This is a reminder that in 2020, the NSW government introduced the Building and Construction Industry Security of Payment Regulationthat removes the ‘owner occupier construction contracts’ as being immune from the application of the Building and Construction Industry Security of Payment Act for residential building work, according to the Building and Construction Industry Security of Payment Regulation 2020 (NSW) Sch 2.
As of 1 March 2021, residential builders and contractors including architects and consultants, can use the Security of Payment regime to resolve disputes and recover progress payments from owner occupiers, and the regime will apply to owner occupier contracts entered into on or after this date.
Most building disputes in NSW worth less than $500 000 end up in the NSW Civil & Administrative Tribunal, but the changes to the Security of Payment regime mean that if a builder’s progress claim is disputed by the homeowner, the builder can apply for an independent adjudication of the disputed payment claim instead of commencing proceedings through NCAT. Hence, if a builder succeeds with independent adjudication, they will obtain an enforceable determination against the homeowner in a much quicker way than via a hearing at NCAT.
Homeowners should become aware of the seriousness of the clause, and Builders and Contractors should be aware of the opportunities to pursue claims directly against relevant owner occupiers of residential property.