So what are the key changes that you need to know about?
- Previously the Act applied only to physical construction work. The Bill widens the definition of construction work to include contracts with designers, engineers and quantity surveyors as from 31 March 2016. It will be critical for anyone involved in those industries to ensure that they are prepared for the changes.
- The Bill proposes to abolish almost entirely the present distinction between residential and commercial construction contracts. One of the flow on effects of this will be to enable contractors under residential construction contracts to enforce their rights by suspending work for non-payment.
- Another major change in the new Act relates to retentions. It is proposed that a party holding retention money will have to hold it on trust for the party from whom it is deducted (for example, held on trust by the head contractor for a subcontractor). The funds do not have to be held in a separate bank account but the retention money will not be available for payments of debts of any other creditor.
What you need to do
If you are involved in the construction industry, whether as a construction professional, property owner or developer, you should ensure that you are familiar with changes to the Act. You will need to take steps to update your documentation and processes before the new Act comes in.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.