Security of payment – NSW

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.

The Institute is working to update the security of payment guidance below. 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 Building and Construction Industry Security of Payment Act 1999 (NSW) came into operation on 5 October 1999. It applies to almost all contracts for construction work in New South Wales entered into after that date.