When Your Funding Arrives in Instalments and the Build Bills by Milestone

When Your Funding Arrives in Instalments and the Build Bills by Milestone

General information for South Australian landowners and offshore owners only. This is not legal, financial, tax or foreign-exchange advice. What any bank or remitter will require of you, how long it will take and what any currency or remittance rule permits are questions for your own banks in both countries; the terms of any building contract, whether a statutory payment regime reaches your arrangement, and what any notice obliges you to do are for an SA construction or property lawyer; tax treatment is for your registered tax agent; obligations that attach to a foreign person are for your own lawyer and adviser. Contract terms, statutory requirements and institutional policies change and vary, so confirm the live position for your own project before you rely on anything here.

The decision, not the definition

If your money sits overseas and your build sits in Adelaide, the question is not "how do progress payments work". It is narrower: in what order should the works, the consents and the contract be arranged so that a payment obligation never falls due before the money to meet it has cleared into an Australian account? That is a sequencing decision, taken before signing, because most of the levers that fix it live in the documents you sign at the start — though not every one of them closes at signature.

Hold it as two clocks. One is the pace at which your funds can actually arrive; the other is the pace at which your contract and your programme manufacture obligations to pay. Nothing goes wrong while the first stays ahead. What goes wrong usually starts with the second getting in front — sometimes because of how the funding was planned, sometimes because an institution, a builder or an authority moved on a timetable of its own.

Clock one: what governs when money lands

Owners funding from overseas often plan against the exchange rate and the transfer fee and treat arrival time as a given. It is the variable with the least slack in it, and three things drive it — only one in the sending country.

Your own remittance route. It has more moving parts than one transfer, and each is worth settling in writing with your banks before a payment schedule is negotiated: whether the amount you need can leave in one movement or must be split; what documentation the sending bank wants for each; and whether an intermediary bank sits in the path and adds time to it. What any currency or remittance rule permits is a question for those banks — but the answers belong on paper, dated, before you commit to milestone dates.

Verification at the Australian end. AUSTRAC says that when you engage newly regulated businesses — real estate professionals, lawyers, conveyancers and accountants among them — "they may ask you for identification or questions about your circumstances", and that the ID required "depends on the institution and the nature of your transaction" (source: AUSTRAC — Why you might be asked for ID).

Source of funds questions. Where a provider identifies higher risk, that same page says they "must ask customers for more information, such as proof of source of funds and source of wealth", adding that "this includes long-term customers". Source of funds means "how and where you got the funds for a specific transaction"; it "doesn't refer to the account or place the money was transferred from", and examples of acceptable evidence include a signed letter from your accountant, an executor's letter, or a sale record or title deed (source: AUSTRAC — Proof of source of funds and source of wealth). AUSTRAC notes such examples are not exhaustive.

Handled early, most of this is lead time rather than a blockage — but it is not merely scheduling: these providers "have a legal obligation to collect information about you before they can provide services to you" (source: AUSTRAC — Why you might be asked for ID), so material that cannot be produced at all is a different problem from material that arrives late. Assemble it before a transfer, not after a payment claim.

Clock two: what creates an obligation to pay

South Australia regulates the timing of money in domestic building work rather than leaving it wholly to the contract. The published position is that "a builder must not demand or request payment unless it is a genuine progress payment in respect of work already performed under the contract", and that "the building owner is not obliged to make the payment in the absence of a written request by the builder for the progress payment" (source: SA Law Handbook — Building Work Contracts).

Read the whole section, though. Certain advance payments are authorised under the regulations — a deposit, which the regulations cap at a maximum depending on the value of the work, the building indemnity insurance premium, and third-party costs for professional services such as engineering, drawing or surveying. That cap is in the regulations, for your lawyer to confirm against your contract value. Money before work is confined to defined categories; everything else must be earned first and asked for in writing.

The written request is the half offshore owners tend to find most useful, because it puts a dated document at the front of every payment. Whether it reaches your build is the prior question: that page sets these rules out for domestic building work, and attaches several of the requirements around them to contracts above a value fixed by the Act and its regulations. Whether your contract is one the rules govern — and so whether the written request is a protection you hold — is for your construction lawyer against your documents. Where it applies, that request's date is what a funding cadence can be anchored to.

Sequencing: move the obligations, not just the money

The failure to sequence against is rarely one missed payment but a run of them: a milestone completes, a written request follows, funds take longer than expected, and the next trade is already scheduled. Some of that lag is the owner's and some is not — institutions run their own checks on their own timetables, builders miss dates, and a relevant authority or referral body can take longer than anyone allowed for. Holding costs accrue regardless of whose lag it was, the point made at length in what a delay actually costs. The lever before signing is the shape of the payment schedule set against the shape of the programme.

• Look first at what the regulations allow to be paid before work starts. On the Law Handbook's account the building indemnity insurance premium and third-party professional costs sit in that category, and both are smaller and more predictable than construction milestones. Whether a particular early payment in your schedule is one of them is for your lawyer against the contract.
• Look at where milestones cluster. A schedule concentrating large triggers close together compresses the tolerance between the clocks; spreading them, where the builder will agree, widens it.
• Ask what the contract does about timing. Fixed-price lump sum, rise and fall, and cost-plus differ in how predictable the second clock is; the Law Handbook notes a rise and fall clause is lawful where there is a completion date and "can allow for an extension of the completion date in certain circumstances" (source: SA Law Handbook — Building Work Contracts). Which suits your funding pattern is a question for your lawyer.
• Where the buffer sits. How much working liquidity to hold in Australia against a slow first clock is a question for your bank and your financial adviser, not one this article can answer.

