$250 a day liquidated damages, or a $4,000 bonus for finishing early, on the same 14 week scope

I fund other people's rehabs and I read the contracts, and lately I'm seeing both of these written into the same kind of deal, which tells me the market hasn't settled.

The damages version: substantial completion by a stated date, $250 per calendar day after that, capped somewhere around 5 percent of contract. It's clean on paper and it survives being read by a lender. What I've watched it do in practice is change behavior in ways nobody wanted. Crews price the risk in, so your bid comes back 4 to 6 percent higher before anyone breaks ground. Then the ones who fall behind start papering the file with delay notices and weather days and owner-caused change order impacts, and by week ten you're arguing about causation instead of drywall. Whether that clause is enforceable at all, and whether it reads as a penalty rather than a genuine estimate of loss, is a state law question and a real one, so anyone using it should have counsel look at the actual language.

The bonus version: same target date, $4,000 to the crew for hitting it, nothing owed if they miss. Costs more when it works, costs nothing when it doesn't, and it makes the GC an ally of the calendar instead of a defendant. The complaint I hear is that you're paying extra for the thing you already bought, and that early-finish money pulls crews toward speed on the parts a walkthrough won't catch.

Carry cost on the deals I fund runs $180 to $220 a day, so $250 roughly covers me and $4,000 is about three weeks of carry. Both numbers are defensible. I keep going back and forth on which one actually gets the house finished.