Paying for building work - checklist

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  • Make progress payments only according to the schedule in your contract
  • Before you make each progress payment, make sure the work has passed the building surveyor’s inspection, meets your contract requirements and is complete

Paying the deposit

By law, a deposit can be no more than:

  • 10 per cent, if the total contract price is less than $20,000
  • five per cent, if the total contract price is $20,000 or more.

For work over $16,000, don't pay a deposit until you have evidence of the builder's domestic building insurance policy, a current certificate of insurance for the building project's address, and have checked the builder's registration number.

How stages are defined

By law, you pay when certain stages of the project are complete as follows:

Stage

Complete when: 

Base

Depends on type of floor:

  • timber – concrete footings for the floor are poured and base brickwork is built to floor level
  • timber with no base brickwork – stumps, piers or columns are complete
  • suspended concrete slab – concrete footings are poured
  • concrete floor – floor is complete
  • floor put in after exterior walls and roof are constructed – concrete footings are poured

Frame 

The frame is completed and approved by a building surveyor

Lock-up 

External wall cladding and roof covering are fixed, the flooring is laid and external doors and windows are installed

Fixing

All internal cladding, architraves, skirting, doors, built-in shelves, baths, basins, troughs, sinks, cabinets and cupboards are fitted and fixed in position.

Making progress payments

You pay a percentage of the total price for each completed stage depending on the details of your contract. The table below presumes you are paying a five per cent deposit, wit the remainder at completion.

Standard payment schedule

Type of contract 

% total contract paid 

Stage when payment is made 

Build to lock-up

20 per cent
25 per cent

base stage
frame stage 

Build to fixing stage 

12 per cent
18 per cent
40 per cent 

base stage
frame stage
lock-up stage 

Build all stages 

10 per cent
15 per cent
35 per cent
25 per cent 

base stage
frame stage
lock-up stage
fixing stage 

Do not pay in advance. Domestic building insurance gives you limited cover and may not pay claims on work paid for in advance.

Before you make each progress payment, make sure the work:

  • has passed any required inspection identified on the building permit applicable to the stage of the building work
  • meets your contract plans and specifications
  • is complete.

You should not withhold progress payments because of defects (provided that the stage has been completed). Always get legal advice before withholding a progress payment.

Choosing a different payment schedule

A builder may request a different payment schedule to the standard one. Seek legal advice if you are considering agreeing to a different payment schedule. You should consider if the payment schedule would leave you at a financial disadvantage if the builder was not able to complete the work.

Whether you sign a contract with a standard or different payment schedule, you are obliged to make the payments as set out in your contract.

Making final payment

The building project is complete, and you make the final payment, when the work is finished in accordance with plans and specifications and the Occupancy Permit has been issued (for a new home) or a Certificate of Final Inspection has been issued (for an extension or renovation). The builder is not entitled to the final payment until then.

You can pay an independent building consultant to check for defects or unfinished work, and to advise you of any issues which have affected completion of the project. If you have concerns:

  • make a list of any work that you believe is faulty or incomplete
  • speak with your builder immediately about your concerns
  • put your request and any agreements made with the builder to finish work in writing, and send it by registered post.

If you are in dispute about areas of work, contact our Building Information Line on 1300 55 75 59 between 9:00 am to 5:00 pm, Monday to Friday (except public holidays). Calling this number costs the same as a local call. Additional charges may apply if you are calling from overseas, on a mobile or payphone.