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Ebert Construction and retention monies held 'in trust'

By Pierce Bedogni - 3 Aug 2018

On 1 August 2018, Ebert Construction Limited went into receivership. Ebert's receivership will be interesting to monitor, primarily due to it being the first major construction company to enter receivership with the requirement to hold retentions "in trust" under new amendments to the Construction Contracts Act 2002.

If you are involved with building work in a commercial context, it is likely that you have been exposed to retentions.

Since 31 March 2017, retentions withheld under all new non-residential construction contracts must either be held in trust or a suitable insurance policy or bond must be provided in lieu, to ensure the availability of those retentions should a company enter receivership/liquidation. Those retentions must be either in the form of cash, or in a form that can be readily called upon to pay for those retentions.

Whilst Ebert's receivers undertake their investigations, it will be interesting to see whether Ebert have been complying with their obligations under the Act and retentions are available for contractors working on their projects.

In any case, it is a timely reminder to confirm that if you are required to hold retentions under your building contract that you comply with your obligations under the Act. That includes keeping proper accounting records of those retentions, ensuring that they are readily available, and capable of being audited.

If you wish to discuss your obligations in relation to retentions or any other general construction matters please contact either Geoff Hardy or Pierce Bedogni.


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