With respect to a construction contract, a contractor must fulfill certain basic obligations. These core duties usually arise expressly from the language of the contract.
When planning a new development, developers must account for the density of the project. By an established minimum lot size, the density of single-family homes in a development is predetermined leaving developers with a finite number of homes that can be contained in the development. With respect to multi-family homes such as condominiums, maximum density is usually calculated by the number of homes per acre.
Retainage funds do not only serve as a protective mechanism for an owner on a construction project. Third parties may also benefit from the funds that have been earned by the contractor, but withheld pending completion of the construction project. Third parties may seek to satisfy a contractor's outstanding indebtedness out of the retainage funds.
In order to preserve the character and quality of a new development, some developers place restrictions on the property to control how it will be used. These private land use controls take the form of restrictive covenants and negative reciprocal easements.
When the owner of a construction project files for bankruptcy, all participants on the project will feel the effects. Usually, the owner will seek to complete the project utilizing the bankruptcy tools at his disposal. Owners reorganizing under Chapter 11 can assume beneficial executory contracts or unexpired leases and reject others.