Not every lever closes at signature. The Act gives a building owner a cooling-off window after signing, counted in clear business days and exercised by written notice, effective when that notice is posted by certified mail or personally served; it allows termination before completion where the builder has not complied with the relevant provisions of the Act; it allows a party to apply to the Magistrates Court for relief where terms are harsh or unconscionable; and it makes void any term purporting to exclude the effect of the Act (source: SA Law Handbook — Building Work Contracts). That page advises taking legal advice before cooling off, because there can be ramifications for unpaid work and costs. Whether any of these is open on your contract, and how a notice must be served from overseas inside the window, is for your SA construction lawyer — a reason to engage one before you sign.

Where borrowed money is in the mix, a further timetable joins with its own structure — a different case, set out in how a modular payment schedule and a construction loan pull apart.

A statutory payment regime that may or may not reach your contract

A second timing layer runs on statutory periods that take no account of where you are. Under South Australia's security of payment regime a contractor can serve a payment claim, and a respondent who does not intend to pay it in full by the due date must serve a payment schedule in writing. The Act sets the outer limit of the response window, counted in business days, and a contract provision seeking to extend it beyond that limit is void — but the same page states the schedule is due within that period "or a shorter period if provided by the contract", so the window that binds you is whichever of the two is tighter on your own document (source: Adjudicate Today — Respondent Prepares Payment Schedule). Reading your contract for that shorter period is a job for your lawyer before a claim arrives.

Whether the regime reaches your arrangement needs care. The published summary states that construction work "does not apply to domestic building work if a resident owner is party to the contract and to the extent the contract relates to a building or part of a building where the resident owner resides or intends to reside" (source: Adjudicate Today — SA Security of Payment Definitions). Which side your contract falls on is a question of law on your documents, for your construction lawyer — and that page warns its definitions "summarise and simplify what are often complex provisions" and "should not be relied on in the event of a dispute". Where the regime applies, its timetable cannot be stretched to suit you, and does not pause because the person who must answer is in another time zone.

If a payment claim arrives while you are offshore

A payment schedule must be in writing, identify the claim, state the amount proposed — which may be nil — and set out reasons for any amount withheld and how it is calculated (source: Adjudicate Today — Respondent Prepares Payment Schedule). The same page lists the provisions the Act makes void: "pay if paid" and "pay when paid" clauses, provisions inconsistent with the Act, and clauses attempting to "contract out" of it. What that page lists as void are "pay if paid" and "pay when paid" clauses — the respondent's defence that it has not itself been paid by the principal — along with provisions inconsistent with the Act and clauses attempting to contract out of it. Whether a payment term contingent on your own funds landing from overseas is caught by any of those is a different question, on a different fact pattern, and it is one for your construction lawyer on your own document. What does not depend on the answer is the practical point: where the regime applies, its periods run on their own count, and a funding cadence that assumes a transfer will simply be waited for has nothing in the Act holding it up.

The practical warning joins timing and reasons: a payment schedule received outside the prescribed time cannot be considered by the adjudicator, and reasons for withholding that were not included in the payment schedule cannot be introduced in an adjudication response later (source: Adjudicate Today — Common Respondent Pitfalls).

The card an owner still holds after missing that window is on the same flowchart: a respondent who fails to comply "must be given a second opportunity to provide a payment schedule", which the claimant does by serving a notice under section 17(2) of the Act; a shorter further period, again counted in business days, then runs in which a payment schedule can still be served or the claim paid in full. It is a second opportunity rather than a reprieve — if the respondent ignores it, "the Act denies the respondent the right to participate in the adjudication process" (source: Adjudicate Today — Respondent Prepares Payment Schedule). Whether a document you have received is a section 17(2) notice, and what period it starts running, is for your construction lawyer on the document itself.

That page ranks courier with a signed receipt above ordinary post as a method of service — guidance that reads differently when the person who must sign sits overseas. The arrangement to make in advance is therefore not legal strategy but availability: arrangements for who receives documents in Australia and on what basis — settled with your SA lawyer rather than improvised — and a lawyer already engaged rather than found in a hurry, as in running a development from a distance.

Variations, and the clock that speeds up mid-build

Variations move the contract sum, and so move the second clock. The Law Handbook notes that contracts can usually only be varied if both parties agree in writing, though minor changes may occur without the owner's consent, and that "variations may result in increased costs, and a building owner should ensure that there are sufficient funds to cover changes" (source: SA Law Handbook — Building Work Contracts). For an owner funding from overseas, "sufficient funds" means funds already inside the country, or reachable within the time the variation allows — a variation agreed by email and payable shortly after is the second clock accelerating with nothing matching it on the first.

Where coordination does the work

A development manager does not advise on your currency position, does not determine anything and does not replace your lawyer, accountant or bank. The role sequences: holding the programme and the funding cadence in one view, keeping the written request that triggers a payment from being the first warning that money is needed, and getting the people who must sign, verify or answer engaged before the date that needs them.

The two clocks do not synchronise by themselves. They are made to line up, in advance, on paper.