At closing, real estate taxes are typically prorated so that:
Correct Answer
B) The seller pays taxes accrued through the closing date; the buyer is responsible for the remainder
Property taxes are prorated at closing based on the closing date. The seller is responsible for taxes accrued through the day of closing, and the buyer assumes responsibility from that point forward. In Maine, the property tax year runs from April 1 to March 31, so this calculation is particularly important to ensure each party pays only their fair share of the annual tax obligation.
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Related Topics & Key Terms
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Related Concepts
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
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- → A Rhode Island licensee encounters a listing contract is drafted. What should the licensee remember?
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