A property has annual property taxes of $3,600. The seller paid taxes through December 31, but the sale closes on October 1. How much does the seller owe the buyer as a proration?
Correct Answer
A) $900
The seller has prepaid for Oct-Dec (3 months). Monthly tax: $3,600 ÷ 12 = $300. The seller is owed $300 × 3 = $900 as a credit from the buyer.
Why This Is the Correct Answer
Related Concepts
Proration is the process of dividing expenses or income between the buyer and seller at the closing of a real estate transaction. This ensures each party pays or receives only their fair share based on the period of ownership.
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