The number of days each party owned the property directly affects their share of expenses or income. Typically, the seller is responsible for the days they owned the property *before* the closing date, and the buyer is responsible for the days *on or after* the closing date. Accurate calculation of these days is essential for fair proration.
If a property closes on July 16th, the seller owned the property from January 1st to July 15th. The number of days the seller owned the property is 31 (Jan) + 28 (Feb) + 31 (Mar) + 30 (Apr) + 31 (May) + 30 (June) + 15 (July) = 196 days.
Determining Ownership Days is tested in the Real Estate Math section of the real estate exam. Questions typically present a scenario and ask you to apply the concept. Here are examples of how exam questions are phrased:
Annual property taxes are $4,380. The property closes on March 15. If the seller has NOT paid taxes for the current year, how much does the seller owe at closing? (Use 365 days)
Practice with all 1 related questions below to build confidence in this topic area.
Remember to include the closing date when calculating the buyer's days of ownership. Be careful with leap years and the number of days in each month.
Related Terms
Practice Questions
Related Concepts
The capitalization rate (Cap Rate) is the rate of return on a real estate investment based on its expected income.
In real estate, property value can be estimated by dividing the Net Operating Income (NOI) by the Capitalization Rate (Cap Rate).
Converting a percentage to a decimal involves dividing the percentage value by 100.
Monthly interest is the portion of the total annual interest that is paid or accrued each month.
Annual interest is the total amount of interest charged on a loan or investment over a year.
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