WA builders fail to transfer $3m in retention money into trust accounts

The findings followed recent inspections by the Department of Local Government, Industry Regulation and Safety.

Retention funds are a percentage of progress payments set aside to ensure the building is finished, free of defects and completed.

According to the watchdog, for construction contracts worth more than $20,000, any cash withheld from progress payments as security must be held in a dedicated trust account.

Once informed, the builders acted quickly to rectify the matter and have since transferred $3 million in funds.

Building commissioner Phil Payne said while funds were usually paid back once the work was completed to the negotiated standard, retention money was often vulnerable to misappropriation or loss.

“Holding this money in trust safeguards it in the event the builder or head contractor becomes insolvent,” he said.

“Builders and head contractors that fail to comply with the retention trust scheme could be in breach of their fiduciary duties, exposing them to substantial liability and offences under the act with penalties of up to $50,000.”

The Department of Local Government, Industry Regulation and Safety confirmed that the companies have not been prosecuted or faced legal action.

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