A Florida commercial property closing involves a triple-net lease where the tenant pays all property expenses. The lease requires the tenant to pay property taxes directly to the tax collector. At closing, the seller's attorney wants to prorate the taxes between buyer and seller. What should the closing agent do?
Correct Answer
D) Prorate based on the lease terms and credit the appropriate party
Correct: In triple-net leases, tax obligations follow the lease terms, and proration should reflect who is responsible during each ownership period according to the lease. Why not A: Normal proration ignores the lease obligations that may affect the actual tax burden. Why not B: Holding funds in escrow is unnecessary when lease terms clearly define responsibilities. Why not C: Even though the tenant pays, the ownership change may affect the landlord's obligations under the lease.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Closing Procedures Calculations Question
Background Knowledge for Closing Procedures Calculations
Real World Application in Closing Procedures Calculations
Common Mistakes to Avoid on Closing Procedures Calculations Questions
Related Topics & Key Terms
Key Terms:
Related Concepts
Daily rate calculation involves determining the cost or income per day by dividing the total amount by the number of days in the period (usually a year or a month). This is a fundamental step in proration.
The capitalization rate (cap rate) is the ratio of a property's net operating income to its sale price, expressed as a percentage. It is used to estimate value and compare profitability of investment properties. Cap Rate = NOI / Value.
The capitalization rate (Cap Rate) is the rate of return on a real estate investment based on its expected income.
More Closing Procedures Calculations Questions
A property closes on March 15th. The annual property taxes of $2,400 have been paid by the seller for the entire year. Using a 365-day year and the day of closing belongs to the buyer, what is the proration amount the buyer owes the seller?
Training example Harbor Packet asks the question this way. A Florida closing statement uses an annual tax estimate of $3,960 based on the parties' agreed current-year estimate. Using a 360-day year and assigning the day of closing to the buyer at a July 1 closing, what seller debit for taxes is shown?
A first-time homebuyer in Jacksonville is concerned about closing costs on their $195,000 home purchase. Their lender has provided a Loan Estimate showing various fees. Under Florida law and federal regulations, which statement about the lender's fee disclosure is most accurate?
A buyer purchases a home for $325,000 with a 10% down payment. The buyer also pays 2 points on the loan amount. If each point equals 1% of the loan amount, what is the total cash needed at closing for down payment and points combined?
A Florida closing occurs on August 1. Use a 360-day year, 30-day months, assume property taxes are paid in arrears, and assign the day of closing to the buyer. If annual taxes are estimated at $3,240, what buyer credit corresponds to the seller's accrued tax debit?
- → A real estate licensee in Fort Lauderdale is representing a buyer who received their Closing Disclosure three days before the scheduled closing. The buyer notices that the lender's title insurance premium increased by $300 from the Loan Estimate, and the appraisal fee increased by $75 due to the property's unique features requiring additional analysis. What should the licensee advise the buyer?
- → A Florida property closes on June 18th. The seller has a homeowner's insurance policy with an annual premium of $2,400 paid through December 31st. Using the 365-day method and treating the day of closing as belonging to the buyer, what credit should the seller receive for the unused portion of the insurance?
- → The buyer gets a $280,000 mortgage in Florida. The intangible tax is:
- → A Florida condominium unit is being sold and the closing is scheduled for Friday. On Thursday, the buyer's attorney discovers that the seller has not paid the monthly condo association fees for the past three months, totaling $1,200. The association has filed a lien. How should this be handled at closing?
- → A Florida real estate transaction is scheduled to close on March 15th. The buyer's attorney discovers a cloud on the title that requires additional documentation from the seller. The seller's agent assures everyone the documents will be available by March 20th. What is the most appropriate action for the closing agent?
- → In Florida, who typically pays for owner's title insurance?
- → Property taxes of $2,400 for the year have been paid by the seller. The closing is on September 15th (day 258 of 365). How much does the buyer owe the seller for the unused portion of prepaid taxes?
- → In Florida, who typically selects the closing agent?
- → A real estate agent in Orlando is preparing a buyer for closing costs on a $275,000 condominium purchase. The buyer is obtaining an 80% LTV loan and the lender requires a loan origination fee of 1.25%, an appraisal fee of $475, credit report fee of $35, and flood certification of $25. The buyer will also need owner's title insurance estimated at $1,200. What category represents the largest portion of the buyer's closing costs?
- → In Florida real estate transactions, all of the following are typically paid by the buyer at closing EXCEPT:
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Valuation and Market Analysis
10% of exam
Related Articles
How to Study Real Estate Closing Questions Without Guessing the Sequence From Memory Alone
A topic that feels clear in notes can still fail in practice if recall has not caught up with recognition. If you are searching for study real estate...
Why Real Estate Closing Questions Improve Faster When You Track Who Acts, Who Pays, and What Triggers the Next Step
A topic that feels clear in notes can still fail in practice if recall has not caught up with recognition. If you are searching for real estate closing...
How to Study Real Estate Closing Cost Questions Without Memorizing Random Fees
Random looking scores usually mean the study process is hiding one or two repeat problems. If you are searching for study real estate closing cost questions...
Previous Question
In Florida real estate transactions, what is the primary purpose of the closing disclosure (CD) that buyers must receive?
Next Question
A Florida closing occurs on March 1. Use a 360-day year, 30-day months, assume property taxes are paid in arrears, and assign the day of closing to the buyer. If the annual property tax estimate is $2,880, what seller debit for taxes should appear on the closing statement?