Construction default occurs when a contractor fails to perform their obligations under a construction contract. This can include failing to complete the work on time, failing to meet the quality standards specified in the contract, or failing to pay subcontractors or suppliers. Construction defaults can have serious consequences for all parties involved, so it is important to understand your rights and responsibilities if you are facing a potential default situation.
There are two main types of construction defaults: material and contractual. Material defaults occur when the contractor fails to provide the materials specified in the contract. Contractual defaults occur when the contractor fails to perform their work in accordance with the terms of the contract. Both types of defaults can lead to serious problems for the project owner, including delays, cost overruns, and legal liabilities.
When a contractor defaults on their obligations, the project owner has a few different options available to them. The first is to terminate the contract and hire a new contractor to finish the job. This can costly and time-consuming, so it is often not the best option for owners. The second option is to sue the defaulting contractor for damages. This may be the best option if the owner believes they can win their case and recover some of their losses. Finally, the owner can try to work with the contractor to find a resolution that satisfies both parties. This option is often the most difficult to achieve but can be the best outcome for all involved.