NSW Residential Payment Disputes to be Resolved under Security of Payment Legislation

From 1 March 2021, contractors may apply for adjudication of payment claims under owner occupier construction contracts in NSW.

Currently, the Building and Construction Industry Security of Payment Act 1999 (the Act) prescribes as a class of construction contracts owner occupier construction contracts. The Act does not apply to such contracts. This is the effect of section 7(5) of the Act and clause 4(1) of the Building and Construction Industry Security of Payment Regulation 2020 (the Regulation).

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

Schedule 2 also prescribes an owner occupier construction contract as an exempt residential construction contract as defined in section 4 of the Act. Section 11(1C) of the Act provides for a progress payment under an exempt residential construction contract to be made on the date on which payment becomes due in accordance with the terms of the contract, or, if the contract has no express provision for payment, on the date occurring 10 business days after a payment claim is made.

In summary, Schedule 2 of the Regulation will broaden the scope of the Act to allow contractors working directly for a residential homeowner to serve a statutory payment claim on the homeowner by endorsing it as a payment claim made under the Act.

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