Why the Second Payment Is Harder Than the First
The first payment is agreement. The second requires somebody to decide whether enough got done, and a schedule that never defines enough leaves both people deciding it in the moment.
The text arrives on a Thursday. Rough-in is done, the inspector came, and the contractor is asking for the second payment. You walk the basement, and the studs are up and the wire is in, and you find yourself doing arithmetic you were not expecting to do. The second payment is where a payment schedule stops running on agreement and starts running on judgment.
The deposit was easy because nothing had happened yet. Both people were looking at the same drawing and the same number, and there was nothing built to disagree about. A payment made before work starts is a payment made while everyone is still optimistic.
The second payment asks a different question. Somebody has to decide that enough of the work is finished for more money to move, and the word enough is doing the entire job. Nothing in the proposal defines it.
The disagreement that follows does not look like a disagreement about money. It looks like two people who are both being reasonable, which is worse, because two unreasonable people will meet in the middle and two reasonable people will each hold their ground on the grounds that they are being fair.
A schedule written against finished work answers the question in advance. Payment when rough-in passes inspection. Payment when drywall is hung and taped. Payment when fixtures are set. Each of those is a fact somebody can walk into a room and check.
A schedule written against the calendar answers nothing. Half at signing and half in three weeks tells both people when money moves and nothing about what has to be true when it does. Three weeks arrives whether the work did or not.
The money moves when the work does. That is the whole idea behind a milestone-based agreement, where the scope of the work and the money for the work are the same object. What changes at the second payment is which document the two people are looking at.
Rules about deposits and payment schedules vary by state, and some states regulate them directly. This article is about what people commonly do, not about what any law requires. For what a specific state's rules actually say, see the deposit guides in the knowledge base. On the first payment rather than the second, see is 50 percent up front normal.
The second payment is the first honest test of the paperwork. Whatever the document says on that Thursday is what the two of you agreed to, and if it says three weeks, then three weeks is the agreement.