Effective 1 March 2021, the Building and Construction Industry Security of Payment Regulation 2020 (NSW) Schedule 2 has introduced important consequences for owners and builders on all residential building in NSW where the owner occupies or plans to occupy the home at the end of the project ('homeowner projects'). This change also impacts the ABIC Simple Works H NSW contract. These changes mean administering homeowner projects has changed and NSW architects need to be aware that:
- The limitation in the Home Building Act (NSW) that only stage progress payments were authorised no longer applies to homeowner projects. This means that monthly progress claims and payments are once again permitted in building contracts for homeowner projects. This includes typical projects under an ABIC SW H NSW contract.
- The NSW Security of Payments regime now applies to homeowner projects. This benefits the builder's rights to secure timely payment. If a builder serves an SOP claim and invoice, the homeowner/client needs to be aware of the time frames and procedures in the NSW Security of Payments legislation.
This change to the SOP legislation doesn't directly affect the standard ABIC payment claims and assessment time frames and procedures. However, architects should be aware that an SOP claim is a matter between the builder and the homeowner. It can present a professional risk if architects attempt to handle an SOP payment claim or dispute on behalf of their client. If you or your client receives an SOP claim or invoice, you should recommend that your client seeks legal advice. Refer Acumen note Security of payment - NSW.
The ABIC authors are planning to revise the ABIC Simple Works H NSW contract to reinstate the familiar ABIC-standard monthly progress payments, which will bring it in line with the Major Works H NSW contract.
The 2018 revised editions of the Australian Building Industry Contracts (ABIC) Major Works (MW), Simple Works (SW) commercial and domestic are provided below. Information about the ABIC contracts including which contract to use, FAQs and differences between the SW and MW contract, are available on the ABIC contracts page. For a revised edition of the ABIC Basic Works (commercial) contract refer to ABIC Basic Works BW 2018.
Note: The ABIC MW and SW user guides have been updated for the new Corporations Act / insolvency laws that will affect all contracts and in particular Section Q of the ABIC contracts. For an explanation of the changes refer to Termination rights and insolvency events.
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Update: Changes to the Home Building Act 1989 and regulations (HBA), effective 1 July 2018 affect some of the consumer protection requirements and the home building compensation cover. These obligations fall on the contractor under the legislation and may not necessarily require the architect to complete or administer the contract in any different way. The ABIC authors have made updates to the NSW H contracts so they meet these new requirements. From 21 August 2018, all contracts published and sold will be the updated editions. All contracts signed before 1 July 2018 can continue to be used and administered.
These changes to the Home Building Act (NSW) have been updated in July 2020, including a new consumer building guide issued by NSW Fair Trading. The NSW H contracts remain current, but the updated consumer building guide is included in new contract packs sold and can be downloaded separately from the links below.