Security of Payment Act Victoria: How Construction Solicitors Can Help Contractors Recover Unpaid Invoices

The Building and Construction Industry Security of Payment Act 2002 (Vic) gives contractors, subcontractors, and suppliers a statutory right to recover progress payments — without going to court. A construction solicitor can help you use it correctly and on time.

What Is the Security of Payment Act in Victoria?

Victoria’s construction industry is one of the largest in the country. ABS data shows the state generated $153 billion in construction sales and service income in 2022–23, making it Australia’s second-largest construction economy — and a market where disputes frequently require input from construction lawyers in Melbourne. Yet contractors and subcontractors across this sector regularly face a persistent challenge: not getting paid for work they’ve already done.

The Building and Construction Industry Security of Payment Act 2002 (Vic) — commonly called the SOP Act or SOPA — exists specifically to address this. The Act’s object is clear: to ensure that any person who carries out construction work or supplies related goods and services under a construction contract is entitled to receive, and is able to recover, progress payments. It creates a fast, cost-effective pathway to recover money owed, outside of traditional litigation.

What Does the Security of Payment Act Cover in Victoria?

According to the Building and Plumbing Commission (formerly VBA), the SOP Act applies to most contracts for building work or for the supply of related goods and services in Victoria. This covers a wide range of trades and professions.

Subcontractors are explicitly included — even when working on residential projects, if your contract is with a builder rather than the home owner directly, the SOP Act may apply to your payment dispute. It also applies to contracts involving Victorian government construction projects; the Department of Treasury and Finance requires all public construction contracts to comply with the Act, giving contractors a statutory entitlement to payment on publicly funded work.

What Must a Valid Payment Claim Include?

Getting paid under SOPA starts with serving a valid payment claim. A mistake here can invalidate the entire claim process, which is one reason contractors often work with construction lawyers in Melbourne when preparing their first claim. According to the Building and Plumbing Commission’s guidance on making a payment claim, every payment claim must:

• Identify the construction work or related goods and services to which the payment relates
• State the amount of money the claimant claims is due (the “claimed amount”)
• Include the statement: “This is a payment claim under the Building and Construction Industry Security of Payment Act 2002”

Timing matters too. Claims must be served within three months after the reference date, or within the period specified in the contract — whichever is later. Missing this window can mean losing your right to adjudication on that particular payment. A construction solicitor in Melbourne, such as those from Boutique Lawyers, can help you identify the correct reference date and serve your claim in the right form at the right time.

What Happens After You Serve a Payment Claim?

Once a payment claim is served, the other party (the respondent) must respond with a payment schedule within 10 business days or as required by the contract — whichever comes first. If they fail to provide a payment schedule within this time, they become liable to pay the full amount claimed. This is a meaningful provision that can work in a contractor’s favour — but only if the payment claim itself is valid.

If the respondent provides a schedule but disputes the amount, or provides no schedule at all, the claimant may apply for adjudication. This is where the formal SOPA process begins.

How Does SOPA Adjudication Work?

Security of Payment adjudication is a statutory process designed to resolve disputed payment claims quickly, fairly, and at a lower cost than going to court. An adjudication application is lodged with one of Victoria’s four currently Authorised Nominating Authorities (ANAs).

An important feature of the process: the adjudicator’s determination is interim and does not affect the parties’ rights and obligations under their contract. This means adjudication does not prevent either party from later pursuing the matter through VCAT or the courts if needed — it is a fast-track mechanism to restore cash flow, not a final resolution of the underlying dispute.

Costs are shared: both parties are each liable to contribute to the adjudicator’s fees and expenses in equal proportions.

What Can a Construction Solicitor Do for Contractors?

SOPA is designed to be accessible, but the process has strict procedural requirements — and errors can be costly. Contractors who work with construction lawyers in Melbourne, can navigate these requirements with confidence. A construction solicitor can help you with:

• Drafting a valid payment claim — ensuring all three mandatory elements are present and the claim statement is included
• Identifying the correct reference date — so the claim is served within the statutory timeframe
• Responding to a payment schedule — or pursuing adjudication if the respondent disputes the amount or fails to respond
• Preparing adjudication submissions — presenting your claim clearly within the strict adjudication timetable
• Advising on suspension rights and liens — protecting your position if a determination is not complied with
• Escalating to court or VCAT — if adjudication does not resolve the dispute or the respondent fails to pay the adjudicated amount

Building and construction law in Victoria is a specialist area. The interplay between SOPA, the Domestic Building Contracts Act, VCAT jurisdiction, and standard contract terms can be complex to navigate without experience. Firms that focus exclusively on building and construction law such as Boutique Lawyers, are well-placed to bring specialist expertise to these disputes.

What Remedies Are Available If the Respondent Still Doesn’t Pay?

If a respondent fails to pay an adjudicated amount, contractors are not without options. The Building and Plumbing Commission’s guidance on unpaid claims sets out several available remedies:

• Lien over unfixed materials: You are entitled to exercise a lien over any unfixed plant or materials you have supplied to the respondent in respect of the unpaid amount
• Suspension of work: With three business days’ written notice, a claimant can suspend work or the supply of goods and services until the amount is paid
• Court enforcement: An adjudication certificate can be registered as a judgment debt in the relevant court, enabling enforcement as a civil debt

The Victorian Small Business Commission also offers low-cost mediation for payment disputes where businesses prefer a non-adjudication pathway, particularly for smaller or less formal disputes. Victoria’s Fair Payments Policy additionally requires government agencies to pay small businesses within 10 business days on invoices up to $3 million — useful context for contractors working on government projects.

Frequently Asked Questions

Who can use the Security of Payment Act in Victoria?

Contractors, subcontractors, and suppliers who have a contract for construction work or the supply of related goods and services in Victoria can use the SOP Act. According to the Building and Plumbing Commission, the Act covers a broad range of work types, including building, civil engineering, demolition, plumbing, electrical, and the supply of building materials. Domestic building contracts between a builder and a homeowner are excluded — those disputes are handled under the Domestic Building Contracts Act 1995. Subcontractors working under a head contractor (even on residential sites) are typically within scope.

What happens if the other party ignores my payment claim?

If a respondent fails to provide a payment schedule within 10 business days of receiving your claim, they become liable to pay the full claimed amount. You may then apply for adjudication or pursue the debt through court. If an adjudication determination is made in your favour and the respondent still does not pay, you can exercise a lien over unfixed materials, suspend work with proper notice, or register the adjudication certificate as a court judgment.

Can a construction solicitor help if I missed the payment claim deadline?

If you have missed the three-month window for a particular reference date, it may still be possible to serve a claim on a subsequent reference date, or to pursue recovery through other avenues such as VCAT or breach of contract proceedings. A construction solicitor can review the contract and payment history to identify what options remain open. Understanding exactly when your entitlement arose — and under which reference date — is an important first step.