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NSW Security of Payment Act Amendments:
Complete Guide
Understand the key amendments affecting construction contracts entered into on or after 21 October 2019.
You can be confident that you are getting the right legal advice.
The Building and Construction Industry Security of Payment Act 1999 (NSW) has undergone significant amendments that affect builders, contractors, subcontractors, suppliers, and homeowners. These changes impact how payment claims are made, adjudication processes, penalties for non-compliance, and the inclusion of residential owner occupier contracts under the Act.
BOOK YOUR FREE FIRST CONSULTWhen Did These Security of Payment Act
Changes Come About?
The NSW Security of Payment Act has been amended in two significant phases that construction industry participants need to understand.
In November 2018, an Amendment Act was passed, instituting several changes to the Building and Construction Industry Security of Payment Act 1999 (NSW). These changes were implemented on 21 October 2019 and primarily affect claimants, including builders, contractors, and subcontractors.
On 1 March 2021, another important change was made to the SOPA. This amendment specifically affects owner occupier contracts entered into on or after 1 March 2021, bringing residential building contracts between builders and homeowners under the Security of Payment Act framework. Learn more about the owner occupier SOPA changes.
Important: The 2018 amendments apply to construction contracts entered into on or after 21 October 2019. The March 2021 owner occupier amendment applies only to residential building contracts entered into on or after 1 March 2021. Contracts entered into before these respective dates continue to operate under the previous legislative framework.
How Will These Changes Affect Me?
The Security of Payment Act amendments have different implications depending on your role in the construction industry.
Changes Affecting Homeowners
The changes as of 1 March 2021 affect homeowners, who are now included in the SOPA process. Previously, the Security of Payment Act only applied to commercial building contracts.
Under this change, owner occupiers will no longer be exempt from the Act, meaning homeowners may now receive payment claims from builders and may need to respond with payment schedules.
Changes Affecting Claimants
The changes as of November 2018 (commenced on 21 October 2019) primarily affect claimants, including subcontractors, contractors, and suppliers.
These amendments streamline the payment claim process, shorten payment timeframes, and introduce stricter compliance requirements.
Changes Affecting Homeowners
The changes as of 1 March 2021 affect homeowners, who are now included in the SOPA process.
Owner occupiers will no longer be exempt from the Act, meaning homeowners may now receive payment claims from builders.
Changes Affecting Claimants
The changes as of November 2018 primarily affect claimants, including subcontractors, contractors, and suppliers.
These amendments streamline the payment claim process and shorten payment timeframes.
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Under the Home Building Act 1989 (NSW), an owner occupier contract is a residential building contract between a builder or tradesperson and a homeowner. With homeowners now subject to the Security of Payment Act, they may need to engage a specialist construction lawyer to help them respond to payment claims, assist with adjudication proceedings, or represent them in litigation.
Key Changes: A Summary of the
NSW Security of Payment Act Amendments
The key changes apply only to construction contracts entered into on or after 21 October 2019. Understanding these amendments is essential for compliance and protecting your rights under the Act. Learn more about the Security of Payment Act NSW.
Payment Claims Must Reference SOPA
Payment claims must now state that they are made under the Security of Payment Act. Claims that do not expressly reference the Act are invalid.
Shortened Payment Timeframes
Payment to subcontractors cannot exceed 20 business days from when a payment claim is made. This is reduced from the previous 30 business days.
Claims After Contract Termination
Payment claims can be made after a construction contract is terminated, allowing contractors to recover amounts owed even after the contractual relationship ends.
Removal of Reference Date
The term reference date has been entirely removed from the legislation. You are now entitled to receive progress payments by the sole fact that you have undertaken to perform construction work or supply related goods and services.
Monthly Claim Submissions
Claims can now be submitted on and from the last day of each named month in which the work is carried out. However, if the contract makes a provision for an earlier date, the claim may be submitted on and from that date.
