Escrow & Title
In Arizona, 'prorations' at closing are adjustments made to:
ACompensate agents for their commission services
BFairly allocate ongoing expenses (like property taxes, HOA fees, and prepaid rents) between buyer and seller based on each party's period of ownership during the billing cycle✓ Correct
CAccount for the difference between the list price and the sales price
DAdjust for the difference between appraised value and purchase price
Explanation
Prorations divide ongoing costs between buyer and seller as of the closing date. For example, if property taxes are paid annually but the seller owns the property for only part of the year, the seller is debited (or buyer credited) for the seller's share. Arizona typically uses a 365-day year for proration calculations.
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