Payment schedule explained: staging a residential build

A payment schedule is a table in your building contract. It lists each stage of the build, the dollar amount or percentage tied to that stage, and the point at which that amount becomes payable to the builder. Together those stages add up to the full contract sum.

The logic behind it is simple. A residential build runs for months, and a builder cannot fund the whole job out of pocket while waiting for one payment at the end. So the contract sum is broken into chunks that roughly track the value of work completed. As each stage finishes, the builder claims, you check, and that chunk is released.

This is the earned-value idea: money follows value created on site, not a calendar or a builder cash-flow need. A well-built schedule keeps the two close together. A poorly built one front-loads the early stages, so you pay for a large share of the contract before much is standing. The difference matters most if anything goes wrong partway through, which is exactly when an overpaid schedule leaves you exposed.

State rules set the baseline. Maximum deposits and stage definitions are governed by state law, and the government's guide to building and renovating is a sensible starting point before you read the fine print of your own contract.

Names vary by state and by contract type, but most fixed-price residential builds follow a ladder close to this. Percentages are indicative only; your contract and your state cap the deposit and shape the rest.

The exact split is part of what you are agreeing to when you sign. A schedule that loads too much into the deposit and base stages is the one to scrutinise, because it puts your money ahead of the work.

Paying a builder in a single lump, or in a few large early chunks, means trusting that the money you have already handed over will turn into a finished house. If the relationship sours or the builder hits financial trouble, money paid for work not yet done is hard to recover. You can read more on the warning signs in our guide to spotting a builder in financial trouble, and you can check a builder's company status on the ASIC register before you sign.

Staged release flips that. You only release a stage once the work behind it exists. The schedule lines up your payments with completed, verifiable milestones, so at any point in the build the amount you have paid stays close to the value of work standing on site. If things stop, your exposure is limited to the current stage rather than the whole contract.

Verification is the other half of the protection. A progress claim is the builder asking to be paid for a stage; it is not proof the stage is done. The check between claim and payment, whether that is your own inspection, a building surveyor sign-off, or a lender's valuer, is what stops you paying for work that is not actually complete. Our explainer on what a progress claim is walks through that distinction.

This is also why how your funds are held matters. When deposits and progress payments sit in regulated custody separate from the builder's operating account, and release only on a verified condition, the schedule is not just a promise on paper. It is enforced by where the money sits and what has to be true before it moves.

Two mechanisms protect you at the end of the job. The first is the completion hold: a portion of the final stage that is not released until practical completion is reached and any agreed conditions are met. It keeps the builder motivated to finish properly rather than walk away at ninety-five percent.

The second is retention, a small percentage held back across the build and after handover. Retention covers defects that surface once you are living in the home. Withheld amounts are not released until open defects are resolved, which gives you leverage to get rectification done rather than chasing a builder who has already been paid in full.

Both sit at the top of the ladder for a reason. The final slice of money is the slice that buys you a complete, defect-free home, so the contract holds it back until you have one. When you negotiate your schedule, the size of the completion hold and the retention percentage are worth as much attention as the deposit. Our guide to how much retention to hold covers the trade-offs.

The schedule is not fixed by law in every detail. Several parts are open to discussion before you sign, and the time to raise them is during contract review, not after the first claim lands.

None of this is about distrusting your builder. A clear, fair schedule protects both sides, because the builder gets paid promptly for work genuinely done and you never pay for work that is not. For contract clauses you are unsure about, get a construction lawyer to review before you sign.

On BuildFair, the payment schedule is built automatically when the owner accepts the tender. The deposit, the progress stages, and a final builder margin held to completion are laid out as an earned-value ladder from day one, so both parties see the full staging before any money moves.

Owner deposits and progress payments are held in regulated custody with BuildFair banking partner Kobble, separate from the builder operating account. Kobble operates under AFSL 545391 (Yondr Money Pty Ltd). BuildFair itself does not hold your funds directly. Each stage releases only on its verified condition, and every release is recorded permanently in a double-entry, hash-chained ledger you can audit.

Subcontractor and supplier payments downstream release on a fixed 7-day clock from invoice approval, and retention-style withheld amounts release after completion once defects are resolved. Any change to the contract sum needs both the builder and the owner to approve it first. You can see the full model on the platform page, or read how escrow protects owner funds through the build.

This section and the guide as a whole are general information, not legal or financial advice. For advice on your specific contract or a payment dispute, speak to a construction lawyer, your state tribunal such as VCAT or NCAT, or Legal Aid.