Enforceability Status
Daily closing penalty clauses in South Carolina are generally enforceable as liquidated damages when the per-diem amount is reasonable. South Carolina courts follow established common law principles for evaluating liquidated damages, and the state's Unfair Trade Practices Act offers additional consumer protections.
Legal Analysis
South Carolina courts evaluate per-diem closing penalties under the state's liquidated damages framework. A daily charge is enforceable if the stipulated amount was a reasonable estimate of anticipated damages at the time of contracting and actual damages would be impracticable or extremely difficult to fix. South Carolina follows principles consistent with the Restatement (Second) of Contracts Section 356.
South Carolina's growing new construction markets in the Charleston, Greenville, and Myrtle Beach areas have seen increasing use of daily closing penalties. Per-diem rates typically range from $75 to $200. Courts assess whether these amounts reasonably reflect the builder's holding costs, including insurance, taxes, loan interest, and HOA obligations.
The South Carolina Unfair Trade Practices Act (S.C. Code Section 39-5-20) prohibits unfair or deceptive acts in trade and commerce. Builders who fail to prominently disclose per-diem penalty provisions or who misrepresent closing flexibility may face liability under this statute, which allows for treble damages and attorney's fees.
South Carolina does not have specific legislation governing closing penalties in residential construction contracts. Enforceability is determined by general contract principles, the reasonableness of the amount, and whether the provision was clearly disclosed and agreed to by both parties.
Relevant South Carolina Law
Prohibits unfair or deceptive acts in trade and commerce. Provides for treble damages and attorney's fees when builders impose undisclosed or deceptive closing penalty terms.
South Carolina courts require that liquidated damages be reasonable in relation to anticipated loss and that actual damages be difficult to calculate.
Governs residential builder licensing and professional standards. The Residential Builders Commission may consider complaints about unfair contract practices.
Builders in South Carolina Using This Clause
What South Carolina Buyers Should Know
- Review the per-diem rate relative to the builder's actual holding costs. Ask the builder to justify the daily penalty amount by identifying specific costs incurred during a closing delay. South Carolina courts may decline to enforce a per-diem rate that significantly exceeds the builder's demonstrable carrying costs.
- Negotiate a grace period before penalties accrue. Request a buffer of 7 to 14 days after the scheduled closing date before per-diem penalties begin. Minor delays caused by lender processing, title review, or attorney scheduling are common in South Carolina and a grace period helps prevent unnecessary charges.
- Ensure the contract distinguishes buyer-caused from builder-caused delays. The contract should clearly define which delays trigger the penalty and which are excused. Delays caused by the builder's failure to complete construction, obtain certificates of occupancy, or resolve inspection issues should not trigger buyer penalties.
- Retain copies of all communications about the closing timeline. Document all representations made by the builder's sales team regarding closing dates and flexibility. If oral assurances contradict the written penalty terms, this documentation may support a claim under the South Carolina Unfair Trade Practices Act.