The general rule in Missouri for damages to real property is the “diminution in value” test, which is calculated by determining the difference between the fair market value before and after the event causing the damage. With respect to fraudulent misrepresentation claims, the diminution in value method measures damages as the difference between the actual value of the property at the time the sales contract was entered into and the property’s value had the seller’s representations been true.
The “cost of repair” test, an exception to the general rule, may be used when the cost of restoration is less than the diminution in value. Under the cost of repair method, damages are measured by the cost of repairing the defects in the property. Application of the cost of repair test is limited to situations where repairs are only a small percentage of the diminution in value. In fact, to qualify for the cost of repair exception, the plaintiff must present evidence showing that the cost of repair is insignificant to the total market value of the property.
The particular facts and circumstances of each case dictate which measure of damages is appropriate.