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Understanding Progress Payments in the NSW HIA Lump Sum Contract
Progress payments are an essential part of the construction process under the NSW HIA Lump Sum contract. They are payments made by the homeowner to the builder for work completed on the construction project. These payments are typically made on a regular basis, either monthly or at specific stages of the project, as set out in the contract.
Clause 17 of the NSW HIA Lump Sum contract outlines the rules and procedures for progress payments. According to this clause, the owner must pay the deposit stated in Item 2(b) of Schedule 1 on the later of the day that the contract is signed by the owner and the warranty insurance described in Schedule 6 is in force, and the owner is provided with a certificate of insurance for such insurance. The deposit is brought to account with the first progress payment.
The owner must then pay the contract price progressively as claimed by the builder. The builder must give the owner a written claim for a progress payment for the completion of each stage. The progress claim must state the amount claimed and not paid for the stage completed, the amount claimed and not paid for contract price adjustments, the amount claimed and not paid for variations, and the sum of the above amounts.
The owner must pay a progress claim within five working days of the builder giving the claim. It is important to note that payment of a progress claim is on account only, and the owner has no right of set off.
Other than in relation to the final progress claim, payment of a progress claim is on account only, and the owner has no right of set off. This means that the owner must pay the progress claim even if they dispute the amount claimed by the builder.
It is essential that homeowners understand the progress payment process and their contractual obligations under the NSW HIA Lump Sum contract. Failure to make progress payments as claimed by the builder can result in delays to the construction process, additional costs, and potential legal disputes.
It is also important to note that the maximum progress payments that can be claimed under the Security of Payment Act 1999 (NSW) applies to contracts to do residential building work when the contract price exceeds the prescribed amount. This act sets out the rules and procedures for progress payments and provides a mechanism for resolving disputes between homeowners and builders over payment claims.
In the next section, we will explore how progress claims work and the differences between progress claims and payment claims under the NSW HIA Lump Sum contract.
How Progress Claims Work
A progress claim is a request for payment by the builder to the homeowner for work completed to date. Progress claims are a common feature of construction contracts, including the NSW HIA Lump Sum contract. Progress claims are used to ensure that the builder is paid for the work they have completed, and to help the homeowner manage their cash flow and budget for the project.
When the builder submits a progress claim, they will usually include supporting documentation, such as invoices or receipts, to back up their claim. The homeowner then has a certain amount of time to pay the progress claim, as specified in the contract. If the homeowner disputes the progress claim, they can issue a payment schedule, which outlines the amount they are willing to pay and the reasons why the amount is different from what the builder has claimed.
It’s important for homeowners to understand how progress claims work and to keep track of the work that has been completed on their project. This can help them to identify any discrepancies between the work completed and the progress claim submitted by the builder, and to ensure that they are only paying for work that has been completed to a satisfactory standard.
How to Protect Yourself from Unfair Payment Claims
If you receive a progress claim from your builder under Clause 17 of the NSW HIA Lump Sum Contract, but believe that the builder is not entitled to payment, it is important to understand your legal rights and options to protect yourself from unfair payment claims.
First, it is important to carefully review the progress claim and ensure that it meets the requirements of the Building and Construction Industry Security of Payment Act 1999 (NSW). This includes identifying the construction work or related goods and services to which the progress payment relates, and stating the claimed amount. If the progress claim does not meet these requirements, it may be invalid and unenforceable.
If you believe that the progress claim is invalid or that the builder is not entitled to payment, you may dispute the claim under Clause 35 of the NSW HIA Lump Sum Contract. This involves giving written notice to the builder setting out the matter in dispute and attempting to resolve the dispute or agree on methods of doing so within 10 working days. If the dispute is resolved, the parties must write down the resolution and sign it.
If you are unable to resolve the dispute, you may need to consider other options, such as engaging a solicitor to represent you in negotiations or commencing legal proceedings to recover any overpayments or damages. It is important to seek professional advice before taking any legal action to ensure that you understand your rights and obligations under the contract and the law.
Another way to protect yourself from unfair payment claims is to ensure that your contract includes a clear and comprehensive payment schedule that sets out the amount and timing of progress payments. This can help to prevent disputes and ensure that payments are made in accordance with the contract.
You may also wish to consider engaging an independent quantity surveyor or building inspector to review the progress claim and verify the work that has been completed. This can provide you with an objective assessment of the progress claim and help to identify any discrepancies or overpayments.
In summary, if you receive a progress claim under the NSW HIA Lump Sum Contract but believe that the builder is not entitled to payment, it is important to carefully review the claim, understand your legal rights and options, and seek professional advice if necessary. By taking proactive steps to protect yourself from unfair payment claims, you can ensure that your construction project stays on track and on budget.
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In conclusion, understanding progress payments and progress claims is crucial for protecting your rights as a homeowner under the NSW HIA Lump Sum Contract. By understanding how progress claims work, you can protect yourself from unfair payment claims and ensure that you are only paying for work that has been completed satisfactorily. If you have any questions or concerns regarding progress payments or progress claims, don’t hesitate to seek advice from a qualified construction lawyer like myself. Remember, it is always better to be informed and proactive than to be caught off guard. Protect your dream home and your hard-earned money by staying informed and taking action.
