Draw schedules and progress payments on a home renovation, done right

A homeowner in the Lower Valley once told us she had paid her contractor 60 percent of the contract before the demolition dumpster ever showed up. By the time the framing was supposed to start, the contractor had gone quiet, and she was holding a half-finished kitchen and a receipt for money she could not get back. The work was worth maybe a fifth of what she had already paid.

That is the failure that good draw schedules exist to prevent. The money you pay should always stay a step behind the work that is finished, never a step ahead. Get that one relationship right and most of the ways a remodel goes financially sideways simply close off.

Here is how draws and progress payments should work on an El Paso home renovation.

The deposit, and what it should actually cover

A deposit is not the contractor's payday. It is working capital to order materials and get crews mobilized. On a typical El Paso renovation, a fair deposit runs 10 to 20 percent of the contract value.

If you are doing a kitchen or bath with long-lead items, your contractor may ask for a separate material deposit on top of that. Custom cabinets, special-order windows, and quartz all get ordered weeks ahead, and the supplier wants money before fabrication. That is legitimate, as long as it is itemized and tied to a specific purchase order, not a vague lump.

What is not normal is a contractor asking for 40 or 50 percent before any work happens. At that point you are funding their cash flow, possibly to finish someone else's job. A contractor who needs half your project's money to start is telling you they do not have the working capital to run your job safely.

Tie every draw to a finished milestone

The heart of a clean draw schedule is simple. Each payment is attached to a specific, completed, verifiable milestone. Not a date on a calendar. Not "good progress." A finished thing you can stand in front of.

On a mid-size El Paso remodel, a draw schedule might look like this:

1. Deposit at signing, for mobilization and initial material orders
2. Draw at demolition complete and debris hauled
3. Draw at rough-in complete, with plumbing, electrical, and mechanical inspected and passed
4. Draw at drywall hung and finished
5. Draw at cabinets, tile, and fixtures set
6. Final payment at substantial completion and final inspection, after your walk-through punch list

The exact milestones change with the job. The principle does not. You pay for work that is already in place and verifiable, and the amount of each draw should roughly match the value of the work that milestone represents.

Watch for front-loaded schedules. If the first two draws add up to 70 percent of the contract but the work they cover is closer to 40 percent of the job, the schedule is engineered to get money out ahead of value. That is the same trap as a too-big deposit, just spread across two payments.

Why "never pay ahead" is the whole game

Keep the money paid slightly behind the work completed and the contractor always has a financial reason to come back tomorrow. The unpaid balance is your leverage. It is the thing that keeps a job moving when the contractor gets busy or distracted.

Flip that relationship and everything changes. The moment you have paid for work that does not exist yet, the contractor's incentive to finish quietly disappears. If they hit a cash crunch on another project, the job they slow down is the one where they already have your money. You are no longer holding payment. You are chasing it.

This is why the demand to "pay for the next phase so I can order materials" deserves a hard look. Materials get ordered against the deposit and the material allowance you already funded. A request to jump ahead of the milestones usually means the money from a prior phase is already gone somewhere else.

Verify before you release

Before you release any draw, confirm the milestone is genuinely complete. For inspected phases, that means the actual inspection passed, not "the inspector is coming Thursday."

In El Paso and across Texas, rough-in plumbing, electrical, and mechanical all require permitted inspections before they get covered up. Those inspections are your free, third-party confirmation that the work behind the wall is right. Tie your rough-in draw to the passed inspection, not to the day the wires went in. Same for framing where a permit requires it.

A quick walk with your contractor at each milestone is reasonable and normal. Any contractor who resists you confirming that a milestone is done before you pay for it is showing you something about how the rest of the job will go.

Lien waivers protect the home you are paying for

This is the part most homeowners have never heard of, and it is the one that bites hardest.

In Texas, a subcontractor or material supplier who does not get paid can file a mechanic's lien against your house, even if you already paid your general contractor in full. If your contractor took your drywall draw and never paid the drywall sub, that sub can come after your property. You can end up paying twice for the same work.

The protection is a lien waiver. Before you release each draw, ask for signed lien waivers from the subcontractors and suppliers covered by the previous payment. A conditional waiver is signed in exchange for a payment that is about to clear. An unconditional waiver confirms the payment was received. On a renovation, collecting waivers as you go gives you a paper trail proving the money reached the people who actually did the work.

A contractor running a clean operation will not blink at this. They are already collecting waivers from their subs as a normal part of business. If asking for lien waivers makes a contractor defensive, that reaction is information.

A few more habits that protect you

• Pay by check or traceable transfer, never cash. You want a record of every dollar.
• Keep your own simple running tally: total contract, amount paid to date, percent of work complete. If paid ever races ahead of complete, stop and ask why.
• Hold the final payment until your punch list is genuinely closed. The final draw is the last leverage you have, so do not give it up for a job that is 95 percent done.
• Put the whole draw schedule in the contract before work starts. A schedule negotiated mid-project, under pressure, never favors the homeowner.

None of this requires distrust. A good contractor wants the same clean structure you do, because it protects them too. It documents exactly what was owed and when, and it keeps an honest job from drifting into a he-said-she-said over money. The draw schedule is not a sign you expect a problem. It is the thing that keeps a problem from ever needing a referee.

If you are partway into a renovation and the payment side feels off, or you are about to sign a contract and want a second set of eyes on the draw schedule before you commit, the form on the residential side of our site reaches us. We are happy to read it over with you. There is no charge for the conversation, whether you end up building with us or not.