New South Wales caps the deposit and sets a test for stage claims, but it leaves the stages themselves to the contract. Fairfield builder Oliver Alameri says vague stage descriptions are behind most of the disputes he sees, and one line in the Act changes how far the test reaches.

Oliver Alameri has a clear view on where payment disputes on NSW home builds come from. “Most disputes I see come from vague stage descriptions, not bad intent,” said the licensed builder and founder of Buildana in Fairfield.

Under the Home Building Act 1989, that puts the weight squarely on the contract. Victoria writes stage percentages into its legislation, and the Northern Territory has standard stages, as our comparison of deposit caps and stage claims set out. New South Wales does neither.

In NSW, the law sets the frame. The contract does the rest, and Alameri’s advice to clients is built around that.

The NSW deposit cap is 10 per cent, and no payment comes before the insurance certificate

Section 8 of the Home Building Act caps a deposit at 10 per cent of the contract price. The Act defines a deposit as a payment on account before work starts under the contract. The cap applies to residential building work, with limited exceptions such as contracts between licensees.

A corporation that demands or receives more, or signs a contract that entitles it to, faces a maximum penalty of 1,000 penalty units. For an individual it is 200.

There is a second gate. Under section 92, a builder must not demand or receive any payment, deposit included, unless home building compensation cover is in force and a certificate of insurance has been given to the owner. The requirement applies above the prescribed contract price of $20,000.

So on a NSW home build, the first lawful dollar depends on paperwork, not on anything happening on site.

NSW sets no stage percentages but tests how each stage is described

For contracts over $20,000, section 8A authorises two main kinds of progress payment. One is a specified amount or percentage payable after completion of a specified stage, with the work in that stage described in clear and plain language.

The other is a payment for work already performed or costs already incurred, which can include a margin, with claims supported by invoices, receipts or other documents. A contract can use more than one kind.

What the Act does not do is put a number on any stage. That is a decision made in the contract.

Alameri said most of his contracts follow the familiar sequence of deposit, base or slab, frame, lock up, fixing and practical completion. In NSW, that sequence is an industry convention. Nothing in the Act requires it.

Authorised progress payment in NSW

Under section 8A of the Home Building Act 1989, a progress payment on a NSW residential building contract over $20,000 is authorised only if it is a set amount or percentage due after a specified stage whose work is described in clear and plain language, a payment for work performed or costs incurred with claims supported by invoices or receipts, or a payment authorised by the regulations. The section does not apply to a progress payment under a contract to which the Building and Construction Industry Security of Payment Act 1999 applies.

Alameri’s three checks happen before the contract is signed

His view of where disputes start lines up with how section 8A is drafted. The Act does not ask whether a stage percentage is fair. It asks whether the stage is described clearly enough to tell when it is finished.

“The thing I tell clients is to read the stage list before they sign, not when the first invoice lands,” he said.

He takes clients through three checks. Does each stage say what done means? Do the percentages roughly match the value of the work at that point? Is anything large loaded into the early stages?

“If frame is 30% of the price but the frame is nowhere near 30% of the cost, that’s worth a question.”

A schedule that answers that question on paper leaves less to argue about when the claim goes out.

In NSW, the law sets the frame. The contract does the rest.

Certifier inspections cover the early stages, not lock up or fixing

Alameri also expects clients to see the work before they pay. Photos or a site visit at each stage, plus certifier sign off where one applies, “makes the whole process calmer for everyone,” he said.

The words where one applies matter. Under section 61 of the Environmental Planning and Assessment (Development Certification and Fire Safety) Regulation 2021, work on a class 1 or 10 building must be inspected on six occasions.

Those are after excavation for footings, before pouring an in situ reinforced concrete element, before covering framework, before covering waterproofing in a wet area, before covering stormwater drainage connections, and at completion before an occupation certificate is issued.

The base and frame stages each take in at least one of those inspections. The later stages are different. The waterproofing inspection can fall partway through them, but no inspection marks lock up or fixing as finished.

A stage description that leans on certifier sign off works for the early claims. For lock up and fixing, the contract wording carries the weight.

That framework is also due to change. NSW’s new building approvals Act repeals the 2021 regulation and replaces construction and occupation certificates with new approvals, from a date still to be proclaimed. Stage descriptions that name today’s certificates will eventually need rewording.

Security of payment law qualifies the NSW stage rule

One more line in section 8A deserves a second read. Subsection 5 says the section does not apply to a progress payment under a construction contract to which the Building and Construction Industry Security of Payment Act 1999 applies.

For years that carve out mattered little on home builds, because contracts with owner occupiers were exempt from security of payment law. The exemption ended for contracts entered into from 1 March 2021.

The NSW Government says builders can now make payment claims against homeowners under that Act. A homeowner who wants to dispute a claim must provide a payment schedule within the time set by the contract or within 10 business days, whichever is earlier. Contracts over $20,000 must also include the Security of Payment Guide.

Read together, the two Acts raise a question about how far the section 8A stage test still reaches on home building contracts signed since March 2021. Our earlier comparison covered both rules but did not connect them.

The NSW Government’s guidance on the 2021 change does not address the point, and how the two Acts interact on a given contract is a matter for legal advice.

The deposit cap and the insurance requirement are unaffected. Neither section carries the same carve out.

Alameri’s point holds under either Act. A claim is easier to make, and harder to dispute, when the contract says clearly what has been built.

In NSW the payment schedule is written by the builder

Victoria is moving towards a schedule set largely by regulation. NSW has taken the other road, leaving the percentages and most of the definitions to the contract.

That gives NSW builders more room. It also puts more of the risk in the drafting. The stage list decides when money arrives on a job, and the stage descriptions decide whether a claim holds up when an owner pushes back.

It is one of the quieter parts of running a residential building business, and one of the few settled entirely before work starts.

Alameri tells his clients to read that list before they sign. The builder who wrote it is the one person who has already read it.

Build in NSW and see stage claims play out differently on site? We want to hear from you. Follow The Good Builder for more on contracts and payment rules in every state.

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Last updated: 9 November 2026. Legislation as in force at that date.

General Information Only: This article provides general information only and does not constitute legal advice. Deposit and progress payment rules differ between states and territories, apply above different contract values, and change over time. The interaction between the Home Building Act 1989 and the Building and Construction Industry Security of Payment Act 1999 on a particular contract depends on its terms and circumstances. Builders should obtain advice specific to their contracts before setting deposits or payment schedules.

Author: TGB Editorial