How should a finish trades contractor structure a request to defer 124k of a 310k contract to closing
Picture a finish trades business, several years in, mostly high-end interiors, facing a structure it has not worked with before. A sponsor is running a 4.6M target flip, a bit over 3M all-in by their numbers, and the trade contract for millwork, paint, and the stair is 310k. The sponsor is asking to pay 186k on the normal progress schedule and hold 124k until the property sells, paid from closing proceeds. The stated reason is that the lender's budget tightened after a foundation surprise, and this is how the finish level stays where the price point needs it. Even taking that explanation at face value, the timeline is the real exposure. If the house sells in five months, financing 124k for five months is manageable. If it sits fourteen months, which is a real possibility at that price point, that is 124k of working capital tied up in someone else's inventory while payroll still needs to be met out of pocket. A payroll of roughly 61k a month leaves little room for that kind of exposure. A reasonable way to structure the ask: the deferred 124k as a secured note at 10 percent, mechanics lien rights preserved rather than waived on the deferred portion, and a maturity date that hits whether or not the house has sold. Whether a sponsor accepts those terms depends on how much they need this particular trade contractor versus how many other shops are available. The alternative worth weighing is pricing the job at 355k instead and letting the price carry the risk rather than the paperwork. Either path is defensible; the wrong move is signing a discounted price with an undefined deferral and no security behind it.
