Changes to the Build­ing and Con­struc­tion Indus­try Secu­ri­ty of Pay­ment Act 1999

Res­i­den­tial home build­ing work car­ried out by a home builder for an own­er occu­pi­er home­own­er has (until very recent­ly as not­ed below) always been exempt from the secu­ri­ty of pay­ment régime in New South Wales. 

How­ev­er, since 1 March 2021 res­i­den­tial builders have been able to resort to the Build­ing and Con­struc­tion Indus­try Secu­ri­ty of Pay­ment Act 1999 (the SOP Act) with a view to prompt­ly recov­er­ing progress pay­ments from home owners.

In this respect, the SOP Act used to pre­scribe as a class of con­struc­tion con­tracts own­er occu­pi­er con­struc­tion con­tracts. The SOP Act did not apply to such con­tracts. This was the effect of sec­tion 7(5) of the SOP Act and clause 4(1) of the Build­ing and Con­struc­tion Indus­try Secu­ri­ty of Pay­ment Reg­u­la­tion 2020 (the Reg­u­la­tion).

Sched­ule 2 of the Reg­u­la­tion com­menced on 1 March 2021. It omits clause 4.

Accord­ing­ly, since 1 March 2021 the secu­ri­ty of pay­ment laws have applied to all res­i­den­tial build­ing con­tracts, includ­ing those entered into with the homeowner. 

This means that res­i­den­tial home builders car­ry­ing out work on an own­er occu­pier’s dwelling will now be able to utilise the secu­ri­ty of pay­ment adju­di­ca­tion process to resolve a dis­pute with the home­own­er. Since 1 March 2021, res­i­den­tial home builders have also had the ben­e­fit of the statu­to­ry rights to pay­ment if a home­own­er does not pro­vide a pay­ment sched­ule indi­cat­ing the rea­sons why the home­own­er is with­hold­ing all or part of the builder’s progress claim.