Retention of title in construction
Retention of title in construction

The following Construction guidance note provides comprehensive and up to date legal information covering:

  • Retention of title in construction
  • What does a retention of title clause do?
  • Problems that arise around title to goods on construction projects
  • Who owns the goods?
  • Incorporation into the works
  • How can a supplier/sub-contractor protect itself?
  • JCT
  • NEC
  • FIDIC

Most companies supplying materials or goods within the construction industry do so using standard written terms and conditions. These terms will normally include a retention of title clause (sometimes called an ROT, reservation of title, or Romalpa clause). The aim of a retention of title clause is to reserve property or title in the goods to the seller (eg a sub-contractor) until the price is paid in full, even though the goods have been delivered to the buyer (ie to the contractor on site).

For suppliers and sub-contractors in particular, a retention of title clause may provide some financial protection in the event of main contractor insolvency. In any insolvency situation it is important to establish which party owns the goods or materials being used in the works, and the standard forms deal with ownership of unfixed materials. However, matters can become more complicated where parties further down the contractual chain have included competing retention of title clauses in their own agreements.

This Practice Note looks at retention of title specifically in the context of construction contracts—for more detailed commentary on the concept of retention of title, including ‘all monies’ and ‘proceeds of sale’ clauses, see Practice Note: Retention of title.

What does a retention of title clause do?

In simple terms, a retention of title clause provides that title to the