Can the Employer be liable to compensate its tenants if a defect resulted in to damage of their property. The incident occurred after completion of the works under NEC3 ECC Option C?
Normally the Employer’s liability to their tenants would be governed by the lease rather than NEC. Are the tenants a party of the NEC Contract?
NEC cover liabilities between the Employer and the Contractor for things like defects and also damage to the works, see clause 80.1 which lists out the Employer’s risks. Clause 81.1 states “From the starting date until the Defects Certificate has been issued, the risks which are not carried by the Employer are carried by the Contractor.”, so all the other risks associated with the construction are generally carried by the Contractor. Clause 84 also set out the insurance that the Contractor must hold which does include damage to property and the Contractor should hold this insurance “from the starting date until the Defects Certificate or a termination certificate has been issued.”. So the Employer may have cover for some damage to the tenants property before the Defects Certificate but i would get advice from your insurance broker. You might also wish to check whether you have included within your NEC contract Y(UK)3 which might allow the tenants certain rights under your NEC contract with the Contractor.