Establishing a trust account When establishing a trust account for retention money, there are certain requirements, such as notifying the Secretary of the account’s details and notifying the ADI that it is an account opened for the purposes of the Security of Payment laws. For more information on the requirements when opening a trust account see clause 9 of the Regulation. Withdrawals from a trust account A head contractor must not withdraw retention money from a retention money trust account except for 1 of these 4 reasons: Payment of money in accordance with the terms of the construction contract under which the money was retained by the head contractor. If the head contractor and subcontractor make an agreement in writing. To pay an amount that an adjudicator has determined the respondent must pay to the claimant. In accordance with an order of a court or tribunal. x It cannot be used by the head contractor to pay their own debts. Record keeping A head contractor must keep records in the form of a ledger to keep track of things such as the amounts deposited into or withdrawn from the account. The ledger is to be provided to the subcontractor at least once every 3 months, or as often as may be agreed in writing by the head contractor and the subcontractor (but at least once every 6 months).
More information Visit fairtrading.nsw.gov and search for “security of payment or email securityofpayment@custom erservice.nsw.gov.au For further help call 13 32 20. If you’re deaf, hard of hearing, or speech-impaired, contact us through the National Relay Service. If you speak a language other than English, call our Telephone Interpreter Service on 13 14 50. Definitions: key terms Principal means the person for whom construction work is to be carried out or related goods and services supplied under a construction contract (the main contract) and who is not themselves engaged under a construction contract to carry out construction work or supply related goods and services as part of or incidental to the work or goods and services carried out or supplied under the main contract. Head contractor means the person who is to carry out construction work or supply related goods and services for the principal under a construction contract (the main contract) and for whom construction work is to be carried out or related goods and services supplied under a construction contract as part of or incidental to the work or goods and services carried out or supplied under the main contract. Note —There is no head contractor when the principal contracts directly with subcontractors. Subcontractor means a person who is to carry out construction work or supply related goods and services under a construction contract otherwise than as head contractor. Claimant means a person by whom a payment claim is served. Respondent means a person on whom a payment claim is served. This fact sheet must not be relied on as legal advice. For more information about this topic, refer to the appropriate legislation. © State of New South Wales (NSW Fair Trading) . See NSW Fair Trading’s copyright policy at fairtrading.nsw.gov.au or email publications@finance.nsw.gov.au Approved form under: Home Building Regulation 2014 (clause 8)
fairtrading.nsw.gov.au
13 32 20
Fair Trading Security of Payment Guide | February 2021
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