Security of payment explained

Security of payment laws exist so the people in the construction chain get paid for work they have done, without waiting a year or more for a court hearing. Used properly, they can turn a stalled claim into money in weeks. Used casually, they do nothing for you, and on many contracts with homeowners they do not apply at all.

What it is

Security of payment is a set of state and territory laws that give you enforceable rights to progress payments, on top of whatever your contract says. The detail varies by jurisdiction, but the idea is the same: make a valid payment claim, and if the other party does not pay or respond properly within the legislated time, you can go to a fast adjudication process instead of court.¹

Each state and territory has its own Act, its own deadline for the other side to respond, and its own answer on homeowners. The response deadline is the earlier of what the contract says and the figure below, counted from when the claim is served.

State or territory	Act	Response due	Contracts with homeowners
New South Wales	Building and Construction Industry Security of Payment Act 1999	10 business days	Covered, with their own payment rules
Victoria	Building and Construction Industry Security of Payment Act 2002	10 business days	Excluded, unless the owner builds homes as a business
Queensland	Building Industry Fairness (Security of Payment) Act 2017	15 business days	Excluded where a resident owner is a party
Western Australia	Building and Construction Industry (Security of Payment) Act 2021	15 business days	Excluded for an individual’s single home up to $500,000; covered above that
South Australia	Building and Construction Industry Security of Payment Act 2009	15 business days	Excluded where the owner lives or will live there
Tasmania	Building and Construction Industry Security of Payment Act 2009	10 business days, or 20 for a landowner on a residential claim	Covered
Australian Capital Territory	Building and Construction Industry (Security of Payment) Act 2009	10 business days	Excluded where a resident owner is a party
Northern Territory	Construction Contracts (Security of Payments) Act 2004	Notice of dispute within 10 working days	Covered

Checked against the Acts as at October 2026. They change, so check your own state’s current version before you rely on any row.

Why it matters to a builder

It comes down to cash flow. A dispute that starts with a letter of demand and goes the full legal route can take 12 to 18 months to reach a hearing.² An adjudicator’s decision comes far faster, and it is binding for now and enforceable as a debt, even though either side can still argue its final rights in court later.³

When a Brisbane renovation customer could not pay for the variations, the builder had to fund the job himself for four or five months, close to half a million dollars, until he recovered the money. Had it happened a year earlier, he says, the business would have been in a lot of trouble.⁴

It also cuts both ways. When a subcontractor sends you a valid claim, the same law sets how and when you must respond. Ignore it, or miss the window, and you can end up with an adjudication you have no defence to.⁵

How it works in practice

The basic sequence is similar in most states, though the names and deadlines vary (the Northern Territory works differently):

1. You serve a payment claim for work done, in the form and at the time your state’s Act and your contract allow.
2. The other party pays, or replies with a payment schedule saying what it will pay and why, inside the deadline.
3. If it does neither, or you dispute its schedule, you can escalate: to adjudication, or in some cases straight to court.

Queensland shows how strong this can be on a contract the Act covers. If the other party gives no payment schedule in time, it becomes liable for the full amount you claimed. You then give a warning notice in the approved form, no later than 30 business days after the due date, and wait 5 business days. After that you can sue for the amount as a debt, and the other party cannot raise a defence or counterclaim.⁶ That can turn a stalled payment into a court judgment in weeks.² Prefer adjudication? The Queensland Building and Construction Commission sets the windows: 30 business days after a schedule you dispute, 20 business days after the due date if the scheduled amount goes unpaid, and 30 business days after the later of the due date or the last day for a schedule if none arrived.⁷

The catch is that this route is closed on a contract for domestic building work with a resident owner, so in Queensland it will not help you against most homeowners. It works against an investor who will not live in the home, a developer, or anyone further up a commercial chain.⁶

Whatever state you are in, the habits that protect you are the same:

• Serve every payment claim in writing, by a method you can prove, such as email.
• Diarise every response deadline the day the claim goes out.
• Escalate on time if no payment schedule arrives.
• Keep dated written records of instructions and variation approvals.
• Get legal advice early, before the debt is old.

