Deposits and payments for domestic building

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You must give your client a copy of the Domestic Building Consumer Guide before they sign a major domestic building contract. For more information, view our Domestic Building Consumer Guide page.

Laws about domestic building payments

The law governing home building contracts in Victoria is the Domestic Building Contracts Act 1995. Among other things, this law:

  • sets an amount for the deposit
  • defines the stages of building and how much the client pays for each stage
  • only allows certain changes to the contract price (legal changes include variations, and prime cost and provisional sum items).

Other relevant laws include the Australian Consumer Law and Fair Trading Act 2012, which requires contracts to be clear and fair.

Taking deposits for domestic building work

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.

You must give your client a copy of your domestic building insurance policy and a certificate of currency covering their property before you take a deposit or any other money for work worth more than $16,000.

View our Taking payments for home building checklist page.

Stage payments/progress payments for domestic building

The contract must set out the price and stage payments (you must have a major domestic building contract for most work worth more than $10,000, even if your client is an owner builder).

By law, your client pays for completed stages. These are:

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 is fixed, the flooring is laid and external doors and external windows are fixed (even if those doors or windows are only temporary)

Fixing

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

Your client will pay a set amount for each completed stage, depending on what the contract is for:

If the contract is to:

the client pays this % of the total price:

when this stage is complete:

build to lock-up stage

  • 20%
  • 25%
  • Base
  • Frame

build to fixing stage

  • 12%
  • 18%
  • 40%
  • Base
  • Frame
  • Lock-up

build all stages

  • 10%
  • 15%
  • 35%
  • 25%
  • Base
  • Frame
  • Lock-up
  • Fixing

Security of payment and domestic building

The Building and Construction Industry Security of Payment Act 2002 does not apply to domestic building work. It enables subcontractors working in commercial developments who have not been paid by their contractor to recover unpaid amounts against the commercial developer/owner.

So, by law, claims cannot be made against home owners commissioning domestic building work unless the home owner is a commercial builder.

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