Broader Investigatory Powers
Authorised officers under the Act have broader investigatory rights to ensure compliance, including new powers to investigate, monitor, and enforce compliance with SOPA, as well as powers of entry into premises.
Payment Claims Must Reference SOPA
Payment claims must now state that they are made under the Security of Payment Act. Claims that do not expressly reference the Act are invalid.
Shortened Payment Timeframes
Payment to subcontractors cannot exceed 20 business days from when a payment claim is made. This is reduced from the previous 30 business days.
Claims After Contract Termination
Payment claims can be made after a construction contract is terminated, allowing contractors to recover amounts owed even after the contractual relationship ends.
Removal of Reference Date
The term reference date has been entirely removed from the legislation. You are now entitled to receive progress payments by the sole fact that you have undertaken construction work.
Broader Investigatory Powers
Authorised officers under the Act have broader investigatory rights to ensure compliance, including powers of entry into premises.
→ Swipe to see all key changes
Important Changes to Payment Claims
Under SOPA
In the Security of Payment Act, contractors and subcontractors should be given progress payments by issuing a document called a payment claim to ensure they are paid for their construction services. The contractor becomes the claimant, while the client becomes the respondent.
Labelling the Payment Claim
The Act reinserts the requirement that a payment claim must include a statement that it is made under the Security of Payment Act. Payment claims that do not expressly reference the Act are invalid. This is a critical compliance requirement that claimants must observe to preserve their rights under the legislation.
Removal of Reference Date
For contracts entered into before 21 October 2019, the basis for claiming progress payments was the reference date.
For contracts entered into on or after 21 October 2019, there is no more need for a reference date. You are entitled to receive progress payments by the sole fact that you have undertaken to perform construction work or supply related goods and services. Payment claims may be served monthly from the time construction work was performed or goods and services were supplied.
Due Date for Payment to Subcontractors
The amendments have shortened the time for paying subcontractors. Previously, payment to subcontractors was due 30 business days after a payment claim was made.
Now, subcontractors must be paid within 20 business days after a payment claim is made. This change improves cash flow for subcontractors and reduces payment delays.
Payment Claims After Contract Termination
A payment claim may also be served after the construction contract is terminated. This ensures that contractors and subcontractors can recover amounts owed for work performed even when the contractual relationship has ended, providing important protection for completed work.
Labelling the Payment Claim
The Act reinserts the requirement that a payment claim must include a statement that it is made under the Security of Payment Act. Payment claims that do not expressly reference the Act are invalid.
Removal of Reference Date
For contracts entered into on or after 21 October 2019, there is no more need for a reference date. You are entitled to receive progress payments by the sole fact that you have undertaken to perform construction work.
Due Date for Payment to Subcontractors
Subcontractors must now be paid within 20 business days after a payment claim is made. This is reduced from the previous 30 business days.
Payment Claims After Contract Termination
A payment claim may be served after the construction contract is terminated, allowing you to recover amounts owed for work performed.
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Important Changes to the
Adjudication Process
Adjudication is not a court process. Rather, it is a quicker method of resolving disputes where an adjudicator is appointed to settle the dispute without resorting to lengthy and expensive court procedures. The amendments have introduced several changes to how adjudication works under the Security of Payment Act.
Withdrawal of Adjudication Application
Previously, the issue of withdrawing an adjudication application prior to the appointment of an adjudicator was not addressed.
Under the amendments, a claimant now has the right to withdraw an adjudication application from any point before it is determined. However, if the respondent objects to the withdrawal after an adjudicator has been appointed, the adjudicator will decide if the objection should be upheld and whether the application should still proceed.
Setting Aside Part of a Determination
Previously, the entire adjudication determination could be set aside, even if the error was only as to a part.
Under the amendments, the Supreme Court can now strike down parts of an adjudicator's determination on jurisdictional grounds while leaving the rest of the determination intact. This provides more flexibility and avoids situations where minor errors invalidate entire determinations.
