Annual real estate taxes are $3,600. The seller has prepaid the full year. Using a 360-day year, closing occurs on October 1, and the seller does NOT own the day of closing. What amount should the buyer credit the seller for the unused prepaid taxes?
Correct Answer
A) $900
Per diem tax = $3,600 / 360 = $10.00. Seller used Jan through Sep 30 = 9 x 30 = 270 days. Buyer owns from Oct 1 = 90 days. Buyer credits seller for 90 unused days: $10 x 90 = $900.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Constructive notice is the legal presumption that a person has knowledge of information that is available through public records or visible inspection of the property, regardless of whether they actually knew about it.
A deed is a written legal document that conveys (transfers) ownership of real property from one party to another. It must be delivered to and accepted by the grantee to be effective.
For a deed to be valid, it must contain several essential elements including a competent grantor, identifiable grantee, consideration, legal description, granting clause, signature of the grantor, and delivery and acceptance.
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