An Illinois purchase contract states that real estate taxes will be prorated on a daily basis using the prior year's tax bill. The prior year's taxes were $4,800.00, and the closing date is August 25, 2026. The closing day is charged to the buyer. How much tax credit should the seller give the buyer at closing?
Correct Answer
C) $3,103.56
$3,103.56 is correct. In a non-leap year, January 1 through August 24 (the seller's last day of ownership, since the closing day belongs to the buyer) equals 236 days: January (31) + February (28) + March (31) + April (30) + May (31) + June (30) + July (31) + August 1–24 (24) = 236 days. The daily rate is $4,800 ÷ 365 = $13.1507/day. Multiplying: 236 × $13.1507 = $3,103.56. Under Illinois custom, the seller is responsible for taxes through the day before closing when the closing day is assigned to the buyer.
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Related Concepts
A bargain and sale deed implies that the grantor holds title and possession of the property but does not include warranties against encumbrances or title defects.
The chain of title is the sequential history of all transfers of ownership for a specific property, from the original source (typically a government patent or grant) to the present owner. An unbroken chain is essential for marketable title.
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.
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