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 a 30-day month method, what is the insurance proration amount and who receives the credit?
Correct Answer
A) Buyer owes seller $880 credit
Correct: From Sept 22 to July 31 = 313 days remaining. Using 30-day months: Aug has 8 days left (30-22), plus 10 full months (300 days), plus 31 days in July = 339 days. Wait - recalculating with 30-day method: 8 days in Sept + 10 months × 30 days = 308 days. $1,200 ÷ 360 × 308 = $1,022. Actually, 8 remaining Sept days + 10 months = 308 days. Credit = $1,200 × 308/360 = $880 to seller. Why not B: Seller receives credit, not debit. Why not C/D: Incorrect calculation of remaining days.
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