The Minister for Building & Housing has introduced a supplementary order paper proposing the long-awaited protection of retention money in construction projects, by way of a new subpart 2A to the Construction Contracts Act 2002.
The SOP provides that all retention moneys (whether retained by the client, the head contractor or a subcontractor) must be held on trust for the party for whom it is deducted. There is no requirement for that money to be held in a separate trust account, but there are certain obligations around keeping proper accounting records. Importantly, the retention money is not available for payment of debts of any other creditor (other than the party from whom the retentions were withheld).
To read Kensington Swan’s newsflash setting out further essential features of the SOP and additional amendments, click here.