1 December 2015 – Payment Claims

There is now no distinction between a residential and a commercial construction contract (with the exception of charging orders).  All payment claims issued by a contractor must attach Form 1 from the Construction Contracts Regulations 2015 to be a valid payment claim under the Construction Contracts Act (CCA).  You can get a copy of Form 1 here.  Form 1 is the written outline of the process a party must follow to respond to a payment claim and the consequences of failing to respond or not paying.

1 September 2016 – Consultants

Designers, quantity surveyors and engineers who are undertaking design, engineering or quantity surveying work in New Zealand that relates to construction work will be subject to the CCA.  If you employ a designer, quantity surveyor or engineer  on or after 1 September 2016 then ensure you meet your obligations in the CCA e.g. provide a proper payment schedule where payments are to be withheld and a formal payment claim has been received.   These consultants will be considering whether to  bring their payment processes in line with the CCA, they may choose not to.

31 March 2017 – Retentions

All construction contracts will be subject to the new retention rules.  Retention money must be held on trust by the principal under the building contract.  Proper accounting records must be kept and made available free of charge on request by the contractor.  The retention money may be invested but cannot be used to pay off a debt or other than to remedy defects in the work.  Retention money does not need to be held in a separate bank account though.  We may see an increase in the use of retention bonds,  which may be simpler to manage than the proposed new trust arrangements.  Contracts that are being entered into now may become subject to the new retention rules if retentions are still being made or held come 31 March 2017.

By Denise Marsden