Progress Payment Rules Under the HBCA in Western Australia

What it is

Section 10 of the Home Building Contracts Act 1991 (WA) is one section doing two jobs. Section 10(1)(a) governs what a builder can take before work starts. Section 10(1)(b) governs everything after.

The rule after commencement is short. A builder must not enter a contract entitling the builder to demand or receive any payment unless the payment is a genuine progress payment for work already performed or materials or services already supplied, or is of a prescribed kind. The penalty is $10,000.

Nothing upfront but the deposit

Before commencement, section 10(1)(a) permits only a deposit of not more than 6.5 per cent of the total amount payable, or a payment of a prescribed kind. The only prescribed kind is regulation 3A, which lifts the deposit to 20 per cent for qualifying off-site cabinetry work.

That means there is no lawful mobilisation payment, no lawful pre-order allowance and no lawful deposit-plus-materials structure. Building and Energy puts the test in physical terms: a builder cannot ask for a progress payment for the purchase and delivery of bricks until the bricks have actually been delivered to the site. The regulator adds that upfront payments beyond the deposit can affect any claim the owner later makes under a home indemnity insurance policy, which generally does not cover money paid in advance.

The word doing the work is "already"

Section 10(1)(b)(i) is written in the past tense on purpose. A genuine progress payment is for work already performed or materials or services already supplied. A claim tied to a date, a percentage of elapsed programme or an anticipated stage is not a genuine progress payment no matter what the schedule calls it.

Section 10(5) then closes the loop on conduct as well as drafting. A builder must not demand or receive any payment after commencement unless it is a genuine progress payment or of a prescribed kind, again with a $10,000 penalty. So a compliant contract wrongly claimed against is still an offence.

Two things that help the builder

Prefabricated and transportable dwellings. Section 10(2) deems a payment for materials or a dwelling in prefabricated or transportable form to be a genuine progress payment, but only if property in the materials or dwelling passes absolutely to the owner on payment. It applies even though the materials are not yet placed on or affixed to the owner's land. Absolutely is the operative word: a retention of title clause defeats the deeming and the payment reverts to being an unlawful advance.

The schedule presumption. Section 10(3) provides that where a contract sets out a schedule of payments due at specified stages, and a payment is demanded in accordance with that schedule, the payment is taken to be a genuine progress payment until the contrary is shown. That is a rebuttable presumption, not a safe harbour. It shifts the onus to the owner. It does not make a front-loaded schedule lawful, because an owner who shows the money outruns the work displaces it.

What a non-compliant schedule actually costs

Not the contract. Section 27(1) provides that a contract or a provision is not illegal, void or unenforceable only because a requirement of the Act is not complied with. A builder should not read that as comfort, because the consequences that do apply are the ones that hurt.

• Termination. Section 10(4) gives the owner a right to terminate under section 19 where the builder entered the contract in breach of section 10(1). The right crystallises at signing, before any money moves.
• Penalties. $10,000 under section 10(1) and again under section 10(5). Both are prescribed offences under regulation 8 of the Home Building Contracts Regulations 1992, each carrying a modified penalty of $1,000 on an infringement notice.
• Orders that the money is not payable. Section 17 routes a Part 2 breach to a complaint under the Building Services (Complaint Resolution and Administration) Act 2011. Section 41(2)(e) of that Act empowers an order declaring that a specified amount of money claimed, or money claimed for specified work, is not payable. Section 41(2)(c) allows an order that an amount already paid be repaid.

That third limb is the real exposure. The contract survives, and the claim does not.

The band, and what sits outside it

Section 10 only reaches a home building work contract as defined in section 3(1), and regulation 2A prescribes the band at more than $7,500 and less than $500,000. Above $500,000 there is no statutory progress payment rule at all, and the contract carries the whole load. Cost plus contracts are excluded from the definition, so section 10 does not touch them either.

Progress payments are on the table in the current review of WA's home building contract laws, with recommendations due in September 2026.