Key points:

License & Insurance = Essential: No license or HBCF insurance means no progress payments for residential work in NSW.

Homeowner Protection: The amendment strengthens protection for homeowners by ensuring builders are qualified and insured.

Adjudicator Duty: Adjudicators must verify licenses and insurance before awarding payments to avoid legal challenges.

On 20 August 2024 section 8 of the Building and Construction Industry Security of Payment 1999 (SOPA) was amended. This section allows individuals under a construction contract that has carried out construction work or has supplied related goods and services entitlement to a progress payment.

The section has now been amended to exclude a claim if the claimant is unlicensed or does not have HBCF Insurance if it is required.

In accordance with section 4 of the Home Building Act 1989 (HBA) a person must not contract to do any residential work or any specialist work, except as or on behalf of an individual, partnership or corporation that is the holder of a contractor licence. 

Additionally, section 92(1)(a) of the HBA states that individuals are prohibited from undertaking residential building work under a contract, unless they hold a valid contract of insurance for that work and the contractor involved (HBCF Insurance). Section 92(1)(b) requires that you maintain a certificate of insurance evidencing the contract of insurance.

It is crucial to ensure that you hold a valid licence for any work that you will be carrying out and that you obtain Home Building Compensation Fund Insurance for any residential works above $20,000.00. Failing to do so will be in breach of the HBA and you will not be entitled to a progress payment under the SOPA.