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HRA / Completion and accountability

Lesson 13: Construction, inspections, draws and retainage

14 practice questions · Sources reviewed October 4, 2026

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Release work through a documented gate

Current 23.26(15) requires the applicable environmental procedures, preconstruction conference, notice to proceed where applicable, and executed grant or loan closing before construction, including demolition. Confirm the approved scope, contract, insurance, permits, relocation arrangements and required mitigation as part of the release review. Do not allow urgency or a contractor's mobilization date to substitute for an unmet approval.

Construction, inspections, draws and retainage: four decision stagesAuthorize: Verify every construction-start gate and the approved document set.; Inspect: Tie signed reports and photographs to eligible completed work.; Reconcile: Calculate current and cumulative draws, match, administration and retainage.; Release retainage: Check the time requirement and all supporting closeout conditions.01Authorize02Inspect03Reconcile04Release retainage
Construction, inspections, draws and retainage: use each stage with its evidence before advancing.
  1. Authorize. Verify every construction-start gate and the approved document set.
  2. Inspect. Tie signed reports and photographs to eligible completed work.
  3. Reconcile. Calculate current and cumulative draws, match, administration and retainage.
  4. Release retainage. Check the time requirement and all supporting closeout conditions.

At the preconstruction conference, clarify the work, schedule, communications, site access, household needs, inspections, payment documentation and change process. Use the current required report and retain attendance and decisions. Give the contractor the controlled document set. Record who can request, review and authorize a change. A conversation in the field should not become an undocumented amendment.

Inspect against measurable work

Every draw needs the required signed, dated inspection and supporting photographs. Compare claimed quantities and completion with the contract schedule of values and actual work. Identify defective, incomplete, unapproved or unsupported items. Record the location, issue, correction and reinspection. A photograph should make the finding understandable; a large photo folder without captions or a connection to line items is difficult to review.

Do not certify concealed work solely from an invoice. Plan inspections while work remains visible and collect relevant tests and professional certifications. Separate inspection findings from payment approval. A staff member may verify a completed item while another reviewer checks eligibility, available budget, match, lien evidence and the draw calculation. The combined record supports the request.

Build a cumulative draw ledger

The ledger should show original contract amount, approved changes, revised amount, prior approved work, current eligible work, cumulative work, retainage, prior payments and the amount now requested. Reconcile it with invoices and the approved activity budget. Identify whether an entry is a current-period amount or a cumulative total. Confusing the two can cause duplicate payment.

For a practice example, assume $60,000 of eligible hard work is cumulatively completed, ten percent retainage applies, and $36,000 has already been paid. Cumulative retainage is $6,000; cumulative payable is $54,000; the current amount before other required adjustments is $18,000. This is not a complete TDHCA draw: match evidence, title or lien documents, administration and other eligibility checks remain. The course calculator illustrates this arithmetic only.

Match evidence and title protection

Before drawing more than fifty percent of activity funds, provide the required match evidence under 23.31(c)(3). Keep subsequent match evidence aligned with the required draw proportion. For loans, obtain the applicable title down-date endorsement; for grants, obtain the required interim or final lien waiver. Have the program and closing professionals confirm freshness and sufficiency. Do not replace required title evidence with an informal contractor email.

Administrative draws must be proportionate to Direct Activity Costs requested or already disbursed. A five-percent cap is not permission to draw all administration at the first construction invoice. Check the applicable approved base and prior administrative payments. Retain support for soft costs and third-party charges as well as hard construction costs.

Manage changes and deadlines

For proposed changes, document reason, scope, cost, funding classification, schedule, code, environmental and household effects. Obtain all required authorizations before releasing affected work. The source research did not establish a universal HRA change-order delegation or form; confirm the current TDHCA process rather than importing AYBR's specific rule. Budget or term amendments require the authorized approval and cannot simply be noted in a contractor email.

Track the twelve-month RSP construction clock from commitment and the actual amended dates. Seek extensions before the deadline and do not assume they will be granted. Distinguish Construction Completion Date, activity completion, contract termination and final draw dates. The final-disbursement requirement in 23.31(c)(11) uses Contract termination; the completion-report requirement in 23.26(17) uses activity completion.

