Defects liability period and retentions
At the end of the defects liability period, if there are no defects to correct or work to be finished, any retention amounts or security needs to be released.
Statutory defects liability period
Sometimes it is not clear or a contract will not state when the defects liability period ends – or when a contractor is able to claim for the release of their retention amount or security.
In these cases a statutory defects liability period will apply, which is:
- 12 months from the date of practical completion, or
- the date stated in the contract, or
- the last day when the building work was completed as required by the contract.
Notice of defects liability period ending
Anyone holding retentions or other securities after practical completion are required to notify their contractors about the end of the defects liability period.
This notice must be given within ten business days before the end of the defects liability period using the S67NC Notice End Defect Period form (PDF 42KB).
If the defects liability period is linked to the defects liability period for another contract – the notice may be given within five business after the contracting party is themselves given the defects liability notice under the other contract.
Not giving this notice of the end of the defects liability period is an offence and could attract a maximum of 100 penalty units.
Getting paid at the end of the defects liability period
In most cases, a building contract will require a final payment claim to be submitted for the payment of retention amounts.
A final payment claim must be submitted within:
- the date specified under the contract, or
- 28 calendar days after the end of the last defects liability period, or
- six months after the completion of all construction work under the contract.
The defects liability notice will signal to a contractor that it is time to give their final payment claim.
Releasing retention amount or security
he party holding retention amounts or other security must release them according to the building contract unless they have a reasonable excuse.
A maximum penalty of 200 penalty units or one year’s imprisonment may apply for failing to release a retention amount or security as required.
If you have not been paid your retention amounts or had your security released, there are a number of dispute resolution options to consider.