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The Home Building Contracts Act 1991 (HBCA) governs contracts for ‘home building work’ in Western Australia, valued between $7,500 and $500,000. This includes rules that apply to progress payment claims and deposits.
Home building work includes:
‘Associated work’ includes installing swimming pools, spas, pergolas, carports, garages, sheds, fencing, retaining walls, paving, driveways, landscaping and other similar types of work.
For lump sum, fixed price home building work contracts valued between $7,500 and $500,000, prior to the commencement of the works, the builder may claim a deposit of no more than:
After commencement of the works, only a genuine progress payment for work already performed or materials or services already supplied may be demanded or received from the owner.
As such, a claim for a progress payment cannot be made before the works for the relevant stage have been completed.
Beyond these requirements, builders and contractors should be guided by commercial and business factors in determining how to structure their progress payments.
In HIA’s lump sum contracts for home building works valued between $7,500 and $500,000, comply with the requirements of the HBCA.
Numerous factors must be taken into consideration when determining the appropriate progress payment schedule including the:
Banks and financial institutions may attempt to prescribe ‘standard’ progress payment schedules, however there are no standardised progress claims stages or percentages/values which must be adhered to in WA. However, over time, certain progress payment stages have become understood and are widely used for typical builds.Some example stages for progress payments for a typical, single storey residence are set out below. These stages are not required by law and serve only as a general guide, as they may not be suitable for all building works.
Further, each contract should clearly define what is included in that stage.
Payment received before the commencement of the home building work.
The amount must not exceed 6.5% of the total costs of the work or 20% where the off-site cabinetry work is more than 50% of the total contract price.
2. Slab Down
Footings poured. Stumps, piers, or columns complete. Internal and external drainage complete. Electrical gas and plumbing, rough in below the floor complete. Floor slab poured.
3. Wall plate height
Completion of the walls of the structure that provide a platform for the construction of roof frame. All window and door frames have been built into the walls and internal walls have been constructed.
4. Roof cover on
The roof cover of the building has been installed, along with all valley flashings or gutters, fascia, and down pipes. Depending on the type of roof material being used, flashings and linings have been installed and ridge capping placed but not necessarily grouted so that the roof is watertight. In some cases, down pipes may be incomplete to facilitate painting or rendering later.
The structure is now able to be secured. All external doors and windows have been installed. In some cases, external door openings are secured temporarily to prevent damage to specialist timber frames and doors, but generally all glazing and glass sliding doors have been fitted. Surfaces of external walls have usually been installed but painting or texturing often comes later. Utilities are in place and internal wall surfaces have been applied.
6. Second fix
Completion of work to a final finish stage such as tiling, plumbing fit-off, cabinet work and carpentry and electrical fit-off.
7. Practical completion
As outlined in HIA’s lump sum residential contracts from home building works between $7,500 and $500,000:
House and site cleaned internally and externally. Rubbish and excess removed from site.