Retention money offences and penalties
Last updated: 27 February 2024
There are offences and penalties for failing to hold retention money properly. This includes failing to provide reports to those who retention money is withheld from.
Directors and companies can be penalised if they do not meet the requirements of the retention money regime. Penalties include up to $50,000 for a director and up to $200,000 for a company, unless it is proven that all reasonable steps were taken to hold retention money.
If party A is not following the retentions regime, party B can contact the Ministry of Business Innovation and Employment (MBIE) to make sure the person or organisation holding retention money is meeting their requirements.
Penalties apply for the following offences:
| Offence | For each offence (up to) | |
|---|---|---|
| Party A | Each director | |
| Failing to keep retention money in a separate bank account or provide a complying instrument. | $200,000 | $50,000 |
| Failing to use retention money only to remedy defects in the performance of obligations, or to give 10 working days' written notice. | $200,000 | $50,000 |
| Failing to keep proper accounting and other records of retention money. | $50,000 | |
| Failing to provide reports to party B. | $50,000 | |
| Providing false or misleading information to party B. | $50,000 | |
| Obstructing, hindering, or resisting the Chief Executive of MBIE (or their delegate) in the execution of their investigation. | $200,000 | $50,000 |
| Providing information or documents that are false or misleading to the Chief Executive of MBIE. | $200,000 | $50,000 |
MBIE's Integrity and Enforcement team has the ability to investigate and enforce retention money offences. MBIE also has the responsibility to provide information and education to the sector on the retention money regime and monitor compliance. Refer to the retention money complaints page.
Construction Contracts Act 2002 – legislation.govt.nz