HOME BUILDING CONTRACTS ACT 1991 - SECT 10

HOME BUILDING CONTRACTS ACT 1991 - SECT 10

10 .         Deposits and progress payments, limits on terms as to

        (1)         A builder must not enter into a contract which provides that the builder is entitled to demand or receive from the owner any payment —

            (a)         before the commencement of the home building work to which the contract relates unless the payment is —

                  (i)         a deposit of not more than 6.5% of the total amount payable to the builder under the contract for the home building work; or

                  (ii)         of a prescribed kind;

            (b)         after the commencement of the home building work unless the payment is —

                  (i)         a genuine progress payment for work already performed or materials or services already supplied; or

                  (ii)         is of a prescribed kind.

        Penalty: $10 000.

        (2)         Where a contract provides for the purchase by the owner of materials for a dwelling in a prefabricated form or of a dwelling that is transportable or for a similar arrangement, a payment for the materials or dwelling and associated work is a genuine progress payment for the purposes of subsection (1)(b)(i) —

            (a)         if property in the materials or dwelling passes absolutely to the owner on the payment being made; and

            (b)         notwithstanding that the materials or dwelling are not placed on or affixed to the land of the owner.

        (3)         Where —

            (a)         a contract sets out a schedule of payments due at specified stages of the home building work; and

            (b)         a payment is demanded or required in accordance with that schedule,

                the payment is to be taken to be a genuine progress payment for the purposes of subsection (1)(b)(i) until the contrary is shown.

        (4)         If a builder enters into a contract in breach of subsection (1), the contract may be terminated by the owner in accordance with section 19.

        (5)         A builder under a contract must not demand or receive from the owner any payment after the commencement of the home building work unless the payment is a genuine progress payment for the purposes of subsection (1)(b)(i) or of a prescribed kind under subsection (1)(b)(ii).

        Penalty: $10 000.

        [Section 10 amended: No. 76 of 2000 s. 48.]