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Payment on Completion in Australia: The 20% Deposit Risk

October 13, 2026
Payment on Completion in Australia: The 20% Deposit Risk

Final payment under a payment on completion policy becomes due only when the contract's own completion trigger has occurred, usually when all works match the plans and specifications and a building surveyor has issued an Occupancy Permit or Certificate of Final Inspection. Where the contract is silent, statutory payment claim rules decide when a claim and its due date apply. Prior payments should always be reconciled against the final invoice before any balance is released.

TL;DR:

  • Final payment depends on the contract’s trigger, usually completed work matching approved plans, major defects fixed, and an Occupancy Permit or Certificate of Final Inspection.
  • The QBCC advises deposits no higher than 20%; tie payments to written stages, and avoid paying half the price before half the work is complete.
  • A valid statutory claim identifies the work and amount and cites relevant legislation; without a contractual due date, many jurisdictions require payment within 10 business days.
  • Before releasing the balance, verify required certificates, signed and priced variations, warranties, insurance, receipts, and an itemized invoice crediting every deposit and progress payment.
  • If a builder demands early final payment, request written proof and the contract clause, then arrange an independent inspection before paying or seeking regulator review.
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Table of Contents

Deposits and progress payments: typical rules and lawful limits

Most disputes over a payment on completion policy start earlier, at the deposit stage. The QBCC advises against paying more than a 20% deposit before work begins, and treats any larger upfront payment as a risk to the protection available under home warranty schemes. A large deposit hands the contractor money before there is anything built to check it against, which weakens the owner's position if work stalls.

Upfront payment contrasted with verified work stages

Progress payments are the safer structure. They are usually arranged in one of two ways: stage-based payments tied to defined milestones (slab down, frame up, lock-up, fixing), or regular-interval payments made weekly or monthly regardless of progress. Stage-based schedules are generally preferable because each payment is linked to something observable on site rather than the calendar.

Industry guidance is specific about proportionality: a contractor should not be able to claim more than half the contract price until roughly half the onsite work is actually completed. Before signing, owners should insist that each stage carries:

  • A clear written description of exactly what work the stage covers.
  • A fixed percentage or dollar figure attached to that stage, agreed before work starts.

Vague stage descriptions are the single most common source of payment arguments later in a job.

What completion means: practical completion, occupancy permits and certificates

"Completion" has no single universal meaning. Practical completion generally refers to the point where the works are usable for their intended purpose, even if minor items remain outstanding. Contractual completion is whatever the contract itself defines, which is why the wording matters more than any general industry assumption.

Consumer Affairs Victoria sets a clearer statutory bar: the works are considered complete for final payment purposes when everything in the plans and specifications has been finished to the agreed standard, major defects have been rectified, and a building surveyor has issued a Certificate of Final Inspection or Occupancy Permit. Relying on a contractor's own verbal assurance that a job is "done" carries far more risk than requiring independent certification.

A well-drafted completion clause typically covers:

  • Reference to the approved plans and specifications as the benchmark for finished work.
  • Rectification of all major defects, with minor defects carried into a defined defects liability period.
  • A named certifier, usually an independent building surveyor, responsible for sign-off.

Minor defects do not usually hold up final payment altogether, but many contracts allow a small retention to be held back until the defects liability period ends.

Payment claims and timelines: reference dates, due dates and security of payment mechanics

Security of Payment legislation governs how and when a payment claim can be made, separately from whatever the contract says about completion. A valid claim generally needs to:

  1. Identify the construction work or goods and services the claim relates to.
  2. State the amount claimed for that work.
  3. Clearly indicate that it is made under the relevant Security of Payment legislation, since incorrectly formatted claims can lose statutory dispute rights.

Claims can only be made from a reference date, a point the contract sets (often monthly) that triggers the right to claim. When a contract doesn't state a reference date, many frameworks default to the last day of each calendar month.

Due dates follow a similar logic. If the contract specifies a due date, that date applies. Where it doesn't, many Australian jurisdictions default to payment being due 10 business days after the claim is given. Some contract types also carry statutory maximum payment terms that cap how long a payer can take, regardless of what the contract tries to specify. Getting these mechanics wrong on either side, contractor or client, is one of the easiest ways to forfeit a legitimate claim.

