Understanding Progress Claims
As a homeowner under Clause 17 of the NSW HIA Lump Sum Contract, you are likely to receive progress claims from your builder during the course of your construction project. A progress claim is a request for payment that a builder submits to a homeowner or principal contractor for work completed up to a certain point in time. Progress claims are a common feature of the construction industry and are designed to ensure that builders receive payment for work as it progresses. It is important to note that a progress claim is not the same as a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act), although a progress claim may also constitute a payment claim. Progress claims are usually accompanied by a payment schedule, which is a document that outlines the amount the respondent proposes to pay in response to a payment claim. It is important to understand the process of progress claims and payment schedules to ensure that you are fulfilling your obligations under the HIA contract and the Act.
Legal Obligations for Builders and Homeowners under Clause 17
Clause 17 of the NSW HIA Lump Sum Contract outlines the legal obligations for builders and homeowners regarding progress payments. Under this clause, builders have the right to claim progress payments as work is completed, and homeowners are obligated to make payments on time. If the builder fails to issue a progress claim, the homeowner may request a payment claim. If a progress claim is disputed, the homeowner must provide a payment schedule outlining the reasons for withholding payment. Failure to provide a payment schedule may result in the homeowner being liable to pay the claimed amount. It is crucial for homeowners to understand their obligations and seek professional advice if there are any concerns about progress claims or payments.
Your Legal Options as a Homeowner
As a homeowner under the NSW HIA Lump Sum contract, you have legal options if you believe that the builder is not entitled to payment for a progress claim. Firstly, you can issue a payment schedule within the required timeframe and state your reasons for withholding payment. If the builder has failed to provide a progress payment schedule, they become liable to pay the claimed amount to you. If the builder disputes your payment schedule, you can apply for adjudication under the Building and Construction Industry Security of Payment Act 1999 (NSW). Alternatively, you can seek legal advice and pursue other options, such as mediation or court proceedings. It is important to understand your legal rights and options before taking any action.
The Progress Claim Process
The progress claim process is initiated when a builder serves a progress claim to the homeowner, seeking payment for work performed or materials supplied. Homeowners should ensure that the progress claim is compliant with the requirements set out in the NSW HIA Lump Sum contract, and is made under the Building and Construction Industry Security of Payment Act 1999 (NSW). Upon receiving a progress claim, the homeowner may respond by providing a payment schedule to the builder within the time limits set out in the contract. If the builder is not satisfied with the scheduled amount, they may seek adjudication under the Security of Payment Act. Homeowners may also seek legal advice to determine their options and rights regarding the progress claim process.
Standard Progress Payment Schedule in NSW
In NSW, the standard progress payment schedule is typically set out in the HIA Lump Sum Contract. Clause 17 of the contract outlines the stages at which progress payments are due, and the percentage of the total contract price that is payable at each stage. The schedule generally includes the following stages:
- Deposit – usually 5% of the total contract price
- Base Stage – when the foundations and base of the building are completed, usually 15% of the total contract price
- Frame Stage – when the building’s frame is completed, usually 20% of the total contract price
- Enclosed Stage – when the building is “enclosed,” which means that the external walls, roof, and windows are installed, usually 25% of the total contract price
- Fixing Stage – when the building’s internal fixtures and fittings are installed, usually 20% of the total contract price
- Practical Completion – when the building is complete, except for minor defects, usually 10% of the total contract price
- Final Inspection – when any defects are rectified, usually 5% of the total contract price
It is important for both homeowners and builders to understand the progress payment schedule, as it sets out the agreed-upon payment structure for the construction project.
Security of Payment Act in NSW
The Security of Payment Act 1999 (NSW) provides a quick and cost-effective dispute resolution process for construction payment claims. It applies to construction contracts in NSW, including the NSW HIA Lump Sum contract. Under the Act, a builder can issue a payment claim, and the owner must respond within a set timeframe. If the owner disputes the claim, they must provide a payment schedule stating the amount they are willing to pay and their reasons for withholding payment. If the matter remains unresolved, either party may seek adjudication to resolve the dispute. The Act ensures that builders are paid promptly and that homeowners have a fair opportunity to dispute any claims they believe are not valid.
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Conclusion
In conclusion, Clause 17 of the NSW HIA Lump Sum Contract sets out the legal obligations for both builders and homeowners regarding progress payments. As a homeowner, you have legal options if you believe the builder is not entitled to payment. Seek professional advice from a solicitor or construction lawyer to help you understand your legal rights and explore your options.
It is important to understand the progress claim process and the standard progress payment schedule in NSW. You should also be aware of the Security of Payment Act in NSW, which provides protections for contractors and subcontractors who are not paid on time.