Claimants in Liquidation
Previously, insolvent claimants were allowed to issue payment claims.
Under the amendments, claimant corporations in liquidation are now prohibited from serving payment claims. This change addresses concerns about the use of the Security of Payment Act by insolvent entities.
Subcontractors Right to Inspect Records
Previously, inspection of records could only be done by the Small Business Commissioner by regulation.
The amendments now allow regulations to be made permitting subcontractors who are entitled to retention of money to inspect records directly.
Withdrawal of Adjudication Application
A claimant now has the right to withdraw an adjudication application from any point before it is determined. If the respondent objects after an adjudicator has been appointed, the adjudicator will decide.
Setting Aside Part of a Determination
The Supreme Court can now strike down parts of an adjudicator's determination on jurisdictional grounds while leaving the rest intact.
Claimants in Liquidation
Claimant corporations in liquidation are now prohibited from serving payment claims under the amendments.
Subcontractors Right to Inspect Records
The amendments now allow regulations permitting subcontractors entitled to retention money to inspect records directly.
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Increase of Penalties Under the
Security of Payment Act
The amendments significantly increase the penalties for a range of offences under the Security of Payment Act, specifically for corporate offenders. Learn more about SOPA compliance requirements.
New Maximum Penalties
1000
Penalty Units for Corporations
Maximum penalty for corporate offenders
200
Penalty Units for Individuals
Maximum penalty for individual offenders
These are substantially different from the old penalties, which imposed a maximum of 200 penalty units for any party regardless of whether they were a corporation or individual.
Example: Supporting Statement Penalties
Failing to provide a supporting statement with a payment claim will now have a maximum penalty of:
- $110,000 for corporations
- $22,000 for individuals
These increased penalties emphasise the importance of SOPA compliance for all construction industry participants.
Enhanced Enforcement: The amendments also give authorised officers new powers to investigate, monitor, and enforce compliance with the Security of Payment Act, including powers of entry into premises. This enhanced enforcement regime means that non-compliance carries greater risk than under the previous legislative framework.
March 2021 Amendment:
Owner Occupiers Now Included
The most recent change to the Security of Payment Act came about on 1 March 2021 and affects owner occupier contracts entered into on or after 1 March 2021. This is a significant change that brings residential homeowners under the SOPA framework. Learn more about owner occupier SOPA changes.
Important Distinction: Homeowners with contracts signed between 21 October 2019 and 28 February 2021 generally remain exempt from the Security of Payment Act. The owner occupier amendment applies only to contracts entered into on or after 1 March 2021.
What Changed?
Under this change, owner occupiers will no longer be exempt from the Act. Previously, the Security of Payment Act only applied to commercial building contracts. Now, residential building contracts between builders or tradespersons and homeowners are subject to the payment claim and adjudication processes.
Under the Home Building Act 1989 (NSW), an owner occupier contract is a residential building contract between a builder or tradesperson and a homeowner.
Process Flow Under the March 2021 Amendment
1
Builder Issues Payment Claim
The builder issues a payment claim to the homeowner.
2
Homeowner Issues Payment Schedule (10 Days)
The homeowner then has 10 days to issue a payment schedule, which must include the amount they propose to pay and their reasons for not paying the claimed amount in full.
3
Adjudication or Court Action
If the homeowner does not send a payment schedule or does not pay the claimed amount in full, the builder may commence an adjudication application within 10 days. The builder also has the option of bringing a collection case to court instead of adjudication, or after adjudication proceedings if they are unsatisfied with the result.
What This Means for Homeowners
With this change, homeowners may now need to engage a specialist construction lawyer to help them respond to payment claims, assist with adjudication proceedings, or represent them in litigation. Understanding the strict timeframes and procedural requirements is critical, as failing to respond appropriately can result in default judgment in favour of the builder.
