Understanding Progress Payments

What are progress payments?

Progress payments are payments made to builders for construction work completed on a project. They are usually made at set intervals or stages during the construction process and are intended to ensure that the builder is paid for the work they have completed.

Are progress payments the same as payment claims?

No, progress payments and payment claims are not the same thing. A progress payment is a payment made by the owner to the builder for work that has been completed, while a payment claim is a request for payment made by the builder to the owner.

How does a progress claim work?

A progress claim is a request for payment made by the builder to the owner, usually at set intervals or stages during the construction process. The owner has a certain amount of time to respond to the progress claim with a payment schedule that outlines the amount they propose to pay the builder. If the owner fails to respond within the given time, they may be required to pay the full amount claimed by the builder.

Progress payment schedule in NSW

Under the NSW HIA Lump Sum contract, the progress payment schedule is set out in Clause 17. This clause outlines the amount and timing of progress payments, as well as the process for making and responding to payment claims. It is important for both builders and owners to understand the requirements of Clause 17 and to ensure that they comply with its provisions to avoid disputes and potential legal action.

Progress Payment Clause in the NSW HIA Lump Sum Contract

Understanding Clause 17 of the HIA Contract The NSW HIA Lump Sum contract is a widely used contract in the construction industry. Clause 17 of the contract deals with progress payments, and it sets out the terms and conditions for payments to be made throughout the construction process.

The importance of the progress payment clause in the contract

The progress payment clause is an essential part of the contract, as it outlines the payment schedule and the process for making payments to the builder. Homeowners need to ensure that they fully understand the terms and conditions of the progress payment clause before signing the contract.

Common issues with progress payment clauses

Some common issues that homeowners may encounter with the progress payment clause include disputes over the amount of progress payments, disputes over the timing of progress payments, and disputes over whether the builder is entitled to a progress payment. It is important for homeowners to seek legal advice if they have any concerns about the progress payment clause or the progress payments that have been requested by the builder.

Negotiating Progress Payments with Builders

As a homeowner, it’s essential to understand your legal rights when it comes to progress payments under the NSW HIA Lump Sum Contract. If you receive a progress claim from your builder and believe they are not entitled to payment, it’s crucial to communicate with your builder and negotiate a solution.

Firstly, ensure that you understand your legal rights as a homeowner. Seek advice from a construction lawyer to help you understand your contractual and legal rights. Once you understand your rights, you can communicate with your builder and express your concerns.

When negotiating progress payments, try to remain calm and professional. Explain your concerns clearly and provide evidence to support your position. If necessary, propose a compromise that would be acceptable to both parties.

Finally, ensure that you keep a record of all communication with your builder, including emails and written correspondence. When making your final progress claim, ensure that you follow the process set out in the contract and the Building and Construction Industry Security of Payment Act 1999 (NSW). If you are still unable to reach a resolution, seek legal advice from a construction lawyer to help protect your interests.

The Security of Payment Act in NSW

What is the Security of Payment Act?

The Security of Payment Act 1999 (NSW) is a piece of legislation designed to ensure that contractors, sub-contractors, and suppliers receive timely and full payment for work carried out in the construction industry. The Act provides a framework for resolving disputes over progress payments.

How does it apply to progress payments?

The Security of Payment Act applies to progress payments made under construction contracts, including the NSW HIA Lump Sum Contract. The Act sets out the process for making a progress payment claim and requires that payment schedules be issued by the parties to the contract.

Understanding payment schedules

Payment schedules are a document issued by the builder in response to a progress payment claim. The payment schedule sets out the amount the builder is willing to pay and any reasons for withholding payment. If the homeowner is not satisfied with the payment schedule, they can take steps to recover the outstanding amount.

Filing a payment claim

Under the Security of Payment Act, the homeowner can file a payment claim if they believe that the builder has not made a progress payment as required under the contract. The payment claim must be in writing and must identify the work carried out, the amount claimed, and the due date for payment. The builder must respond with a payment schedule within a specified timeframe, and if the homeowner is not satisfied, they can seek adjudication to resolve the dispute.

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Key Takeaways

Negotiating progress payments with builders can be a complex process, but understanding your legal rights and the contract terms can help you achieve a fair outcome. As a homeowner, it’s crucial to communicate effectively with your builder and seek professional advice when necessary. Remember to review and understand the progress payment clause in the HIA contract and the Security of Payment Act in NSW. Always document your progress and any issues that arise to protect yourself and ensure that progress payments are calculated correctly. 

If you are facing issues with progress payments or progress claims, don’t hesitate to reach out to a construction lawyer for advice and representation. As a construction lawyer with years of experience, I am dedicated to helping homeowners and builders understand their contractual and legal rights and negotiate a fair agreement. Don’t let progress payments derail your dream home project, take control of the situation and protect your investment.