Before you pay final: practical checklist for owners and contractees

Releasing the final balance should never be a formality. Before paying, confirm:

  • All work matches the approved plans and specifications, and any variations are signed, dated and priced.
  • The required certificates have been issued, including an Occupancy Permit or Certificate of Final Inspection, along with relevant warranties, insurances and receipts for every prior payment made.
  • The final invoice itemises every deposit and progress payment already made, so the remaining balance is shown clearly rather than just stated as a lump sum.

An itemised final invoice that reconciles total contract value against prior payments removes most of the ambiguity that leads to disputes at this stage. Structuring invoice payment terms clearly from the outset makes this reconciliation far easier when the job wraps up.

Pro Tip: Keep every progress invoice and receipt in one file as the job progresses rather than trying to reconstruct the payment history at the end.

Prepayment risks, regulator guidance and how prepayments affect warranty schemes

Paying for a stage of work before it is actually finished is treated by regulators as prepayment, not progress payment, and it carries real consequences. The QBCC's prepayment guidance states that any payment made ahead of the stage it relates to will be quantified and deducted from a non-completion claim, which can materially reduce what an owner recovers under a Home Warranty Scheme if the builder fails to finish the job.

To avoid weakening this protection:

  • Pay only for work that has demonstrably reached the stage being invoiced.
  • Keep dated records and photos of each stage before releasing the matching payment.
  • Query any request to pay ahead of schedule rather than treating it as a minor accommodation.

Comparing a deposit against a full payment approach early in a contract helps clarify where these lines sit before money changes hands.

If a builder demands final payment before completion: clear escalation steps

A demand for final payment ahead of schedule should be treated as a request to verify, not an instruction to pay. The sequence to follow:

  1. Ask for written evidence of completion and the specific contractual clause the claim is based on, rather than accepting a verbal assurance.
  2. Arrange an independent building consultant to inspect the works against the plans and specifications before any further money moves.
  3. If the dispute doesn't resolve directly, raise it with the relevant regulator, and where the contract and legislation allow, pursue adjudication under Security of Payment provisions.

Each step adds a layer of independent verification, which matters more than speed when the amount at stake is the final balance of a contract.

Author perspective and trade best practice

Most payment disputes on completion come down to one failure: nobody defined completion clearly enough at the start. A contract that spells out exactly what finished looks like, tied to certificates rather than opinions, prevents most arguments before they start.

For trades, the fix is operational as much as legal: itemised progress invoices, payment links sent the moment a stage is done, and photographed handover checklists kept on file. These habits cost little and remove almost all the friction from collecting what's owed.

— Lewis

How MyAirCare supports completion-based billing and safe payment flows

We built our platform around the same reconciliation problem described above: knowing exactly what's been paid, what's owed, and when a job is genuinely finished.

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Through MyAirCare, we help air-con cleaning businesses issue itemised invoices, take secure payments through Stripe, and send automated reminders so nothing gets lost between a completed job and a collected payment.

  • Payment links attach directly to a completed job, so clients pay against finished work rather than a verbal update.
  • Itemised invoicing keeps prior payments and the final balance visible in one place, reducing the back-and-forth that causes disputes.
  • Automated reminders follow up on outstanding balances without manual chasing, supporting repeat bookings once the job is paid off.

Our pricing page outlines the Free plan and MyAirCare Pro at $199 per month, so you can choose the level of automation that fits how you currently bill for completed jobs.

This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.

FAQ

What does payment due upon completion mean?

It means the final balance is only payable once the contract's completion trigger has been met, typically all works finished to specification and a Certificate of Final Inspection or Occupancy Permit issued. Until that trigger is met, the client isn't obliged to pay the final amount.

What should I do if the builder wants final payment before completion?

Request written evidence of completion and the specific contract clause being relied on before paying anything. An independent building consultant can inspect the works, and unresolved disputes can go to the relevant regulator or adjudication under Security of Payment legislation.

Is the percentage of completion method still allowed?

Stage-based progress payments tied to a percentage of work completed remain standard practice and are recommended by regulators such as the QBCC, which notes a contractor generally shouldn't claim more than half the contract price until roughly half the work is done. The key requirement is that each percentage claimed matches the work actually completed on site.

How do progress payments work when building a house?

Progress payments are usually linked to defined stages such as slab, frame, lock-up and fixing, with each payment released only once that stage is verified complete. The QBCC recommends against paying more than a 20% deposit upfront, keeping the bulk of payment tied to demonstrated progress rather than the calendar.

Sources

For official forms, current deposit limits and jurisdiction-specific rules, consult Consumer Affairs Victoria's building checklists and the QBCC's payment guidance directly, since requirements vary by state and contract type.