A construction draw review is the owner-side check performed on a contractor’s payment application before funds are released. It answers one question: does the money being requested match the work actually in place, properly documented, and free of claims that could come back against the property? On a South Florida project, that question carries unusual weight, because Florida’s construction lien statute allows parties you have never met and never hired to assert a claim against your property if they are not paid.
This article is written for owners, developers, investors, and asset managers, not for contractors. It covers what to look at, in what order, and where the decision stops being technical and starts requiring your attorney.
What a Construction Draw Review Actually Is
Most construction contracts pay on a periodic cycle. The contractor submits a payment application — commonly a schedule of values showing each line item, the percentage complete, the amount previously billed, and the amount now due — along with supporting documentation. The owner, or a lender, then approves or adjusts it.
A draw review is not a rubber stamp on that application. It is three separate verifications performed together:
- Documentary — is the paperwork complete, internally consistent, and does it match the contract?
- Physical — is the claimed percentage of completion actually in place on site?
- Legal exposure — has the payment chain been cleared far enough down that paying will not expose the property to a lien?
Skipping one leaves a gap. A draw can be perfectly documented and still overstate progress. Progress can be genuine and the property still exposed, because a second-tier supplier was never paid.
Why Draw Review Matters More to an Owner Than to a Lender
Lender-ordered draw inspections are useful, but they protect the lender’s collateral position, not the owner’s schedule, budget, or quality standard. An inspector confirming that a slab is poured has done the lender’s job. Whether it was poured to specification, whether the building department inspected it, and whether the concrete supplier was paid are the owner’s problems.
The Florida-specific reason to take this seriously is the risk of paying twice. Under section 713.13, Florida Statutes, an owner is generally required to record a Notice of Commencement and post a copy at the job site before improvements begin. A recorded notice is generally not effective more than one year after recording unless a different date is specified, and it becomes void if construction does not begin within 90 days. The statute itself warns owners about improper payments and the risk of paying for the same improvement twice.
That is why the review has to reach past the general contractor and into the tiers below.
The Documents to Review Before You Pay
The payment application and schedule of values
Reconcile the application against the contract, not against the previous application. Check that the schedule of values still totals the current contract sum including approved changes, that no line item has been quietly reallocated, that percentages complete only move forward, and that retainage is calculated at the contracted rate.
Retainage deserves specific attention because owners frequently assume a statutory cap exists where none does. Section 255.078, Florida Statutes allows a public entity to withhold from each progress payment an amount not exceeding 5 percent as retainage, and that section does not apply where the construction services identified in the contract total $200,000 or less. That rule governs public contracts only and sets no standard for private work. On a private project, retainage is purely a matter of contract. Whatever your agreement says is what governs, so the review must test the application against your document rather than against an assumed standard.
Contractor and subcontractor licensing
Licensing status is quick to verify and consequential to ignore. The Florida Department of Business and Professional Regulation maintains a license verification search covering construction licensees. Confirm that the entity actually named on the payment application holds the license, that the license is active, and that the qualifying party matches. On projects with specialty trades — roofing, mechanical, electrical, elevator — verify the subs, not just the general contractor.
Permit and inspection records
Payment applications describe work as complete. Building departments record whether that work passed inspection. These are different facts and they do not always agree. In Miami-Dade, permit status and inspection history can be checked through the county’s building and permitting portal; Broward and Palm Beach municipalities maintain comparable systems. Before approving a draw that includes concealed work — in-wall rough-ins, waterproofing, structural connections — confirm that the corresponding inspection was passed and recorded. Once it is covered, verification becomes destructive and expensive.
Verifying Actual Physical Progress
Percentage complete is an opinion until someone walks the site. The walk tests the application’s claims against observable conditions, line item by line item rather than as a general impression.
A few practices make that walk useful rather than ceremonial. Photograph from repeatable positions each cycle so progress is comparable across draws. Separate materials delivered from work installed, since delivery is not installation and the two bill differently. Watch for line items that stall just short of complete across successive draws, since the last stretch of scope is often harder to finish than the schedule assumed. Where trades are sequenced, verify the predecessor rather than the visible result.
Progress verification also feeds directly into schedule control. A draw that outpaces physical work is usually the first quantitative signal that the project is drifting, well before the milestone dates slip. This connects closely to construction cost control, because overbilling early removes the financial leverage an owner needs later.
Evaluating Stored Materials
Stored materials are the most commonly mishandled line on a South Florida draw, because storage conditions here are difficult and the documentation standard is higher than owners expect.
Before paying for materials not yet installed, establish four things. First, that the materials exist and are identifiable as belonging to this project. Second, that title passes to the owner on payment, which is a contract question. Third, that they are insured for their value in their current location, including off-site storage. Fourth, that they are stored appropriately for the material and the climate — humidity, salt air, and hurricane-season exposure are real risks for millwork, drywall, electrical gear, and finish materials in this region.
Off-site storage raises the standard further. If materials sit in a third-party warehouse, the owner’s protection rests on documentation — bills of sale, warehouse receipts, insurance certificates naming the owner — not on the ability to walk out and look at them.
Change Orders and the Current Budget
A draw review is the natural checkpoint for confirming that the contract sum on the application is the sum you actually agreed to. Discrepancies usually come from three places: work performed under a change directive never converted to an executed change order, changes executed but not yet reflected in the schedule of values, or allowance and contingency draws billed as fixed scope.
Contingency is worth isolating. It is the owner’s money held for the owner’s risk, and it should require specific authorization to draw against rather than flowing automatically into monthly billing. A disciplined approach to change order management makes this checkpoint fast; without it, every draw becomes a reconstruction of what was approved and when.
