Illinois property taxes are billed in arrears. How are they typically handled at the closing of an existing-home sale?
Correct Answer
C) The seller gives the buyer a credit at closing for the portion of the tax year the seller owned the property, calculated according to the contract's proration method
Because Illinois property taxes are paid in arrears — meaning the bill for a given year is not due until the following year — the seller has accrued a tax liability for the portion of the tax year prior to closing that has not yet been billed or paid. To account for this, the seller credits the buyer at closing for that accrued period. The buyer then pays the full tax bill when it comes due, effectively being reimbursed through the credit received. The specific proration method (calendar-day, 30-day month, 105% of prior year's tax, etc.) is governed by the terms of the real estate contract.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Transfer Of Title Question
Background Knowledge for Transfer Of Title
Real World Application in Transfer Of Title
Common Mistakes to Avoid on Transfer Of Title Questions
Related Topics & Key Terms
Key Terms:
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.
More Transfer Of Title Questions
Which type of deed provides the grantee with the greatest protection against title defects from any point in the property's history?
Oklahoma uses which type of recording system?
Title insurance primarily protects against which of the following?
Which best describes a quitclaim deed?
What is Oklahoma's documentary stamp tax rate on real estate transfers?
- → In Oklahoma, real estate documents such as deeds are recorded with which office?
- → Under Arkansas law, what is the realty transfer tax rate charged when real property is conveyed?
- → In Arkansas, with which office are real estate deeds and other property documents officially recorded?
- → Arkansas uses which type of recording system to determine priority among competing claims to real property?
- → Which type of deed provides a buyer with the greatest protection against title defects, including those arising before the grantor's period of ownership?
- → A special warranty deed guarantees that the grantor will defend the title against claims arising from which of the following?
- → An abstract of title is best described as which of the following?
- → Delaware's realty transfer tax, which can total up to 4% of the purchase price, is considered:
- → Which of the following best describes the legal concept of escheat?
- → Title insurance primarily protects the policyholder against which of the following?
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 Review Real Estate Ownership Transfer Questions Without Losing the Sequence
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 review real estate...
How to Review Real Estate Transfer Questions Without Mixing Deeds, Delivery, and Recording
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 review real estate...
How to Study Real Estate Ownership Questions by Comparing Rights, Forms, and Transfer Limits
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...