Payments and stages
Milestone payments: what actually triggers them
A milestone payment falls due when the contract says the stage is complete, which is usually when somebody engaged by the developer certifies it, not when the work is finished to your satisfaction. The certificate and the reality are separate things, and only one of them is checkable.
A milestone payment becomes due when the contract’s definition of that stage is satisfied, and that is normally decided by a certificate from someone the developer has engaged, not by whether the work actually meets your own satisfaction. The certificate and the physical reality are two separate things, and only the reality can be independently checked.
Who decides a stage is complete
In most off-plan contracts, an architect, engineer or supervising consultant issues a certificate, and the payment follows from the certificate rather than from the building. That person is normally engaged and paid by the developer.
This is not necessarily improper. The same arrangement exists in construction contracts everywhere, and most certifiers are professionals with a licence to lose. But the incentive is one-directional, and a stage signed off generously moves money faster than a stage signed off strictly.
Where escrow does and does not help
In markets with statutory project accounts, money is released against the same certificate. Escrow stops funds being spent on another project; it does not test whether the stage happened. Buyers routinely read one as the other.
So a fully compliant escrow release and a stage that is two months from actually being complete are entirely compatible facts.
What to establish before the invoice arrives
- The exact contractual definition of each stage, in the words of your contract.
- Who certifies, and whether you are entitled to a copy of the certificate.
- How long you have to raise an objection after an invoice, and in what form.
- What evidence, if any, the developer is obliged to supply alongside the invoice.
- Whether interest or penalties accrue while a payment is disputed.
When the invoice does arrive
The question is narrow and answerable: does the state of the building satisfy the definition in the contract. Not whether the building looks impressive, not whether progress has been made, and not whether the developer is trying hard.
Answering it requires somebody to look at the site against that definition, and to record what they saw with dates and photographs. That record is what turns a disagreement into a position.
A milestone payment is triggered by a certificate, not by the building itself, so a certificate signed off generously and a stage that is not really finished can coexist. Knowing your contract’s own definition of each stage, and checking the site against it, is what closes that gap before the invoice is paid.
Last checked
Questions on this
- Can I ask for the certificate?
- Ask, in writing. Whether you are entitled to it depends on your contract, but the request itself is informative: a developer who will not show the document their invoice rests on has told you something.
- The certifier is independent. Isn't that enough?
- Independent of the contractor, usually. Engaged by the developer, almost always. Those are different kinds of independence and only the first is normally guaranteed.
- What if the stage is nearly complete?
- Then the contract decides, and most contracts do not have a 'nearly' provision. This is exactly why the definition matters more than the photograph.