Defects and Retention changes to the QBCC Act arising from Building Industry Fairness reforms

Changes arising from the Building Industry Fairness (Security of Payment) Bill (Qld) (Bill) commenced operation on 17 December 2018. Most are aware that, as a consequence, the second tranche of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) has now come into effect and has replaced the Building and Construction Industry Payments Act 2004 (Qld) and the Subcontractors’ Charges Act 1974 (Qld).

However the Bill also led to significant amendment of the Queensland Building and Construction Commission Act 1991 (QBCCA) to strengthen obligations regarding defects liability and the release of security by way of retention.

The QBCCA already placed restrictions on the amount of security able to be held under construction contracts in Queensland. Subject to some specific exception the restrictions are 5% of the contract price for head contracts (s 67K) subject to an ability to contract out in writing and 5% for subcontracts (s 67L) with amounts under both levels of contract to be reduced to 2.5% after practical completion (s 67N).

The amendments now expand obligations with respect to both retention and defects liability.

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