Deposits and Progress Payments

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Deposits

The DBCA sets out maximum deposits that cannot be exceeded, even if the homeowner agrees. If your contract is for work priced at more than $3,300, but less than $20,000, the deposit must not exceed 10% of the total contract price. If the contract price is $20,000 or more, the maximum allowed deposit is 5%.

NOTE: It is an offence to seek or receive a deposit greater than these percentages set out in the DBCA

Progress Payments
For the construction of an entire home the DBCA sets out a schedule for progress payments (Base Stage = 10%, Frame Stage = 15%, Enclosed Stage = 35%, Fixing Stage = 20%, and the balance at Practical Completion). You and the homeowner can agree to vary this payment schedule, but only by
giving the homeowner a notice which satisfies the requirements of the Domestic Building Contracts Regulation 2010 before the contract is entered. The homeowner must initial the clause in the contract that sets out the revised progress payment schedule. If the homeowner does agree to vary the payment schedule, the new schedule must be clearly noted in the contract and should not involve payment in advance of work progress on site.

For the construction of a home to the enclosed stage (formerly known as ‘lock-up stage’) or to the fixing stage (formerly known as ‘pre-paint stage’), the DBCA sets out different schedules for progress payments.

For jobs not involving the designated stages of home construction referred to above (i.e. for work such as renovations, extensions, pools, trade work, etc.), the above deposit maximums (5% and 10%) still apply, but you are free to negotiate a mutually agreeable progress payment arrangement. You cannot seek payment in advance of work performed on site except if expressly agreed between the parties. If you want to be paid in advance of the progress of work, you must give the homeowner a notice which satisfies the requirements of the Domestic Building Contracts Regulation 2010 before the contract is entered. and have the homeowner initial the clause in the contract that sets out the progress payments.

NOTE: Payments in advance of work progress on site may soon be banned under proposed changes to the DBCA.

For further details or advice about payment arrangements under the contract, seek legal advice.