A California escrow is closing on September 15. Annual property taxes of $8,400 were paid by the seller through June 30. Using a 360-day year (30 days per month), what is the correct tax proration entry on the closing statement?
Correct Answer
B) Seller credits buyer $1,750 for taxes accrued but unpaid at closing
The seller paid taxes only through June 30. Closing occurs September 15, meaning the seller owned the property from July 1 through September 14 without paying taxes for that period. That is 2 months and 14 days = 2.467 months. Daily rate: $8,400 ÷ 360 = $23.33/day. July and August = 60 days; September 1–14 = 14 days; total = 74 days × $23.33 = approximately $1,750. Because the seller owes taxes for this period but has not paid them, the seller must credit the buyer $1,750 at closing. This is a debit to the seller and a credit to the buyer — not a reimbursement to the seller.
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A property in San Jose, California, sells for $750,000. The buyer obtains a conventional loan for 80% of the purchase price. The lender charges a 1.5% loan origination fee. What is the total loan origination fee the buyer must pay at closing?
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