Under the AREA purchase contract, how are adjustments for property taxes and utility costs handled on completion day?
Correct Answer
B) Property taxes and other costs are prorated between buyer and seller as of completion day
Under the AREA purchase contract, property taxes and certain utility costs are prorated between the buyer and seller as of completion day. The seller is responsible for costs up to and including completion day, and the buyer is responsible for costs from the day after completion onward.
Why This Is the Correct Answer
Under the AREA purchase contract, property taxes and eligible utility costs are prorated as of completion day. The seller is responsible for the portion up to and including completion day, and the buyer assumes responsibility from the day after completion onward. Lawyers calculate these adjustments as part of the closing statement of adjustments.
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