Enforceability Status
Oregon courts apply careful scrutiny to liquidated damages provisions. Per-diem closing penalties may be enforceable if reasonable, but Oregon's Unlawful Trade Practices Act and the state's consumer-protective legal tradition create meaningful uncertainty for aggressive penalty provisions.
Legal Analysis
Oregon courts evaluate per-diem closing penalties under the state's liquidated damages framework. A daily charge is enforceable if the amount was a reasonable estimate of anticipated damages and actual damages would be difficult to calculate. Oregon follows principles consistent with the Restatement (Second) of Contracts Section 356 but tends to scrutinize consumer contract provisions closely.
Oregon's new construction markets in the Portland metropolitan area, Bend, and Eugene feature moderate use of per-diem closing penalties. Daily rates typically range from $100 to $200. Courts assess whether these amounts reflect actual builder costs or primarily serve as coercive mechanisms to pressure quick closings.
The Oregon Unlawful Trade Practices Act (ORS 646.608) prohibits unfair or deceptive practices in trade and commerce. The Act is broadly applied and provides for actual damages, punitive damages in some cases, and attorney's fees. Builders who impose undisclosed or excessive per-diem penalties face significant liability risk under this statute.
Oregon does not have specific legislation governing closing penalties in residential construction. The state's consumer-protective legal environment, combined with the broad scope of the Unlawful Trade Practices Act, creates significant incentives for builders to ensure per-diem charges are reasonable and clearly disclosed.
Relevant Oregon Law
Prohibits unfair or deceptive practices in trade and commerce. Provides for actual damages, punitive damages, and attorney's fees. Applicable to undisclosed or excessive closing penalties.
Oregon courts require that liquidated damages be reasonable in light of anticipated harm and that actual damages be difficult to ascertain.
Governs contractor licensing and professional conduct. The Board may consider complaints about unfair contract practices by licensed residential builders.
Builders in Oregon Using This Clause
What Oregon Buyers Should Know
- Leverage Oregon's strong consumer protection framework. Oregon's Unlawful Trade Practices Act provides broad protections and allows attorney's fees for prevailing buyers. If per-diem penalty terms were not clearly disclosed or the rate is disproportionate to actual costs, this statute provides meaningful leverage.
- Request a detailed justification for the per-diem rate. Ask the builder to document daily holding costs including property taxes, insurance, loan interest, and HOA dues. Oregon courts are likely to scrutinize whether the penalty amount is genuinely compensatory.
- Negotiate mutual delay provisions and a grace period. Request a reciprocal per-diem credit for builder delays and a grace period of 7 to 14 days before buyer penalties begin. Oregon's consumer-protective courts may view one-sided or immediate penalty triggers unfavorably.
- File a complaint with the Oregon Construction Contractors Board if needed. If the builder's contract practices are unfair, you may file a complaint with the Construction Contractors Board. The Board regulates licensed builders and may take action regarding unfair contract terms.