Under the TREC contract, what does the term 'proration' mean in the context of closing?
Correct Answer
B) The proportional division of expenses between buyer and seller based on the closing date
Proration is the proportional division of ongoing property expenses (such as taxes, HOA fees, and insurance) between the buyer and seller based on their respective periods of ownership during the year of closing.
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Related Topics & Key Terms
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Related Concepts
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
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