The Handover Procedure

When homeowners think about the end of their build, they often assume the handover process is simple. The builder finishes the house, the final payment is made, and they get the keys. In practice, the handover stage is one of the most frequently misunderstood parts of a domestic building contract, particularly under standard form contracts such as the HIA contract. In fact, many builders and site supervisors do not have a good grasp on how these contracts work.

Under the HIA contract, the handover process begins when the builder considers that the works are complete. Clause 36 of the HIA contract provides that, at this point, the builder must issue a Notice of Completion to the homeowner along with a Final Claim. It is important to understand that a final claim is not the same thing as a Final Payment or a final invoice, nor is it an immediate demand for payment. A Final Claim is essentially the builder’s calculation of the amount they say will be payable once the Final Payment actually falls due.

In most cases, that Final Payment is calculated as the remaining balance under the contract (typically the Final Claim amount), which is often 5% of the contract price, depending on the payment schedule used. If the contract uses a different payment method, the calculation may vary, but the principle is the same. The Final Claim must also take into account any adjustments required under the contract, including approved variations, additional costs, or deductions that arise from delays.

This is the point in the contract where delay-related adjustments are applied. For example, if the contract includes an agreed liquidated damages amount of $250 per week and the builder is ten weeks late, the total deduction would be $2,500. That amount is deducted from the Final Claim, meaning the Final Payment payable by the homeowner is reduced accordingly. The final claim is therefore not a fixed figure by default.

Another thing to understand at this stage is that a builder cannot lawfully demand the Final Payment until the house is genuinely “Complete” (as defined in the DBCA and the Contract). Completion is not simply when the builder says the job is finished. The house must be completed in accordance with the plans and specifications set out in the contract, and the builder must have issued either an Occupancy Permit or a Certificate of Final Inspection. Until those requirements are met, the final payment does not fall due, regardless of whether a Final Claim has been issued.

Once the notice of completion is given, the homeowner has seven days to inspect the property and notify the builder of any defects or incomplete items they identify. This inspection period is usually the last opportunity for homeowners to assess the build before the Final Payment becomes payable. Any defects or incomplete works identified during this period must be addressed by the builder.

After those items are rectified, the builder then issues a further notice confirming that the outstanding defects or incomplete works have been completed. It is only at this point that the final claim becomes payable. The timing of these notices matters, because payment obligations are triggered by completion and rectification, not by the builder’s initial assessment alone.

We’ve spoken about Practical Completion previously. Practical completion is sometimes defined in special conditions, but it is not usually defined in standard HIA or Master Builders contracts, nor is it defined in the DBCA. Completion, on the other hand, is a defined concept.

At handover, all of these elements intersect. Approved variations must be accounted for, delay deductions must be applied where applicable, defects must be resolved, and the statutory completion documents must be issued. Only once all of these requirements are satisfied does the builder become entitled to receive the Final Payment.

Understanding the handover process removes much of the pressure and confusion that often arises at the end of a build. It clarifies when payment is actually due, what can be deducted, and why defects and documentation matter so much at this stage.