Claim the day a stage is genuinely complete, in writing, and diarise every response deadline. The law only protects builders who follow its timing.

Lodging promptly matters for cash flow too. Every day a claim sits unlodged, you are funding the job from your own pocket.

Who your state’s Act covers

Contracts with homeowners are excluded in Queensland, Victoria, South Australia, the ACT and Western Australia. Queensland and the ACT exclude a contract where a resident owner is a party. South Australia excludes domestic work on a home the owner lives in or will live in. Victoria excludes domestic building contracts with an owner who does not build homes as a business. Western Australia excludes an individual owner’s single home up to $500,000; above that the Act applies, and the claim must include a homeowner’s notice.⁸

Contracts with homeowners are covered in New South Wales, Tasmania and the Northern Territory. New South Wales has applied the Act to owner-occupier contracts since 1 March 2021, with a 10 business day deadline for the homeowner’s payment schedule.⁹ In Tasmania, a landowner who is not a building practitioner gets 20 business days to reply to a claim for a residential structure. The Northern Territory has no residential exclusion.⁸

In every state that excludes homeowners, your subcontracts are still covered. So your plumber or framer can take you to adjudication while you have no security of payment route against the customer who has not paid you.⁸ Allow for that gap in your cash flow plan and in your contract with the customer.

Common confusion

“My contract says something different.” Security of payment laws apply whatever the contract says. In New South Wales and Queensland, for example, a clause that tries to exclude or limit the Act is void.¹⁰ Review your subcontract and building agreements every year or two, and get legal advice before you sign a new one.

“Any invoice is a payment claim.” Not in most states. In New South Wales, Victoria, South Australia, Tasmania, the ACT and Western Australia, the claim must state that it is made under the Act. Queensland is the exception: a written document with the word “invoice” on it counts as a request for payment.¹¹ If your state needs the words, put them on every claim.

“A determination means I get paid.” A determination still has to be enforced. If the party you are claiming against has no money, such as a developer in administration, the process is far less effective, and unsecured creditors often recover cents in the dollar.¹²

“Security of payment lets me claim early.” It does not. Claim only for stages that are complete as your contract defines them. The former director of a Perth building company was fined $10,000, partly over a lock-up payment demanded before the home reached lock-up and a roof cover payment for work not done to the approved plans. That case was brought under Western Australia’s building registration law, not security of payment, but it shows how regulators treat early claims.¹³ If you need money coming in sooner, change the stages instead. A builder in south-west Victoria splits lock-up and fix-out into two stages each, sets a clear trigger for every stage, and explains to customers that it keeps the job’s cash flowing.¹⁴

Let the system hold the deadlines

A calendar can track deadlines on two or three jobs. Once claims go out on a dozen jobs and trade claims come in every week, something gets missed. Good construction software keeps it in one place:

• One view per job of every claim’s forecast date, when it was issued and sent, when it is due, and whether it is paid, pending or overdue.¹⁵
• Claim templates that carry your state’s “made under the Act” wording, so nobody has to remember it.
• Response deadlines worked out in business days from the date the claim was sent, with a flag when one passes with no payment schedule.
• Incoming trade claims logged on arrival, with a countdown to your own schedule deadline.
• Claims raised when a stage is signed off as complete on site, not before.

Where to next

Most payment fights start with what was agreed before signing. Read Contract mistakes builders make before they sign, then How to build a 13 week cash flow forecast so a late payment never catches you short.