Release retainage only after all conditions

Section 23.31 provides ten-percent hard-cost retainage and release no earlier than forty days after Construction Completion Date, with the required supporting documents. The passage of forty days alone does not establish eligibility for release. Resolve required title or lien evidence, inspections, completion documents and applicable insurance evidence. Give the household the builder's one-year warranty and relevant manufacturer information.

Final inspection must document required standards and completion, with occupancy evidence or the permitted documentation where the jurisdiction issues none. Preserve proof of demolition or MHU removal, replacement location and required mitigation. Reconcile the final request with all prior payments. The closeout reviewer should be able to follow each dollar from approved scope through verified work to the cumulative ledger.

Work the case

A contractor submits $60,000 cumulative completed work and asks for $60,000 now, although $36,000 was already paid.

Review the decision

Reconcile the cumulative claim. With the exercise assumption of ten-percent retainage, $6,000 remains held and cumulative payable is $54,000. Subtract the $36,000 prior payments: the current amount is $18,000 before other adjustments. Verify the inspection, eligibility, match and required lien or title evidence before submission.

Apply it in the file

Open the budget and draw practice calculators

Authorities for this lesson

Practice questions

1. Can demolition begin before the required construction-start gates?

  1. No
  2. Yes, if called preparation
  3. Yes, if the owner pays
  4. Yes, if the contractor is available

2. What should support a draw's construction progress?

  1. Only a contractor's verbal percentage
  2. Signed dated inspection and photographs
  3. Only the original estimate
  4. Only a delivery advertisement

3. What must a cumulative ledger distinguish?

  1. Only contractor names
  2. Only invoice colors
  3. Prior payments and the current request
  4. Only inspection mileage

4. What is ten-percent retainage on $60,000 completed hard work?

  1. $600
  2. $12,000
  3. $60,000
  4. $6,000

5. With $60,000 cumulative work, $6,000 retainage and $36,000 paid, what remains before other adjustments?

  1. $18,000
  2. $54,000
  3. $60,000
  4. $24,000

6. Does the calculator alone establish an approved TDHCA draw?

  1. Yes, whenever the result is positive
  2. No
  3. Yes, after printing it
  4. Yes, for any invoice

7. What evidence is generally associated with loan construction draws?

  1. Only an informal text message
  2. Only a contractor business card
  3. The required title down-date endorsement
  4. Only a permit number

8. What evidence is generally associated with grant construction draws?

  1. Only the applicant's quiz result
  2. Only an unsigned estimate
  3. Only a bank balance
  4. The required lien waiver

9. Can all administration be drawn immediately just because it is below five percent?

  1. No
  2. Yes, always
  3. Yes, before any eligible cost
  4. Yes, when a bid is selected

10. What should a proposed change review include?

  1. Only a revised invoice title
  2. Scope, cost, schedule and compliance effects
  3. Only the contractor's verbal request
  4. Only the homeowner's paint choice

11. Does requesting an extension change the deadline automatically?

  1. Yes, if sent by email
  2. Yes, if the owner agrees
  3. No
  4. Yes, after a rain delay

12. What is the earliest retainage timing stated by the HRA rule?

  1. The day the first invoice arrives
  2. The day the bid is opened
  3. Automatically at the preconstruction meeting
  4. At least forty days after Construction Completion Date

13. Does reaching forty days alone authorize retainage release?

  1. No
  2. Yes, regardless of liens
  3. Yes, without final documents
  4. Yes, if staff is absent

14. What warranty evidence is required with the final construction draw?

  1. Only an oral lifetime promise
  2. The builder's one-year warranty
  3. Only a blank brochure
  4. No warranty evidence

Glossary

Schedule of values
Allocation of contract value to work items.
Cumulative draw
Total work or disbursement through the current period.
Down-date endorsement
Title evidence updating the covered status through the required date.
Lien waiver
The required release or waiver concerning payment-related lien rights.
Construction Completion Date
The documented completion event used by applicable construction rules.
Change order
An authorized modification to contract scope, price or time.
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