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

Computer Hand Wide
Privacy Commissioner releases draft biometrics privacy code
Biometrics is a trending issue and with the development of technology there are consistently more ways biometric data can be used, from replacing a password to identifying repeat shoplifters in a shop...
03.05.2024 Posted in Business Advice
Building Permit
Build-to-Rent (BTR) Basics
If the term Build-to-Rent is new to you, you are probably not alone.  Unlike countries such as the USA, UK and Australia where BTR is well established, the BTR sector is still emerging in New Zealand...
26.04.2024 Posted in Property
Insurance Contract Law – Parliament finally gets to consider long-awaited reforms
The Government’s Contracts of Insurance Bill was introduced on 30 April 2024.  We are currently reviewing that Bill and a new article is coming soon. In February 2022, the Ministry of Business, Inn...
24.04.2024 Posted in Insurance
Tower Troubles – Body Corporate 366567 (Harbour Oaks) v Auckland Council
Standing 40 storeys tall with 406 units, the Gore Street building in downtown Auckland (formerly known as “Harbour Oaks”) is presently the subject of New Zealand’s largest claim for residential ...
18.04.2024 Posted in Construction & Disputes
Construction Framework Wide BW
OIO Spotlight:  Government issues new directive on foreign investment for build-to-rent housing developments
Earlier this year, the coalition Government announced that it would be introducing a new streamlined consent pathway for build-to-rent developments by way of amendments to the Overseas Investment Act ...
16.04.2024 Posted in Business Advice & Property
Incorporated societies’ reregistration deadline – April 2026 may be closer than you think
The Incorporated Societies Act 2022 (2022 Act) came fully into force on 5 October 2023, meaning incorporated societies can now apply for reregistration under the 2022 Act.  Approximately 24,000 exist...
16.04.2024 Posted in Business Advice
iStock  Construction dpi
Call me? Care is required when calling on a bond
In the recent High Court decision Hawkins Ltd v Elizabeth Properties Ltd, Hawkins was successful in preventing EPL from calling on a $3m bond pending determination of a dispute principally over the ap...
10.04.2024
SEND AN ENQUIRY
Send us an enquiry

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