Further development on retention trust accounts

Another supplementary order paper (SOP) proposing an amendment to the Construction Contracts Act has been issued by the Green Party this week. The SOP also proposes to qualify the status of retentions monies under construction contracts and the basis on which they are held.

This SOP differs to the SOP introduced by Clayton Cosgrove. In particular, it is significant that this SOP uses the terms payer and payee (rather than Contractor and Subcontractor). This is intended to provide more protection for contractors, as it acknowledges that retentions may be held by the principal.  

 This SOP also gives the payee an option to provide a bond in lieu of retentions, regardless of any provision in the construction contract. This is a significant shift from the current situation.  

 It will be interesting to monitor the passage of the Construction Contracts Amendment Bill, given we expect further details to be released.

One thought on “Further development on retention trust accounts

  1. Pingback: Retentions to be held under statutory trust | CONSTRUCTION LAW BLOG

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