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The Act sets out three different deposit limits that cannot be changed. Where the contract price is:
The last deposit limit applies mostly to kitchen and bathroom suppliers and installers. Where the value of the off-site work is more than 50% of the contract price you can take up to 20% as a deposit. Off-site work is defined as contracted services performed at a place that is not the place at which the domestic building works it to be finally installed or constructed under the contract.
There are no longer any prescribed progress payment stages, nor are there restrictions on using your own defined progress schedule. HIA have provided in the HIA QC1, QC2 and QC3 contracts a sample schedule to help provide the industry with a workable payment schedule. The contracts also still allow for a customised schedule to be entered into where you can alter the progress claims to align with your particular job. However there are rules under the Act that you must comply with; specifically a builder under a domestic building contract must not claim an amount other than a deposit, unless the amount:
As an illustrative example: For 50% of the completed job you are entitled to 50% (inclusive of deposit) of the contract price. HIA contracts also provide a definition of each stage at which payment claims will be made under the sample progress schedule. If a builder chooses to use the same terminology as the sample schedule provided in the HIA contracts, the definitions of each stage will apply. The builder may customise and change those definitions to suit a particular job.
The most important thing to remember is that you cannot demand or receive an amount in advance under the contract, other than the deposit.
We recommend that whenever you wish to make changes to the standard conditions of an HIA contract that you have the changes reviewed by a HIA workplace adviser or your solicitor.
There are several types of disputes that may arise regarding progress payments. The following are some generic examples (excluding final claims):
a. Engage with the owner to seek a resolution
b. Complete the additional requested works and then resend the progress claim
c. Get the QBCC involved through their Early Disputes Resolution service; or
d. Suspend the works until payment is made.
It is very important to understand your contractual rights during any dispute with the client. Knowing where you stand can assist in resolving disputes before they escalate into more damaging disputes.
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No matter the size of the job, a watertight building contract is critical to protect your business, and the current climate presents a great opportunity to go digital with your contracts.