How Drees Homes Uses This Clause
Drees Homes purchase agreements have been documented to include daily closing penalty provisions. If the buyer cannot close by the specified date, the contract imposes per-day financial penalties that can accumulate rapidly.
These penalties may apply even when the delay is caused by factors outside the buyer's control, such as lender processing times, title issues, or last-minute changes to closing documents. The daily rate and maximum accumulation period vary by contract.
Closing penalties create financial pressure on buyers to close quickly, potentially before all issues have been resolved. This pressure may discourage buyers from raising concerns about unfinished work or identified defects.
Builder-Specific Details
Custom Build Timeline Considerations
Drees Homes' custom and semi-custom builds may involve longer construction timelines, creating more opportunities for scheduling complexities that could trigger closing delays.
Combined with Deposit Forfeiture
The closing penalty works alongside the deposit forfeiture provision to create compounding financial pressure. A buyer who delays closing faces both daily penalties and the risk of losing their deposit.
Asymmetric Application
Builder contracts typically impose penalties on buyers for closing delays but may not provide equivalent compensation to buyers when the builder causes delays.
Legal History
The following cases involve Drees Homes's use of this clause type.
Closing Delay Disputes
Court records document disputes over closing penalties in homebuilder contracts. These disputes often center on whether the delay was caused by the buyer, the builder, or third parties.
State-by-State Enforceability
Enforceability of this clause varies by state. The following reflects Drees Homes's operating states.
| State | Status | Note |
|---|---|---|
| Ohio | Likely Enforceable | Ohio courts generally enforce reasonable per-diem closing penalties under liquidated damages principles, though excessive penalties may be challenged. |
| Kentucky | Likely Enforceable | Kentucky courts enforce reasonable liquidated damages provisions. Closing penalties that are disproportionate to actual damages may be scrutinized. |
| Indiana | Likely Enforceable | Indiana generally enforces reasonable per-diem closing penalties under liquidated damages analysis. |
| North Carolina | Likely Enforceable | North Carolina courts evaluate closing penalties under liquidated damages principles and generally enforce reasonable provisions. |
| South Carolina | Uncertain | South Carolina courts examine closing penalty provisions for unconscionability, particularly in the context of the overall contract balance. |
| Texas | Likely Enforceable | Texas courts generally enforce reasonable per-diem closing penalties that represent a reasonable estimate of anticipated damages. |
| Maryland | Likely Enforceable | Maryland courts enforce reasonable liquidated damages provisions, including per-diem closing penalties. |
| Virginia | Likely Enforceable | Virginia courts generally enforce reasonable per-diem closing penalties under liquidated damages principles. |
| Florida | Likely Enforceable | Florida courts enforce reasonable liquidated damages provisions, though penalties that are grossly disproportionate may be challenged. |
Related Clauses in Drees Homes Contracts
This clause often works in combination with other provisions in Drees Homes's purchase agreements.
The closing penalty and deposit forfeiture create compounding financial pressure on the buyer to close on the builder's timeline.
Inspection restrictions may prevent buyers from identifying issues before closing, while the closing penalty discourages delay to address discovered problems.
If the buyer discovers unauthorized material substitutions near closing, the closing penalty discourages delaying to resolve the issue.
What Buyers Can Do
- Understand the daily penalty amount and when it triggers. Read the contract to determine the exact per-day charge, when it begins, and whether there is a maximum accumulation period. Calculate your potential exposure.
- Negotiate a mutual closing penalty. Request that the builder also pay a per-day penalty if the builder causes delays. This creates a more balanced arrangement and incentivizes on-time completion.
- Secure financing early in the process. Start the mortgage process well before the anticipated closing date. Lender delays are a common cause of closing penalties, and early preparation reduces this risk.
- Do not let the penalty pressure you into closing with unresolved issues. While the penalty creates financial pressure, closing on a home with known defects may cost more in the long run than absorbing a few days of penalties.