A Jacksonville property closes on September 22nd. The homeowner's insurance premium of $1,200 runs from August 1st through July 31st of the following year. The buyer will assume the policy. Using the 30-day month (banker's) method and treating the day of closing as belonging to the buyer, what is the insurance proration amount and who receives the credit?
Correct Answer
A) Seller receives a $1,026.67 credit from the buyer
Seller prepaid 12 months. Days used by seller (8/1 through 9/21 under 30-day method) = 52 days; days remaining for buyer = 360 − 52 = 308 days. Unused portion = $1,200 × 308/360 = $1,026.67, which the buyer reimburses (credits) to the seller.
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Related Topics & Key Terms
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Related Concepts
Proration is the process of dividing expenses or income between the buyer and seller at the closing of a real estate transaction. This ensures each party pays or receives only their fair share based on the period of ownership.
Proration calculations divide shared expenses such as property taxes, insurance, HOA dues, and rent between buyer and seller at closing based on the number of days each party owns the property.
Transfer tax is a tax imposed on the transfer of real property ownership, typically calculated based on the sale price and paid at closing. It is commonly expressed as a rate per $100, $500, or $1,000 of the sale price.
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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 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?
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- → In Florida, who typically pays for owner's title insurance?
- → In Florida, who typically selects the closing agent?
- → A Florida buyer's side of the closing statement shows note documentary stamp tax of $875, nonrecurring intangible tax of $500, lender charges of $1,200, and recording charges of $95. What is the buyer's total for those stated items?
- → A Florida buyer agrees by contract to pay a survey of $575, an inspection of $350, an appraisal of $650, and prepaid interest of $635. What is the buyer's total for these agreed costs?
- → In Florida real estate transactions, all of the following are typically paid by the buyer at closing EXCEPT:
- → 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?
- → Which statement best describes Florida's rule on state-imposed closing charges versus negotiable costs?
- → Scenario Harbor Manual raises this Florida point. A Florida buyer agrees by contract to pay a survey of $500, an inspection of $500, an appraisal of $575, and prepaid interest of $520. What is the buyer's total for these agreed costs?
- → A buyer in Orange County is purchasing a home for $295,000 with a conventional loan of $236,000. The lender requires: 1% origination fee, 0.5% discount points, $450 appraisal, $35 credit report, and $95 flood certification. The title company charges $1,100 for owner's title insurance and $650 for lender's title insurance. The buyer will also pay $375 for a home inspection. What is the buyer's total closing costs for these items?
- → A buyer in Palm Beach County is purchasing a waterfront home for $850,000 with a jumbo loan of $650,000. The lender charges 1.5% origination fee, 0.75% discount points, and a $1,200 underwriting fee. The documentary stamp tax on the deed is $3.00 per $1,000, and intangible tax on the mortgage is $2.00 per $1,000. If the buyer pays all lender fees and intangible tax, while the seller pays deed stamps, what is the buyer's total cost for these items?
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A Tampa Bay condominium sale is scheduled to close on March 10th. The monthly maintenance fee of $450 was paid by the seller for the entire month of March. According to Florida real estate practice, how should this prepaid maintenance fee be handled at closing?
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In Florida real estate closings, all of the following items are typically prorated between buyer and seller EXCEPT: