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Final payment and handover procedure
HIA Victorian contracts
The information below 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 (January 2011)
- Clauses 39, 40 and 41 – Alterations, Additions and Renovations Contract (January 2011).
Steps in the final handover process
- Step 1: Notice of Completion
- Step 2: Final inspection
- Step 3: Rectify any defects
- Step 4: Seek final payment
Frequently asked questions regarding the handover procedure
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 [LINK TO THE HIA BOOKSHOP] or your local stationary supplier.
When should final inspection of a site take place?
You and your client must meet within seven 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 decision 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.
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