The seller collected $2,000 of monthly rent in advance for a 30-day month. Closing occurs on the 12th day of that month, and the seller owns the day of closing. Using the 30-day month, what is the seller's share of that month's rent?
Correct Answer
D) $800
Start with the per diem: $2,000 divided by 30 days is $66.67 per day. The seller owns the first 12 days of the month, including the day of closing, so the seller's share is 12 times $66.67, or $800. The buyer owns the remaining 18 days, a share of $1,200, and because the seller is already holding the cash that $1,200 appears on the settlement statement as a debit to the seller and a credit to the buyer.
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Related Topics & Key Terms
Key Terms:
Related Concepts
IRV stands for Income, Rate, and Value. It represents the relationship between Net Operating Income (I), Capitalization Rate (R), and Property Value (V).
Loan qualification math involves calculating the debt-to-income ratios that lenders use to determine whether a borrower qualifies for a mortgage. The two primary ratios are the front-end (housing expense) ratio and the back-end (total debt) ratio.
Monthly interest is the portion of the total annual interest that is paid or accrued each month.
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