A Texas property closes on February 28 of a leap year. The annual property taxes are $8,400. The seller has not paid the current year's taxes. Using a 366-day year (leap year) with the seller responsible through the day of closing, what is the seller's prorated share of property taxes?
Correct Answer
A) $1,354.10
January 1 through February 28 in a leap year = 59 days (31+28). Daily rate = $8,400/366 = $22.9508/day. Seller's share = $22.9508 × 59 = $1,354.10.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
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