The seller prepaid an annual hazard-insurance premium of $2,160. Using a 360-day year and 30-day months, closing occurs on 4/22, and the seller owns the day of closing. What amount should the buyer credit the seller for the unused insurance?
Correct Answer
A) $1,488
Per diem insurance = $2,160 ÷ 360 = $6.00. Seller used 112 days, so seller's used share = $6.00 × 112 = $672. The unused portion credited to seller is $2,160 − $672 = $1,488.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
An abstract of title is a condensed history of all recorded documents and proceedings that affect the title to a specific parcel of real property. It is a summary, not a guarantee, of title condition.
Actual notice means a person has direct, personal knowledge of a fact or interest in real property. This can come from being told, seeing something firsthand, or any form of direct awareness.
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