As you may or may not have known, amendments to the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act), which affected the way progress payments in the construction industry were to be applied from 21 October 2019.

Those amendments were to that payment claims clearly outline specific reference to the Act as well as others. Further to the 2019 amendments, recent changes were made on 1 March 2021 so that the Act applies to owner-occupied construction contracts. This is a significant change.

If a builder issues a payment claim under the Act upon a homeowner and the contract fails to expressly outline when the progress payments become due and payable, a payment schedule complying with the Act should be issued in response, failing which there may be significant consequences for the home owner/s.

A homeowner who has been served with a payment claim may reply by providing a payment schedule to the building contractor. There are strict timeframes for the homeowner to provide a payment schedule. These are:

  • within the time outlined in the construction contract, or
  • within 10 business days after the payment claim is served (whichever is earlier).

Up until 1 March 2021, the Act did not apply to owner-occupier construction contracts, meaning that builders who carried out residential construction work were not able to make a payment claim against a homeowner under the Act, even though subcontractors who carried out work on the same project could make such claims against the builder.

Further to the March 2021 change, from 26 June 2021 it is mandatory for all construction contracts with a value of over $20,000 to contain the Security of Payment Guide. This is prescribed in clause 8 of the Home Building Regulation 2014.

The Security of Payment Guide provides easy-to-read guidance on key aspects of the Security of Payment legislation. A link to the guide is below for your convenient reference.

Security of Payment Guide

Should you have any questions or queries regarding the Act, please do not hesitate to contact our Ziv Ben-Arie
on zivbenarie@hbal.com.au or Rishon Cross on rcross@hbal.com.au

Authors: Ziv Ben-Arie (Managing Principal) and Rishon Cross (Paralegal)