Comparison: Before and After
21 October 2019
Understanding the differences between the old and new SOPA framework is essential for compliance. Here is a summary of the key changes:
| Aspect | Before 21 October 2019 | After 21 October 2019 |
|---|---|---|
| Reference Date | Required for claiming progress payments | Removed – entitled by undertaking work |
| Payment Timeframe | 30 business days | 20 business days |
| SOPA Statement | Not required on payment claim | Must state made under SOPA |
| Withdrawal of Application | Not addressed | Can withdraw before determination |
| Setting Aside | Entire determination set aside | Can set aside parts only |
| Claimants in Liquidation | Could issue payment claims | Prohibited from serving claims |
| Investigation Powers | Limited to supporting statements | Broader powers including entry |
| Corporate Penalties | Max 200 penalty units | Max 1000 penalty units |
Navigating the Security of Payment
Act Amendments
The Security of Payment Act amendments represent significant changes to how payment disputes are handled in the NSW construction industry. Whether you are a builder seeking to recover payment, a subcontractor preparing a payment claim, or a homeowner responding to a claim, understanding these changes is essential for protecting your rights.
Contracts Specialist is a construction law firm dedicated exclusively to serving builders, contractors, subcontractors, and homeowners across NSW. Our Principal Lawyer, John Dela Cruz, provides specialist guidance on SOPA compliance, payment claims, adjudication applications, and litigation. With over 17 years focusing exclusively on construction law, John helps clients navigate these complex legislative changes efficiently and effectively.
About the Principal Solicitor
John Dela Cruz
Principal Lawyer, Contracts Specialist
When you work with Contracts Specialist, you receive legal advice directly from John Dela Cruz — Principal Lawyer with over 17 years of exclusive construction law experience.
John is an Australian Legal Practitioner and he services NSW, Queensland, Victoria, and Tasmania. He has dedicated his entire legal career to specialise in construction law. As a former Divisional President of the Master Builders Association NSW, he combines deep legal expertise with comprehensive industry knowledge. He maintains daily experience in building dispute tribunals (NCAT, VCAT, QCAT) and courts across multiple jurisdictions.
Unlike generalist lawyers who handle various legal matters, John specialises exclusively in construction law matters affecting homeowners, builders, contractors, and subcontractors. You receive focused expertise from a lawyer who understands both the legal framework and the practical realities of the building industry.
How to Get Started
1
Book Your Free Consultation
Book your free consultation through our online calendar - choose a time that suits you. No cost, no obligation. You will have direct access to our Principal Lawyer to discuss your Security of Payment matter.
2
Discuss Your Matter
Speak directly with John Dela Cruz, Principal Lawyer, about your construction law matter. We may request additional documents such as your contract, payment claims, or correspondence to fully understand your situation.
3
Receive Your Cost Disclosure
Receive a detailed cost disclosure outlining the scope of work and fees. Review and agree to proceed when you are ready - no hidden costs. Fixed fees for defined scope means you know your investment upfront.
1
Book Your Free Consultation
Book your free consultation through our online calendar - choose a time that suits you. No cost, no obligation. You will have direct access to our Principal Lawyer to discuss your Security of Payment matter.
2
Discuss Your Matter
Speak directly with John Dela Cruz, Principal Lawyer, about your construction law matter. We may request additional documents such as your contract, payment claims, or correspondence to fully understand your situation.
3
Receive Your Cost Disclosure
Receive a detailed cost disclosure outlining the scope of work and fees. Review and agree to proceed when you are ready - no hidden costs. Fixed fees for defined scope means you know your investment upfront.
→ Swipe to see all steps
Frequently Asked Questions
Common questions about the Security of Payment Act amendments and how they affect your construction contracts.
When did the Security of Payment Act amendments take effect?
The main amendments took effect on 21 October 2019 for contracts entered into on or after that date. The owner occupier amendment took effect on 1 March 2021 and applies only to residential building contracts entered into on or after 1 March 2021. Contracts entered into before these respective dates continue to operate under the previous framework.
