Final payment and handover procedure (VIC)

You have completed the building works under the contract – what do you do next to be paid?  If you do not follow your contract properly then you may compromise your right to get paid quickly or at all.

HIA Victorian Contracts
This information sheet sets out the procedure in the HIA Victorian New Homes and Alterations, Additions and Renovations Contract. The relevant clauses in the HIA Victorian contracts are:

• Clauses 36, 37 and 38 - New Homes Contract (October 2004); and
• Clauses 39, 40 and 41 - Alterations, Additions and Renovations Contract (October 2004).

Final handover Process
Step 1 - Notice of Completion
Step 2 - Final inspection
Step 3 - Rectify any defects
Step 4 - Seek final payment

What does a builder need to do once a job has been completed?
When you have completed the building works under the contract, you must give your client a Notice of Completion and a Final Claim, together with a copy of either:

• the occupancy permit; or
• the certificate of final inspection from the building surveyor (if not completing the works to   the final stage of the contract).

Notice of Completion forms are available to purchase from the HIA bookshop or your local stationary supplier. The forms are called ‘Notice of Completion‘.

When should final inspection of a site take place?
You and your client must meet within 7 days of your client receiving the Notice of Completion and final claim for a final inspection of the completed works. A list of defects and incomplete works is prepared and signed, by both parties as an acknowledgement. The fact that you sign the list is not an admission that the defects exist or there is incomplete building works. 

You must complete the items on the list that you believe are defective or incomplete.  Once these items are complete you have to give your client a further written notice stating that you have completed the work.

When should a builder seek final payment?
The final payment is payable within 7 days of your client receiving the notice in Step 3. 

When should possession take place?
On payment you should give your client possession together with all keys, certificates and warranties.

What happens when an owner takes possession prior to making final payment?
If your client takes possession before final payment, and without your written consent, then your client is in substantial breach of the contract.  You can elect to either:

• treat your client’s action as a repudiation of the contract and accept it; or
• give your client a notice to remedy the breach of the contract; or
• accept your client’s actions as a request to vary the Building Works to omit that part of the building Works not completed as at the date your client takes possession.

You should seek advice before making any election as the consequences and procedures are different for each option.

What can a builder do when an owner takes possession prior to making final payment?
If your client breaches the contract (including repudiates) you have the right to recover damages or exercise any other right or remedy.

If you are having difficulties with the final payment and handover procedure or if a client has breached the contract contact HIA on 1300 650 620 and ask to speak to a Workplace Adviser.

For more information call the HIA member Hotline on 1300 650 620

_{DISCLAIMER – the above is intended to provide general information in summary form. The contents do not constitute specific advice and should not be relied upon as such. Formal specific advice should be sought by members with respect to particular matters before taking action.}