An escrow officer in Sacramento is prorating the seller's homeowner association (HOA) dues at closing. The quarterly HOA dues are $1,800, payable on January 1, April 1, July 1, and October 1. The seller has paid the current quarter (April 1 through June 30). The closing date is May 15. Using a 30-day month, how much credit is the buyer owed for the HOA dues the seller has prepaid beyond the closing date?
Correct Answer
A) $900
Step 1: Quarterly dues cover April 1 through June 30 = 90 days (3 months × 30 days). Step 2: Daily HOA rate = $1,800 ÷ 90 = $20/day. Step 3: Seller owns through May 14 (buyer owns starting May 15). Seller's prepaid period beyond closing = May 15 through June 30 = 15 days (May) + 30 days (June) = 45 days. Step 4: Buyer's credit = $20 × 45 = $900.
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Key Terms:
Related Concepts
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.
For a deed to be valid, it must contain several essential elements including a competent grantor, identifiable grantee, consideration, legal description, granting clause, signature of the grantor, and delivery and acceptance.
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