Homeowner Won’t Pay for Completed Work? A Builder’s Guide to Getting Paid

The job is done, the client has moved in, and the final invoice has been sitting unpaid for six weeks. Every phone call produces a new “defect”. Whether Security of Payment applies to an owner who lives in the home depends on your state and when the contract was made: in New South Wales the Act covers owner occupier construction contracts entered into on or after 1 March 2021 (see our Security of Payment claim); in other states, check whether your state’s Act excludes contracts with a resident owner. Here is what actually works.

Step 1: Lock down your position before you chase

• Confirm practical completion in writing. Send a notice of practical completion under the contract, with the date, and attach the final inspection or occupation certificate.
• Issue a compliant final invoice. Itemise the contract price, every signed variation, PC and PS adjustments with supplier invoices, and payments received. Show the balance and the due date under the contract.
• Collect your evidence. Signed contract, signed variations, progress claims, photos of finished work, defects list (if any) and your responses, and every message from the client.
• Do not remove anything from the site. Do not threaten to. It undermines your claim and can be a criminal offence.

Step 2: Deal with the “defects” head on

A client who does not want to pay will produce a defects list. Take it seriously, because the tribunal will. Inspect, photograph, and reply in writing to each item. Fix the genuine ones promptly. For the rest, explain why they are not defects (within tolerance under the relevant standards guide, not part of the contract scope, or caused by the owner). A client who refuses access for rectification loses the argument that you failed to fix defects.

Remember: minor defects do not entitle the owner to withhold the whole balance. At most they can hold back the reasonable cost of rectification. Say so in your letter.

Step 3: Know the legal basis of your claim

• Contract. The HIA or MBA contract sets the payment terms, interest on late payment (often 10% or more per annum) and your right to suspend work and recover costs.
• Quantum meruit. If there is a problem with the contract (unsigned, unlicensed at the time, or a variation not in writing), you may still recover a reasonable sum for the value of the work, although the rules are tighter for domestic building. In New South Wales, section 10 of the Home Building Act 1989 restricts recovery where the contract does not comply.
• Tribunal jurisdiction. NCAT hears home building claims up to $500,000. VCAT’s Building and Property List has no cap, but a domestic building dispute with a homeowner must first go to Domestic Building Dispute Resolution Victoria (now part of the Building and Plumbing Commission) before VCAT will accept an application, unless you are seeking an injunction. QCAT handles domestic building disputes but you must go through the QBCC’s dispute resolution process first. SAT in Western Australia handles building service complaints via Building and Energy.

Step 4: Send a letter of demand

This is the single most effective step. Most homeowners who are stalling assume you will not follow through. A letter that shows you know the process changes that. It should:

1. State the contract, the amount outstanding and the date it fell due.
2. Address the defects list item by item, confirming which are fixed and why the rest are not defects.
3. Claim contractual interest from the due date.
4. Give 14 days to pay in full.
5. State that you will file in the tribunal or court, seek costs where available, and that a judgment can be enforced against wages, bank accounts or property.

Step 5: File if you have to

Filing fees in the tribunal are low and you do not need a lawyer. Your evidence pack from Step 1 is your case. If the client counterclaims for defects, your written responses from Step 2 are your defence.

What not to do

• Do not send angry texts. They will be read out in the hearing.
• Do not agree to a discount “to make it go away” before you have sent a proper demand. You are leaving money on the table.
• Do not sit on it. Contract interest is nice, but the longer it drags, the more the “defects” list grows.

Get your demand out today

Claim Done drafts your Letter of Demand for $49. Tell us about the contract, the final invoice and any defects correspondence. We produce a letter that sets out the debt, answers the defects argument, claims interest, and puts the client on a 14-day clock before tribunal proceedings. Emailed to the client so it is in writing and dated.

Send my Letter of Demand – $49