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Practical Completion and Final Payment

Practical Completion and Final Payment…

 

Building and Construction in Queensland

What is practical completion?

Practical completion can be difficult to navigate. Contracts will generally provide a completion date in which the works under the contract are to be completed by.  However, in some cases that date may not be met.

Practical Completion generally means the work has been completed in accordance with your contract and any statutory requirements except for minor defects and omissions and it is reasonably suitable to inhabit.  Your contract may define practical completion.

The QBCC Act 1991 (Qld) (the ‘Act’) defines practical completion for building work carried out under a building contract that is not a domestic building contract, as: –

(a) the day practical completion of the work is achieved, as worked out under the contract; or

(b) if the contract does not provide for the day practical completion of the work is achieved—the day the work is completed—

(i) in compliance with the contract, including all plans and specifications for the work and all statutory requirements applying to the work; and

(ii) without any defects or omissions, other than minor defects or minor omissions that will not unreasonably affect the intended use of the work.

The Act also defines practical completion, for a domestic building contracts, as the day when the subject work is completed: –

(a) in compliance with the contract, including all plans and specifications for the work and all statutory requirements applying to the work; and

(b) without any defects or omissions, other than minor defects or minor omissions that will not unreasonably affect occupation; and

(c) if the building owner claims there are minor defects or minor omissions—the building contractor gives the building owner a defects document for the minor defects or minor omissions.

Most contract’s definition of practical completion will be similar to, if not the same as the definition of practical completion provided under the Act.

If you believe the construction works undertaken have reached practical completion, you should refer to your contract’s definition of ‘practical completion’ (if any) and the definition provided under the QBCC Act and make sure the works are practically complete in accordance with those definitions.

Your contract may also set out the steps to be taken once the works have reached practical completion. If so, you should also make sure those steps are complied with.  This may minimise the risk of a dispute concerning whether the works have in fact reached practical completion.

When do I issue the final invoice?

This will depend on the terms in your contract.  You should refer to your contract and comply with the terms concerning issuing the final invoice.  However, most contracts will provide that the final payment will be required once the works have reached practical completion.

When must I pay the final payment to the contractor?

This will depend on the terms of your contract.  However, generally final payment will be required once the works have reached practical completion. The contract may also provide that until final payment is made, you will not be able to take possession of the works.

What is a defect liability period?

The contract will generally set out a defect liability period and this will generally be 12 months from the date of practical completion.  This is the period in which the contractor will be liable to rectify any defects.  If you become aware of any defects in the works during the defect liability period, you should notify the contractor (preferably in writing) of these without delay.

The QBCC Act also defines defect liability period as well as provides for statutory warranties. If you want to know more about statutory warranties, you can read about it in our article on QBCC Statutory Warranties.

Practical Completion and Final Payment

I am involved in a dispute and need assistance

If you are involved in a dispute and / or need legal advice about this topic, contact us at Klein Legal today.  Klein Legal are dispute resolution and litigation experts.

This is general information only and does not constitute legal advice.

If you or someone you know wants more information or needs help or advice about this topic, please contact us on (07) 5458 6855 or email mklein@kleinlegal.com.au.