Lien Waivers, Releases, and Where Counsel Belongs
This article is for general informational purposes and is not legal advice. Owners should consult qualified Florida construction counsel regarding lien rights, releases and payment procedures.
Florida’s lien statute is the reason draw review cannot stop at the general contractor. Under section 713.06, Florida Statutes, subcontractors, sub-subcontractors, and material suppliers who lack a direct contract with the owner must generally serve a Notice to Owner before commencing, or not later than 45 days after commencing, to furnish labor, services, or materials. Those notices tell you who may be able to claim against the property. They should be logged and reconciled against the payment chain every cycle, because a lienor who served notice and was not paid remains a live exposure even if your contractor’s application says otherwise.
The same section addresses final payment. A contractor is required to furnish the owner a final payment affidavit stating whether all lienors who timely served notice have been paid, and identifying any who have not. The statute provides that a contractor has no lien or right of action against the owner while in default for failing to give that affidavit.
On waivers, section 713.20, Florida Statutes supplies statutory forms — one for progress payments and one for final payment — and several points in it matter directly to draw review. A right to claim a lien may not be waived in advance, and an advance waiver is unenforceable. A lienor may condition a waiver on the payment check actually clearing, and the statute contemplates the owner withholding the amount of an unpaid check until that condition is satisfied. A waiver that is not substantially similar to the statutory forms is enforceable according to its own terms, which is precisely why non-standard forms should be read rather than filed.
The practical consequence is that collecting a stack of signed waivers is not the same as being covered. What matters is whether they correspond to the parties who actually hold claim rights, for the periods and amounts being paid.
Common Warning Signs
Certain patterns recur often enough to be worth naming:
- Billing consistently runs ahead of observable progress, cycle after cycle.
- Waivers arrive from the general contractor but not from the tiers below, or arrive unsigned, undated, or covering the wrong period.
- Notices to Owner are on file from parties who never appear in any waiver package.
- Stored materials are billed with no location, no insurance certificate, and no way to identify them.
- The schedule of values is revised between draws without a corresponding executed change order.
- Line items sit at high percentages for months while the completion date holds firm on paper.
- Inspection records lag the work claimed as complete, particularly for concealed conditions.
- Supporting documentation arrives late, incomplete, or only under pressure.
Any one of these is a question. Several together are a pattern, and patterns are what an independent third-party project review is designed to surface before they become disputes.
The Checklist Before Releasing Payment
A workable sequence for each cycle:
- Reconcile the application against the current contract sum, including all executed changes.
- Confirm the schedule of values has not been reallocated between line items.
- Verify retainage is calculated at the contracted rate.
- Confirm contractor and relevant subcontractor licenses are active.
- Check permit status and confirm required inspections were passed and recorded.
- Walk the site and verify claimed percentages line by line.
- Separate materials delivered from work installed.
- For stored materials, confirm existence, title, insurance, and storage conditions.
- Confirm all change orders billed are executed, not merely directed.
- Confirm contingency and allowance draws carry specific authorization.
- Reconcile Notices to Owner on file against the waivers received.
- Verify waivers cover the correct parties, periods, and amounts.
- Confirm non-standard waiver forms have been reviewed rather than assumed.
- At final payment, confirm the contractor’s final payment affidavit is in hand.
- Document the approval decision, including any amounts withheld and why.
The last step is the one owners skip most often. A contemporaneous record of what was approved, what was reduced, and why is the strongest position to hold if the cycle is later disputed.
When to Bring in an Owner’s Representative
Not every project needs a dedicated reviewer. The case strengthens when amounts are large enough that a systematic overbill matters; when the owner has no technical staff able to test a percentage-complete claim on site; when multiple prime contracts make the payment chain hard to track; when a lender’s requirements and the owner’s interests diverge; or when the warning signs above are already present.
An owner’s representative can coordinate progress verification, payment-application review and project controls as part of an agreed scope of services, alongside broader project oversight. The role is to test what is being represented to you before the money moves, and to document the basis for every approval.
Frequently Asked Questions
How long should a draw review take?
On a monthly cycle, a thorough review including a site walk is typically a matter of days rather than hours. The constraint is usually document turnaround from the contractor, not review time. Building that timeline into the contract’s payment terms avoids pressure to approve quickly at the end of the cycle.
Can an owner reduce a draw request?
Whether and how an owner may withhold or reduce payment is governed by the construction contract and applicable law. Most contracts contemplate adjustment where work is not in place or documentation is incomplete, and the statutory waiver provisions contemplate withholding tied to an unpaid check. The specifics of any withholding decision are a matter for the contract and for counsel.
Is a lender’s draw inspection enough?
It is useful but narrower. Lender inspections generally confirm that progress supports the advance. They typically do not test quality against specification, reconcile change orders against the owner’s budget, or verify the waiver chain below the general contractor.
What is the difference between a conditional and unconditional waiver?
Section 713.20 provides forms for progress payments and for final payment, and allows a lienor to condition a waiver on the payment check clearing. Because non-conforming forms are enforceable on their own terms, the practical answer for any specific document is to read it — and, where amounts are significant, to have counsel read it.
Do we still need this if we trust our contractor?
Draw review is not an accusation. Florida’s lien framework exposes the owner to parties several tiers removed from the general contractor, some of whom the contractor cannot control. A disciplined review protects a good contractor as much as the owner: it produces a clean, documented record of what was paid and why.
Discuss Your Project
If you are approving construction draws in South Florida without an independent check on progress, documentation, and the payment chain, the fix is procedural. Contact FALKE CORP to discuss how draw review fits into oversight of your project.
This article is for general informational purposes and is not legal advice. Owners should consult qualified Florida construction counsel regarding lien rights, releases and payment procedures. Statutory references reflect the Florida Statutes as published by the Florida Legislature and may change.