Understanding Payment Schedules in HIA Building Contracts
When entering into a Home Industry Association (HIA) building contract, it’s crucial to understand the payment schedule to ensure smooth financial transactions throughout the construction process. Here’s a detailed look at when payments are typically required under a standard HIA building contract.
Progress Payments
Progress payments are a common feature in HIA building contracts. These payments are made at various stages of the construction process, ensuring that the builder receives funds as work progresses. The payment schedule is usually outlined in the contract and includes specific milestones that must be reached before payments are made.
Typical Stages for Progress Payments
- Deposit: This is the initial payment made when the contract is signed. It is usually a small percentage of the total contract price.
- Base Stage: Payment is made once the foundation or base of the building is completed.
- Frame Stage: This payment is due when the framing of the house is finished.
- Lockup Stage: At this stage, the building is secure, with windows and doors installed. Payment is made once this stage is completed.
- Fixing Stage: This includes the installation of internal fittings and fixtures. Payment is made upon completion of this stage.
- Completion: The final payment is made once the construction is fully completed and the building is ready for occupancy.
Payment Terms
Under a typical HIA contract, builders are entitled to be paid within a specified period after submitting a progress claim. This period is usually around 5 days, but it can vary depending on the contract terms1. It’s important for homeowners to review and understand these terms to avoid any delays or disputes.
Late Payments
If a valid claim is presented then it must be paid within the prescribed payment terms. Late payments are a breach of contract. Your responsibe for the timing of all payments, even if your lender delays the payment. Late payments will attract interest charges at the rate specified in your building contract.
Final Considerations
Before signing a contract, homeowners should ensure that the payment schedule aligns with their financial arrangements, especially if they are relying on a lender. It’s advisable to discuss the payment schedule with the lender to avoid any issues with financing during the construction process3.
Understanding the payment schedule in an HIA building contract helps both homeowners and builders manage their finances effectively, ensuring a smoother construction process and reducing the risk of disputes.
If you have any specific questions about HIA contracts or need further details, we recommend contacting a construction lawyer.
Disclaimer
This is not legal advice. We are not lawyers. The information shown here is general information and is not specific to your circumstances.