In the current financial environment, some lenders have changed their lending practices for residential projects where financing is being given under certain lending products. In some states and territories, this has affected residential projects with a contract price up to $1.5 million. We understand that these lenders have become concerned that a system of monthly progress claims (with an architect administering the contract) gives rise to the potential for risk exposure for the bank, during the duration of the project. This view is not shared by the ABIC joint-venture partners.
The following replacement schedules may be used in the state/territory specific ABIC SW 2018 contract for housing where a financial institution's lending requirements specify staged payments instead of monthly progress payments for residential projects, or the parties wish to use staged payments. They are intended to be inserted in place of the existing Special Conditions – Schedule 2a. In those states or territories where staged payments have been adopted by residential building legislation, the procedure for staged payments is now integrated in the relevant ABIC SW H contract.
Staged payments and deposit
Note that, if the parties have agreed that a deposit is to be paid, when adopting staged payments into your contract using Schedule 2A, the deposit should be included as a stage. Typically, the deposit is the first stage and under the ABIC domestic contracts, the deposit is only payable when the contractor meets the conditions in the contract for giving insurances and security (see the deposit clauses in section N). Page 12 of the SW User Guide (see your relevant state or territory ABIC contracts page) provides more information about deposits under ABIC, including the limits on the amount of deposit that apply to your ABIC contract.
Replacement Schedule 2a – staged payments
- Australian Capital Territory
- Northern Territory
- New South Wales – the procedure for staged payments is now integrated in the ABIC SW H NSW contract as required of the residential building legislation; staged payments adopted. Schedule 2a not used.
- Queensland
- South Australia
- Tasmania – the procedure for staged payments is now integrated in the ABIC SW H Tas contract as a requirement of the residential building legislation; staged payments already adopted. Schedule 2a not used.
- Victoria – the procedure for staged payments is already integrated in the ABIC SW H Vic contract form unless the parties opt-out of this payment method by choosing option 1 in clause N3.2.
- Western Australia
Procedure for adopting staged payments
To adopt staged payments into your state-specific ABIC SW H contract, we suggest you follow this procedure:
- Print out the replacement Schedule 2a double-sided for the relevant state/territory.
- Replace the existing Schedule 2a with the appropriate replacement Schedule 2a above.
- In item 3 of schedule 1 of the contract, next to the question regarding special conditions, ensure that ‘Yes’ is circled and/or ‘No’ is crossed out.
- Rule diagonal lines through the original clauses N3 and N4 in Section N of the contract to indicate that these are now deleted from the contract.
- When the contract is being signed, make sure the parties initial where shown at the bottom of the replacement Schedule 2a, the page containing item 3 of schedule 1, and the page containing clauses N3 and N4.
If the parties have already signed the contract before becoming aware of a lending institution issue, they will need to confirm their consent to vary the terms of the contract. Ideally this will be by an exchange of correspondence as well as following steps 1 to 4 above, making sure the parties verify the variation of the signed contract, by:
- Placing their initials at the bottom of all pages of the newly inserted replacement Schedule 2a.
- Initialling any corrections by hand to item 3 of schedule 1 as per step 2.
- Placing their initials next to the diagonal lines through the original clauses N3 and N4.
Once this is done, the only procedure for progress payments to be followed by the contractor and the architect is the procedure set out in clauses N3 and N4 of the replacement Schedule 2a, not the original clauses N3 and N4 found in section N of the contract.
If you have any questions regarding how to properly insert the replacement Schedule 2a, or if you have feedback about a financial institution’s lending practices that affect the ABIC contracts, please email: knowledge@architecture.com.au
ABIC 2008 MW and SW versions withdrawn from sale and use
Effective September 2019: The ABIC 2008 versions of MW and SW are no longer published and have been withdrawn from sale and use. They have been replaced with the 2018 revisions of MW and SW, which were released in April 2018. The ABIC co-authors no longer give copyright permission for anyone to use the 2008 versions (and 2011 versions in Queensland) of the ABIC MW and SW contracts, subcontracts, User Guides, the associated ABIC supporting documentation, nor the related Acumen guidance (the ABIC 2008 Materials). The ABIC co-authors do not give anyone permission to use, adapt, modify, reproduce nor communicate the ABIC 2008 Materials, unless permission is given under an express licence. Any such use is a breach of copyright and at a user’s own risk. The Institute no longer provides customer support or guidance about the ABIC 2008 Materials and we encourage all users to purchase and use the 2018 contracts and related supporting documents.
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