Enforceability Status
Indiana courts generally enforce per-diem closing penalty provisions that qualify as reasonable liquidated damages. Indiana follows established common law principles, and the state's Deceptive Consumer Sales Act provides additional protections when penalty terms are not clearly disclosed.
Legal Analysis
Indiana courts evaluate daily closing penalties under the state's liquidated damages framework. A per-diem charge is enforceable if the amount was a reasonable estimate of anticipated damages at the time the contract was formed and actual damages would be difficult or impossible to calculate. Indiana follows principles consistent with the Restatement (Second) of Contracts Section 356.
Indiana's new construction markets in Indianapolis, Fort Wayne, and the surrounding suburban areas feature moderate use of per-diem closing penalties. Daily rates typically range from $75 to $175. Courts assess whether these amounts are proportionate to the builder's actual holding costs.
The Indiana Deceptive Consumer Sales Act (Ind. Code Section 24-5-0.5-3) prohibits deceptive acts in consumer transactions. Builders who misrepresent closing flexibility or fail to clearly disclose per-diem penalty terms may face liability under this statute, which allows for actual damages, attorney's fees, and treble damages in some cases.
Indiana does not have a specific statute regulating closing penalties in residential construction. Enforceability depends on general contract principles. Indiana courts generally respect freedom of contract but will decline to enforce provisions that operate as penalties rather than reasonable damage estimates.
Relevant Indiana Law
Prohibits deceptive acts in consumer transactions. Applicable when builders impose undisclosed or misleading per-diem closing penalty provisions. Allows actual damages, attorney's fees, and treble damages.
Indiana courts require that liquidated damages be a reasonable forecast of just compensation and that actual damages be uncertain or difficult to calculate.
Governs home improvement contracts and may inform the analysis of new construction contract provisions including penalty clauses.
Builders in Indiana Using This Clause
What Indiana Buyers Should Know
- Assess the per-diem rate against the builder's actual costs. Indiana's relatively moderate home prices mean that carrying costs are lower than in high-cost states. Ask the builder to justify the daily rate with specific cost data. A per-diem that significantly exceeds actual holding costs may be vulnerable to challenge.
- Negotiate a grace period before penalties begin. Request a buffer of 7 to 14 days after the scheduled closing date before per-diem charges start accruing. Short delays caused by lender processing are common and a grace period prevents unnecessary financial pressure.
- Push for mutual delay accountability. Indiana builder contracts frequently impose penalties only on buyers. Request a reciprocal per-diem credit if the builder fails to complete the home or obtain required inspections by the contracted delivery date.
- Keep records of all communications about closing dates. Document every statement from the builder's sales team about expected closing dates and flexibility. If oral representations conflict with written penalty terms, this record may support a claim under the Indiana Deceptive Consumer Sales Act.