All of the following are customarily prorated between buyer and seller at closing EXCEPT
Correct Answer
D) the brokerage commission earned on the sale
Proration divides an item that accrues over time between the party who owned the property before closing and the party who owns it afterward. Property taxes, interest on an assumed loan, and collected rent all accrue day by day, so each is apportioned as of the closing date. A brokerage commission is a lump sum earned on the sale itself, charged in full to the party who owes it and never split across the calendar.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Title insurance is a policy that protects the insured party against financial loss from defects in title that were not discovered during the title search. Unlike other insurance, it covers past events rather than future risks.
A title search is an examination of public records to determine the history of ownership, liens, encumbrances, and other interests affecting a property. It verifies that the seller has the legal right to transfer the property.
A transfer tax is a tax imposed by state, county, or local government on the transfer of real property from one owner to another. It is typically based on the sale price or a flat rate per dollar of consideration.
More Transfer Of Property Questions
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