Enforceability Status
Missouri courts generally enforce per-diem closing penalty provisions when structured as reasonable liquidated damages. Missouri follows established common law principles and the state's Merchandising Practices Act provides additional consumer protections against deceptive contract terms.
Legal Analysis
Missouri courts evaluate daily closing penalties under the state's liquidated damages framework. A per-diem charge is enforceable if the amount was a reasonable pre-estimate of the builder's anticipated damages and actual damages would be difficult or impracticable to calculate. Missouri follows principles consistent with the Restatement (Second) of Contracts Section 356.
Missouri's new construction markets in the St. Louis and Kansas City metropolitan 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 daily costs for maintaining a completed home.
The Missouri Merchandising Practices Act (Mo. Rev. Stat. Section 407.020) prohibits deception, fraud, unfair practices, and the concealment or omission of material information in connection with the sale of merchandise, including real estate. Builders who fail to disclose per-diem penalty terms or who misrepresent closing flexibility may face claims under this broadly applied statute.
Missouri does not have specific legislation governing closing penalties in residential construction. Enforceability depends on general contract principles. Missouri courts generally uphold freedom of contract but will decline to enforce provisions that operate as penalties rather than reasonable damage estimates.
Relevant Missouri Law
Prohibits deception, fraud, unfair practices, and concealment of material information in consumer transactions. Applicable to undisclosed or misleading per-diem closing penalty provisions.
Missouri courts require that liquidated damages be a reasonable forecast of just compensation and that actual damages be difficult to calculate.
Provides the Attorney General with enforcement authority over consumer protection matters, including unfair practices in residential construction.
Builders in Missouri Using This Clause
What Missouri Buyers Should Know
- Assess whether the per-diem rate is proportionate to actual costs. Missouri's moderate home prices mean builder carrying costs are relatively low. Request a cost breakdown and verify the daily penalty rate reflects actual expenses including property taxes, insurance, loan interest, and maintenance.
- Negotiate mutual delay accountability. Push for a reciprocal per-diem credit if the builder fails to deliver the home on time. One-sided penalty structures that only burden the buyer should be challenged during contract negotiation.
- Request a grace period before penalties begin. Ask for a 7- to 14-day buffer after the scheduled closing date before per-diem charges accrue. Minor delays caused by lender processing or title issues are common.
- Document all representations about closing timelines. Keep written records of all communications from the builder's sales team about closing dates and flexibility. The Missouri Merchandising Practices Act covers concealment and omission of material information, which may be relevant if penalty terms were not clearly communicated.