Consumer Building Guide NSW – Progress Payments
Your builder or tradesperson may ask you to make payments so that they can pay for materials and labour as they go.
Progress payments are usually made at specific stages of a project (eg. when the slab is laid or the frame goes up or at lock-up). These payments should equate to the value of work done. Make sure the dollar value placed on each stage is realistic. Ideally, a schedule of all progress payments required to be made during the course of the project should be included in the written contract.
A stage of work is usually considered to have reached completion when it has been finished in accordance with the contract documents and any variations agreed to and is free of apparent defects.
Never pay for work that has not been performed or pay any money in excess of that required under the contract. Also, make sure that progress payments are for work done and not simply time on the job.
Sometimes the bank lending you the money for the work will have special requirements for progress payments. If so, these will need to be included in the contract under an additional clause.
Your home warranty insurance policy may limit the amount of compensation for incomplete work to 20% of the original contract price (including variations) so it is very important you do not agree to arrangements for progress payments that cover work not yet completed. The loss of any progress payment made by a homeowner to a builder that exceeds the amount stipulated in the contract will not be covered by the home warranty insurance policy for the project.
Reference- NSW Fair Trading viewed 15/2/12, image source google
Como Building P/L, Michael Como provides in SYDNEY, an NSW Building Regulations Consultancy service that comprises, Interpretation of NSW legislation relevant to the construction of Class 1 and 10; Issuing: Complying Development Certificates (CDC), Construction Certificates (CC) [after a local council has approved a development], Occupation certificates (OC), Compliance Certificates, NCC Building Code Australia Reports. Engagement for the certification work is on a contract basis.
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