Do I still need a reference date to make a payment claim?
No. The term reference date has been entirely removed from the legislation for contracts entered into on or after 21 October 2019. You are now entitled to receive progress payments by the sole fact that you have undertaken to perform construction work or supply related goods and services.
How quickly must subcontractors be paid under the amended Act?
Subcontractors must now be paid within 20 business days after a payment claim is made. This is reduced from the previous 30 business days, improving cash flow for subcontractors.
What happens if my payment claim does not reference the Security of Payment Act?
Payment claims that do not expressly state they are made under the Security of Payment Act are invalid. This requirement has been reinserted into the legislation and is a critical compliance matter for all claimants.
Are homeowners now subject to the Security of Payment Act?
Yes, but only for contracts entered into on or after 1 March 2021. As of that date, owner occupier contracts are no longer exempt from the Act. Homeowners with contracts signed on or after 1 March 2021 may receive payment claims and must respond with payment schedules within the required timeframes. Contracts signed before 1 March 2021 generally remain exempt.
What are the penalties for failing to provide a supporting statement?
The maximum penalty for failing to provide a supporting statement with a payment claim is now $110,000 for corporations and $22,000 for individuals. This represents a significant increase from the previous penalty regime.
Can I make a payment claim after my contract has been terminated?
Yes. Under the amendments, a payment claim may be served after the construction contract is terminated, allowing you to recover amounts owed for work completed even after the contractual relationship has ended.
Can I withdraw an adjudication application once lodged?
Yes, a claimant can withdraw an adjudication application at any point before it is determined. However, if an adjudicator has been appointed and the respondent objects to the withdrawal, the adjudicator will decide whether the application should proceed.
When did the amendments take effect?
The main amendments took effect on 21 October 2019. The owner occupier amendment took effect on 1 March 2021 for contracts signed on or after that date.
Do I still need a reference date?
No. The reference date has been removed. You are entitled to progress payments by the sole fact that you have undertaken construction work.
How quickly must subcontractors be paid?
Within 20 business days after a payment claim is made, reduced from the previous 30 business days.
What if my claim doesn't reference SOPA?
Payment claims that do not expressly state they are made under the Security of Payment Act are invalid.
Are homeowners now subject to SOPA?
Yes, but only for contracts signed on or after 1 March 2021. Contracts signed before this date generally remain exempt.
What are the penalties for non-compliance?
Maximum penalty for failing to provide a supporting statement is now $110,000 for corporations and $22,000 for individuals.
Can I claim after contract termination?
Yes. A payment claim may be served after the construction contract is terminated to recover amounts owed for work completed.
Can I withdraw an adjudication application?
Yes, at any point before determination. If an adjudicator has been appointed and the respondent objects, the adjudicator will decide.
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Related Resources
Explore our comprehensive guides to learn more about the Security of Payment Act and how it affects you.
Security of Payment Act NSW
Comprehensive guide to understanding the Building and Construction Industry Security of Payment Act 1999 (NSW).
Learn More →Owner Occupier SOPA Changes
Learn how the 2021 amendments affect homeowners and residential building contracts under the Security of Payment Act.
Learn More →SOPA Compliance NSW
Understand the compliance requirements for payment claims, supporting statements, and adjudication under the amended Act.
Learn More →→ Swipe to see all resources
Get Expert Security of Payment Advice
Whether you need to prepare a payment claim, respond to an adjudication application, or understand your rights under the amended Security of Payment Act, our Principal Lawyer provides specialist guidance with transparent fees and direct access.
Book your free consultation today – understand your legal rights with no cost and no obligation.
- Direct conversation with John Dela Cruz (17+ years construction law experience)
- Clear assessment of your SOPA rights and options
- Understand timeframes, compliance requirements, and enforcement strategies
- No cost, no obligation – just clarity on your legal position