Parliament has identified the need for clarification of the forthcoming retention regime under the Construction Contracts Amendment Act 2015 (“Amendment Act”), and has introduced the Regulatory Systems (Commercial Matters) Amendment Bill (“Bill”), which proposes to change s11A of the Amendment Act. This would mean that the retention regime, which requires all retention money to be held “on trust”, will only apply to construction contracts entered into or renewed on or after 31 March 2017 (which is when the regime is due to come into force), unless the parties agree.
Prior to the Bill, there was concern in the construction industry that on 31 March 2017 all retention money must be held “on trust”, even if a construction contract was entered into prior to the retention regime coming into force. The Bill reduces the significant financial implication this would have had on retention holders.
Find out more by contacting James Hakaria.