Proration in a real estate closing refers to:
Why Allocating ongoing expenses (taxes, HOA dues, insurance) between buyer and seller based on the closing date Is Correct
Answer B: Allocating ongoing expenses (taxes, HOA dues, insurance) between buyer and seller based on the closing date
Exam Tip: Escrow & Title
Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.
Key Escrow & Title Terms in This Question
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ProrationThe division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
People Also Study
Related Arizona Questions
- An Arizona property has an annual property tax bill of $3,600. The tax is paid in two installments. The seller is closing on October 1. Using a 365-day proration, how many days of taxes has the seller already 'used' (January 1 through September 30)?Real Estate Math
- When an Arizona seller credits the buyer for unpaid property taxes at closing (a proration), the credit appears on the settlement statement as a:Escrow & Title
- In Arizona real estate, 'proration' at closing for property taxes paid in advance means the:Escrow & Title
- An Arizona investor purchases a rental property for $320,000. Annual gross rents are $36,000, and annual expenses (taxes, insurance, maintenance, management) total $14,400. What is the property's cap rate?Real Estate Math
- In Arizona, property taxes are prorated based on the fiscal year running from:Escrow & Title
- In Arizona, 'gap insurance' in a title insurance context covers the period between:Escrow & Title
Key Terms to Know
The division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Closing CostsFees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
Math Concepts
Study This Topic
Practice More Arizona Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Arizona Quiz →