Defects liability period and retentions

A statutory defects liability period now applies to all building contracts where a retention or security may be held.

If a building contract doesn't specify a period for release of retention or security, the contracting party must release retention amounts to contractors and subcontractors 12 months from the day of practical completion for the contract.

If a retention or security is held, the contracting party (head contractor or higher subcontractor) must give the subcontractor (or sub subcontractor) a Notice of End of Defect Liability Period within 10 business days before the end of the period.

This notice must include:

  • the date the defects liability period ends;
  • the amount of retention to be paid; and
  • the date the retention amount will be paid.

If the defect liability period relates to the defect liability period for a higher contract, the subcontractor must also give the sub-subcontractor a S67NC Notice End Defect Period.pdfIf the subcontractor cannot give notice within 10 business days due to the time it receives its notice the subcontractor must give notice to its sub-subcontractors  within 5 business days after receiving the notice.

Penalties may apply for failing to release a retention or security in accordance with the building contact.