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How do progress payments work in a building contract?

The short answer

Deposits are capped by law in most states, commonly at a low percentage of the contract value, and payments after that should be tied to defined stages of completed work rather than to dates.

TradieAnswers editorial · written in-house and sourced to the authorities listed below

Checked against 5 published sources, listed in full at the end of this page. How we source this

The principle that protects you is simple: you should never be significantly ahead of the work. Every dollar paid for work not yet done is a dollar at risk if the builder stops, and the deposit caps in state legislation exist precisely because that risk was being exploited.

Deposits are capped

Most states cap the deposit on a domestic building contract as a percentage of the contract price, with a different cap for smaller contracts. A builder asking for a large deposit on a residential job is either unaware of the cap or hoping you are. Check your own state's figure, because the caps differ and they have been amended.

What a good payment schedule looks like

  • Payments tied to identifiable stages: base, frame, lock up, fixing, completion, rather than to calendar dates.
  • Each stage clearly defined in the contract, so there is no argument about whether it has been reached.
  • A final payment held until practical completion, with defects listed and agreed.
  • No payment for materials not yet on site, unless the contract specifically provides for it and you have some security.

Sources

Every source below was fetched and its response recorded on the date shown. Where a government site blocks automated clients, that is noted rather than reported as a successful check.

  1. Building contracts · Consumer Affairs VictoriaChecked 2026-08-10 · responded 200 OK
  2. Building Commission NSW · NSW GovernmentChecked 2026-08-10 · responded 200 OK
  3. QBCC · Queensland Building and Construction CommissionChecked 2026-08-10 · responded 200 OK
  4. Consumer Protection · Government of Western AustraliaChecked 2026-08-10 · responded 200 OK
  5. Contracts · Australian Competition and Consumer CommissionChecked 2026-08-10 · responded 200 OK

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