Tenant compensation from defective work

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Legal and contractual solutions · Practical completion and defects

Can an employer recover tenant compensation caused by remedial works?

Contractor's default, third-party liability, remoteness and proof

Tenant compensation may be recoverable where defective work and the contractor's failure to remedy cause the premises to be vacated, but the employer must prove legal liability, causation, remoteness, reasonableness and mitigation.

Quick answer

Recoverability depends on whether the tenant payment was a reasonable and sufficiently foreseeable consequence of the contractor's breach

If the contractor refuses or neglects a valid instruction to remedy defective work, the employer may appoint others and claim reasonable remedial and associated cost. A payment to a displaced tenant is not automatically recoverable. The employer must show that the payment was legally due or reasonably incurred, that vacation was caused by necessary remedial work, that this type of loss was within the applicable remoteness rule, and that the duration and amount were reasonably mitigated. The final certificate and defects procedure must also be checked for their precise effect.

IssuePosition
Defective workBreach must be established
Failure to remedyFollow the contractual default steps
Tenant displacementMust be caused by necessary remedial work
Tenant paymentProve legal or reasonable basis
RecoverySubject to remoteness and mitigation

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