to the uncovered packages in protecting your build budget from inflation and material price spikes.
- Write the release rules: unforeseen conditions and documented gaps draw on contingency; owner upgrades draw on the upgrade reserve; builder errors draw on neither.
- Hold the owner’s reserves in the owner’s control, released by signed change order, never as a builder’s float.
- Report the ledger monthly with every draw on each reserve and its cause, alongside the forecast in luxury construction cost overruns.
- Fund the reserves in the cash-flow plan so they exist when needed; international owners should align transfers with the draw calendar, per banking, financing and wire transfer practices.
- Return unspent reserves to the owner at close-out, reconciled with the allowances.
How do allowances, changes and lenders affect the schedule of payments?
Payment schedules are adjusted by allowances, change orders and lender requirements, and the rules below keep those adjustments from breaking the link between money and verified work.
- Allowances are reconciled at the draw in which the item is installed: overages billed with invoices, underages credited, and the ledger reported; the exhibit standard is in construction contract red flags.
- Approved change orders are added to the contract sum and appear as their own lines in the schedule of values, billed as their work is verified; the procedure is in change order abuse.
- Retainage is held on every draw and released against the closed punch list and delivered documents, including the warranties described in warranties and guarantees for luxury homeowners.
- A construction lender adds its own inspector, draw request format and title update at each draw, so the builder’s pay application is prepared to the lender’s standard from the first draw.
- Soft costs and carrying costs sit outside the construction draw schedule and are budgeted separately, per soft costs in luxury home construction.
- Stored materials are paid only with proof of purchase, insurance and secure storage, which supports the early buy-outs that protect price and schedule.
Kass Construction & Development reports the schedule of values, the change log, the allowance ledger and the contingency ledger together each month on projects across Broward, Palm Beach and Miami-Dade, so the owner sees money and work in step at every draw.
Frequently Asked Questions
What is a schedule of values?
A line by line breakdown of the contract price by work item, used to measure progress and to justify each draw. It should match the scope exhibit exactly.
How often are draws submitted?
Monthly is standard on custom homes. What matters more than frequency is that each draw is measured against completed work and supported by lien waivers.
Should I pay for materials stored off site?
Only with proof of purchase, proof of insurance, evidence of segregation and title, and ideally inspection. Otherwise the payment is unsecured.
What is a conditional lien waiver?
A waiver effective only once payment clears. Conditional waivers are exchanged with the draw and unconditional waivers follow once funds have settled.
How much contingency is enough?
Enough that a discovery does not require a decision about the design. The amount depends on document completeness and site risk, and it should be reported monthly.
Can I withhold payment for defective work?
The contract normally allows a proportionate withholding tied to identified items, with notice. Withholding an entire draw without notice usually breaches the agreement.
When is the final payment made?
After punch closure, final inspections and closed permits, delivery of warranties, manuals, and as-builts, and the final lien waivers.
