The Construction Industry’s Open Secret: What Most Customers Don’t Realise

When you’re hiring a builder or working with a trade business, you probably think you’re dealing directly with a company. But in many cases—especially in the construction industry—you’re actually dealing with something more complicated: a trading trust.

This common but often invisible structure can create hidden risks for customers and subcontractors if things go wrong.

A Quick Primer on Trusts

Trusts span back to Roman times and are a legal structure where one party (the trustee) holds assets on behalf of another (the beneficiaries). A trading trust is when that structure is used to run a business. Typically, the trustee is a company and the trust itself holds the business assets. Legally, it’s the trustee that signs contracts—not the trust.

This setup is perfectly legal and often used for tax, asset protection, or succession planning. Great for your builder or tradie, but not so great for you as it changes how liability works if there’s a dispute.

A Common Setup: Bill's Builders (Example)

Let’s say you hire Bill's Builders Pty Ltd (Bill's) to build your granny flat.

On the surface, it looks like you’re dealing with a regular company - but in reality, that company is just the trustee acting on behalf of the Bill and Co Family Trust , which is the entity that actually owns the business assets.

Here's how it might look:

• The Trust: Bill and Co Family Trust (owns all the business assets)
• The Trustee: Bills Builders Pty Ltd (signs contracts, creates invoices, is liable for claims as it's the entity entering into contracts)
• The Trading Name: Bills Builders

When Things Go Wrong...

If you have a dispute with a builder and the legal entity you dealt with is just a trustee company, you might not be able to access the actual assets of the trust unless very specific legal conditions are met. In many cases, those assets—like tools, vehicles, even cash—are technically owned by the trust, not the company.

So, if something goes wrong, you’re legally chasing Bill's Builders Pty Ltd—which might have $2 in the bank. The real money, equipment, or receivables are in the trust.

That makes recovering money or enforcing judgments more complex and, sometimes, impossible.

What Can You Do to Reduce Your Risk?

If you’re dealing with a business that looks like it’s using a trading trust (especially in higher-risk industries like construction), here are a few things to consider:

• Look carefully at the legal name - does it include “The Trustee For…”?
• Ask up Front - ask businesses you're engaging with if they'r eusing a trading trust structure
• Check the ABN details - Bizly makes this easy by showing legal names, trading names, and entity type.
• Use legal professionals to review agreements - knowing how common this structure is in the construction industry, it's worth having a legal professional review any material or high risk contracts.
• Get personal guarantees - if the trustee has no assets, a personal guarantee from a director can offer some protection.
• Confirm insurance arrangements - ensure whoever you're dealing with has sufficient insurance for the nature of the project
• Be cautious with upfront payments - especially if the trustee entity appears under-capitalised.
• Consider using Bizly’s monitoring tools - to keep an eye on legal status, changes, and risk signals for the business.

Keep in mind though, if someone wants to obscure the fact they're using a trading trust structure, the nature of trusts makes it almost impossible to discover without much further research.

Is It a Red Flag? 🚩

Not necessarily. Many legitimate businesses use trusts for valid reasons. But when it comes to protecting yourself, the key is knowing who actually holds the assets—and what happens if things go wrong.

At Bizly, we help you spot these details quickly and clearly, so you can make smarter decisions before money changes hands.