Footnotes

1. “Cash Flow for Builders Australia”, The Good Builder, June 2026. The rights and response deadlines come from the state Acts: Building and Construction Industry Security of Payment Act 1999 (NSW), s 14; Building and Construction Industry Security of Payment Act 2002 (Vic), s 15; Building Industry Fairness (Security of Payment) Act 2017 (Qld), s 76; Building and Construction Industry (Security of Payment) Act 2021 (WA), s 25; Building and Construction Industry Security of Payment Act 2009 (SA), s 14; Building and Construction Industry Security of Payment Act 2009 (Tas), No. 86 of 2009, s 19; Building and Construction Industry (Security of Payment) Act 2009 (ACT), s 16; Construction Contracts (Security of Payments) Act 2004 (NT), Schedule 1. Versions in force at October 2026. ↩

2. “Do Not Wait Eighteen Months to Get Paid”, The Good Builder, December 2025. ↩ ↩²

3. “Building Disputes in Australia”, The Good Builder, June 2026. See, for example, Building and Construction Industry Security of Payment Act 1999 (NSW), s 32. ↩

4. “Brisbane Builder on Ambition, Fraud & Almost Losing It All”, Better Builder Podcast #66, July 2025. https://www.youtube.com/watch?v=qoDe5jEJhO8 ↩

5. “Managing Subcontractors in Australia”, The Good Builder, June 2026. ↩

6. Building Industry Fairness (Security of Payment) Act 2017 (Qld), ss 61(2)(b), 77, 99 and 100. ↩ ↩²

7. Queensland Building and Construction Commission, “Apply for adjudication”, checked October 2026. https://www.qbcc.qld.gov.au/complaints-disputes/payment-contract/commercial-payment-dispute/adjudication/apply-adjudication ↩

8. Building and Construction Industry Security of Payment Act 2002 (Vic), s 7(2)(b) and (ba). https://www.legislation.vic.gov.au/in-force/acts/building-and-construction-industry-security-payment-act-2002 Also Building Industry Fairness (Security of Payment) Act 2017 (Qld), s 61(2)(b); Building and Construction Industry Security of Payment Act 2009 (SA), s 7(2)(b); Building and Construction Industry (Security of Payment) Act 2009 (ACT), s 9(2)(b); Building and Construction Industry (Security of Payment) Act 2021 (WA), ss 10(1) and 24(2); Building and Construction Industry Security of Payment Act 2009 (Tas), s 19(3); Construction Contracts (Security of Payments) Act 2004 (NT), s 9. ↩ ↩² ↩³

9. NSW Government, “Changes to security of payment laws”, checked October 2026. https://www.nsw.gov.au/housing-and-construction/compliance-and-regulation/security-of-payment/changes-to-laws ↩

10. “What Every Builder Should Know Before Signing a Subcontractor Agreement”, The Good Builder, April 2026. Building and Construction Industry Security of Payment Act 1999 (NSW), s 34; Building Industry Fairness (Security of Payment) Act 2017 (Qld), s 200. ↩

11. Building and Construction Industry Security of Payment Act 1999 (NSW), s 13(2)(c); Building and Construction Industry Security of Payment Act 2002 (Vic), s 14(2)(e); Building and Construction Industry Security of Payment Act 2009 (SA), s 13(2)(c); Building and Construction Industry Security of Payment Act 2009 (Tas), s 17; Building and Construction Industry (Security of Payment) Act 2009 (ACT), s 15; Building and Construction Industry (Security of Payment) Act 2021 (WA), s 24(1)(d); Building Industry Fairness (Security of Payment) Act 2017 (Qld), s 68(3). ↩

12. “How Builders Can Protect Themselves When a Developer Goes Under”, The Good Builder, April 2026. ↩

13. Building and Energy, Government of Western Australia, media release on a State Administrative Tribunal decision, 4 July 2025. Also “$10K Builder Fine, Steel Crisis Incoming & the $11M Boom No One’s Talking About”, The Good Builder Podcast, July 2025. https://www.youtube.com/watch?v=_4-7oV9j0eg ↩

14. “Stop Signing Fixed Price Contracts Before You Beg Family For Loans”, The Professional Builder (podcast), June 2026. https://www.youtube.com/@theprofessionalbuilder ↩

15. ClickHome, “4 ways ClickHome27 keeps progress claims moving”, September 2026. https://www.clickhome.com.au/insights/progress-claims-software-builders ↩