Related Content: Homeowners Guide to the Security of Payment Law
Understanding Progress Claims and Payment Schedules
Before discussing the impact of changes to the Building and Construction Industry Security of Payment Act 1999 (NSW) on Clause 17 Progress Payment of the NSW HIA Lump Sum Contract, it is important to first understand the basics of progress claims and payment schedules. A progress claim is a request for payment for work done to date or for goods and materials supplied for a construction project. On the other hand, a payment schedule is a response to a progress claim, indicating the amount the respondent proposes to pay (scheduled amount), or the reason for withholding payment. The HIA Contracts provide a standard progress payment schedule in NSW, which requires the builder to submit a payment claim for a progress payment and the owner to respond with a payment schedule within a certain timeframe. It is important to understand the process of progress payments and payment schedules to fully comprehend the impact of the changes to the Security of Payment Act on Clause 17 Progress Payment of the NSW HIA Lump Sum Contract.
Clause 17 of the NSW HIA Lump Sum Contract
Clause 17 of the NSW HIA Lump Sum Contract regulates progress payments and provides that the builder is entitled to receive progress payments during the construction period. The clause sets out a procedure for claiming and making progress payments, including providing a payment claim to the owner, and the owner responding with a payment schedule. The clause also provides that the builder can suspend work if payment is not made in accordance with the contract. It is important for homeowners to understand the clause, as it sets out their payment obligations and the builder’s entitlement to payment. Any dispute regarding progress payments can be referred to an adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW).
Changes to the Building and Construction Industry Security of Payment Act 1999 (NSW)
In 2019, changes were made to the Building and Construction Industry Security of Payment Act 1999 (NSW). These changes affect progress claims and payment schedules made under the Act. One of the key changes is the introduction of a maximum payment term for progress payments, which is 20 business days from the date a payment claim is made. Additionally, the changes introduced new rules for supporting statements and increased penalties for non-compliance. It is important for homeowners and builders to be aware of these changes and ensure they are complying with the new requirements to avoid potential legal issues.
HIA Contracts and Progress Payments
The Housing Industry Association (HIA) provides a range of contracts for use in the residential construction industry. HIA contracts usually include a progress payment schedule, which outlines the timing and amounts of progress payments to be made throughout the construction process. It is important to understand that the progress payment schedule in the HIA contract is subject to the requirements of the Building and Construction Industry Security of Payment Act 1999 (NSW). Homeowners should carefully review the progress payment schedule in their HIA contract and ensure that it complies with the requirements of the Act. It is also recommended that homeowners seek legal advice to ensure that their rights are protected and that the payment schedule reflects the agreed payment terms.
Final Progress Claim and Payment
Once the building work is completed, the builder will issue the final progress claim to the homeowner. The final progress claim is usually the last payment the builder will receive before the homeowner takes possession of the property.
Before making the final payment, the homeowner should ensure that all building work has been completed to their satisfaction and that there are no outstanding defects or issues. The homeowner should also ensure that they have received all necessary documentation, including any warranties or guarantees, before making the final payment.
If there are any outstanding issues, the homeowner should raise them with the builder and discuss how they can be resolved. If the builder has not completed the work to the satisfaction of the homeowner, the homeowner may be entitled to withhold payment until the work is completed to their satisfaction. However, it is important to seek legal advice before withholding payment, as this may be a breach of the contract.
It is important to note that the final progress claim may be subject to retention, which means that a percentage of the final payment is withheld by the homeowner until any defects or issues have been resolved. The amount of retention is usually set out in the contract. The retention money can be used to cover the cost of any defects or issues that arise after the final payment has been made.
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Conclusion
In conclusion, progress claims and payment schedules can be complex and confusing for homeowners building their dream home. It is important to understand the terms of your contract and seek professional advice if you have any concerns or questions about progress payments. With the recent changes to the Building and Construction Industry Security of Payment Act 1999 (NSW), homeowners should be aware of their rights and obligations when it comes to progress payments and progress claims. The NSW HIA Lump Sum Contract and other HIA Contracts also have specific clauses relating to progress payments, which should be carefully reviewed and understood.
If you’re a homeowner navigating progress payments and progress claims, it’s important to seek professional legal advice. As a construction lawyer with 10+ years of experience in construction law, I can help you understand your rights and obligations under the recent changes to the Security of Payment Act 1999 (NSW) and other relevant contracts. Contact me today to ensure a successful and stress-free building process.
