Part 1. Victoria’s Security of Payment Regime Has Changed. Here’s What You Need to Know.

On 15 April 2026, the most significant changes to Victoria’s security of payment regime since 2006 took effect. For property developers, head contractors, principals and financiers, the practical consequences arrived without much fanfare. That is precisely the problem.

The reforms sit within the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 (Vic) (the “Fairer Payments Act”), which overhauled the Building and Construction Industry Security of Payment Act 2002 (Vic) (the SOP Act). The amendments now apply broadly across construction contracts in Victoria, including many existing projects, subject to transitional provisions for some payment claims and adjudications already on foot before commencement.

What has changed

The excluded amounts regime has been repealed. For nearly two decades, Victoria was the only Australian jurisdiction that prevented delay damages, extensions of time, latent conditions, prolongation, acceleration and most variation claims from being adjudicated under the SOP Act. Sections 10A and 10B have been repealed. The full range of contractual claims is now adjudicable. Adjudication will be used very differently, and far more frequently, than it has been.

Payment schedules are now near-final legal documents. A respondent can no longer raise reasons for non-payment in an adjudication response that were not articulated in the payment schedule. Every set-off, every quantum objection and every entitlement defence must be in the schedule within the statutory 10 business day window. Miss that window and it is lost. A schedule prepared without legal input on any meaningful claim is now a liability, not a formality.

Calling on a bank guarantee requires statutory notice. New sections 17A to 17H introduce a statutory regime governing both the release of, and recourse to, performance security. Before calling on a bank guarantee or retention, a principal must give written notice of intention at least 5 business days beforehand, identifying the contract, the contractual basis, the amount and the circumstances. Contracting out is prohibited. Unannounced recourse, historically a significant lever in a dispute, is no longer available.

Time bars can now be declared unfair. Under new section 13A, an adjudicator, court, arbitrator or expert determiner may declare a contractual time bar provision void where compliance was not reasonably possible or would have been unreasonably onerous. Developers who have historically relied on tight extension of time, variation and latent condition notice regimes should treat those provisions as defensible only on their merits.

Payment terms are capped at 20 business days. This is a first for Victoria, aligning the State with New South Wales and Queensland. Any contract specifying a longer payment window is overridden to that extent, and where the contract is silent the default period is 10 business days.

Reference dates are replaced; the claims window is longer. Reference dates have been replaced by a statutory monthly entitlement to claim. The timeframe for a final payment claim is now longer, with the long-stop tied to the later of the contractual date, six months after practical completion, or six months after the last supply of related goods and services. Termination does not necessarily extinguish the right to claim, and contractors may make a final payment claim after termination, including a claim for release of security.

The Christmas shutdown is now statutory. The period from 22 December to 10 January is excluded from the definition of “business day” under the SOP Act, affecting the calculation of all statutory time limits across that period.

What this means in practice

The reforms are deliberately claimant-friendly. For developers acting as principal, three things follow.

Payment schedule preparation now requires legal involvement on any claim of consequence. The schedule is the central battleground, and a reason omitted is a reason forfeited.

Recourse to performance security must be planned, not improvised. A standard-form section 17H notice should be in every developer’s contract administration toolkit, alongside an internal sign-off protocol before the 5-day clock starts.

Project records must be maintained to a forensic standard from day one. Because delay damages, prolongation and latent conditions are now adjudicable, the principal’s ability to defend such claims depends entirely on the quality of contemporaneous records: programme analyses, delay correspondence, latent condition reports and site diaries. Records assembled retrospectively are records assembled too late.

The SOP Act changes are, however, only part of the story. Three further Victorian building reform packages are scheduled to commence before the end of 2026, each carrying its own significant implications for developers and builders. We cover those in Part 2 of this series.

For advice on how these reforms apply to your contracts or projects, contact Jeremy Quah or a member of the Building and Construction team at Tisher Liner FC Law.

This article is intended as general information current as at 22 May 2026 and does not constitute legal advice. Specific legal advice should be obtained in relation to any particular matter.