25.10.2016

Clarification of retentions requirements for construction contracts

The retentions regime comes into force on 31 March 2017

A bill has been introduced to Parliament to make clear that the new retentions regime for construction contracts only applies to contracts which have been entered into, or renewed, on or after 31 March 2017.  Once the regime comes into force, parties may agree that it applies to earlier contracts.  The Regulatory Systems (Commercial Matters) Amendment Bill had its first reading on 18 October 2016.

The retentions regime comes into force on 31 March 2017.  Principals and head contractors will be required to hold retention money on trust as cash or liquid assets that are readily converted into cash.  The money does not need to be kept in a separate trust account, and can be commingled with other moneys.  Retentions may only be used to remedy defects in the contract works, cannot be used for working capital, and must be paid no later than the date upon which the contractor’s obligations have been completed.  The mechanics of the regime will be clarified in regulations, which have yet to be released.

For more information, or to discuss any aspect of construction law, please contact:

Nick Gilliesnick.gillies@heskethhenry.co.nz or +64 9 375 8767

Christina Bryant –     christina.bryant@heskethhenry.co.nz or +64 9 375 8789

Helen Macfarlanehelen.macfarlane@heskethhenry.co.nz or +64 9 375 8711

Sarah Holdernesssarah.holderness@heskethhenry.co.nz or +64 9 375 8778

Disclaimer:  The information contained here is of a general nature and should be used as a guide only.  It is not a substitute for obtaining legal advice.  Any reference to law and legislation is to New Zealand law and legislation.

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

Forestry Unsplash ruben hanssen wl ylTCM
Forestry: Regulatory Roundup March 2024
The challenging economic environment for New Zealand’s forestry industry continues, with China’s demand for our logs remaining subdued. Moreover, in addition to the change in Government, t...
25.03.2024 Posted in Forestry & Property
solar
OIO Spotlight: Solar projects, exempted interests and farmland considerations
As New Zealand renewable energy developments continue to attract interest from global investors, we take a look at some recent approaches of the Overseas Investment Office in assessing consent require...
BCC Trade Credit v Thera Agri Capital: Policyholder Successful Against Credit Insurer in Australian Court of Appeal Decision
When applying for trade credit insurance, a prospective insured will typically provide information on the financing arrangements that will form the basis of cover. Where there is deviation from these ...
05.03.2024 Posted in Insurance & Trade and Transport
iStock
Parker v Magnum Hire: A new era of personal grievance remedies awarded in the Employment Relations Authority?
If you heard a sudden loud noise last week – no it wasn’t a jet plane flying overhead, it was the gasp of employment lawyers across New Zealand when the Employment Relations Authority published it...
26.02.2024 Posted in Employment
employment dictionary website
Banding together: the Court’s new approach to awards for injury to feelings
One of the key remedies available to an employee who has successfully established a personal grievance in the Employment Relations Authority (Authority) or the Employment Court (Court) is compensation...
23.02.2024 Posted in Employment
Trust liability under the Health and Safety at Work Act
WorkSafe New Zealand v RH & JY Trust & ors
21.02.2024 Posted in Health & Safety & Private Wealth
New year, new government, new policies: what’s on the cards for employment law in 2024?
As we have been known to say once or twice (okay, maybe every year!) employment law never stands still. New governments can also spell major change, and this time is no exception. As you will likely h...
14.02.2024 Posted in Business Advice & Employment
SEND AN ENQUIRY
Send us an enquiry

For expert legal advice, please complete the form below or call us on (09) 375 8700.