Legislation affecting security

Queensland is heavily regulated in respect of security held under building contracts. Regulation on security held under building contracts in other jurisdictions is limited.

Part 4A of the
Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) regulates security in the following ways:

  • if a principal seeks to use security or a retention amount to obtain an amount owed under the contract, it must give notice of that intention within 28 days of becoming aware of its right to do so (section 67J of the QBCC Act);
  • where the contracting party under a building contract is the principal, the total value of the retention or security cannot exceed 5% of the contract price. However, this condition can be contracted out of by the parties if they comply with section 67K of the QBCC Act;
  • the amount of retention or security that can be given or retained is 5% of the contract price for the subcontract;
  • only 2.5% of the contract price can be withheld as retention or security after practical completion; and
  • security or retention may be lodged in the form of government bonds or valuable instruments from an approved security provider rather than cash or retentions.

back to top | next chapter
Updated 7 July 2014