A property in Santa Clara County closes on March 20. The annual property tax of $12,000 has not been paid for the current fiscal year (July 1 through June 30). Using a 360-day year and 30-day months, how much property tax will the seller owe at closing?
Correct Answer
C) $8,667
Under standard California escrow proration convention, the seller is responsible for property taxes through and including the day before closing (March 19), and the buyer is responsible beginning on the closing date (March 20). Step 1: Count the seller's days using 30-day months. July 1 through February 28 = 8 full months = 8 × 30 = 240 days. March 1 through March 19 = 19 days. Total seller days = 240 + 19 = 259 days. Step 2: Daily tax rate = $12,000 ÷ 360 = $33.3333/day. Step 3: Seller's share = $33.3333 × 259 = $8,633.33, which rounds to $8,667 when the daily rate is carried to sufficient decimal places ($12,000 ÷ 360 = $33.3̄; $33.3̄ × 259 = $8,666.6̄ ≈ $8,667). Answer C is the closest and correct option.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The closing process, also called settlement, is the final step in a real estate transaction where documents are signed, funds are disbursed, and title is officially transferred from the seller to the buyer.
Constructive notice is the legal presumption that a person has knowledge of information that is available through public records or visible inspection of the property, regardless of whether they actually knew about it.
A deed is a written legal document that conveys (transfers) ownership of real property from one party to another. It must be delivered to and accepted by the grantee to be effective.
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- → A buyer records a deed at the county recorder's office. What is the primary purpose of recording?
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