What is 'proration' in a real estate closing?
Why The division of ongoing expenses (like taxes or HOA dues) between buyer and seller based on the closing date Is Correct
Answer B: The division of ongoing expenses (like taxes or HOA dues) 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
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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 California Questions
- Annual property taxes of $5,400 are to be prorated at a July 1 closing. The tax year runs January 1 to December 31 and taxes are paid in arrears. How much does the seller owe the buyer as a proration credit?Real Estate Math
- Property taxes of $3,600 are paid for the full year. The property sells with a closing date of April 1 (day 91 of 365). How much does the buyer owe the seller in prorated taxes? (Use 365-day year)Real Estate Math
- Annual property taxes are $6,000. The property sells on April 1 (taxes paid in arrears). How much does the seller owe the buyer at closing?Real Estate Math
- Escrow closes on March 15. Annual property taxes of $6,000 were prepaid by the seller for the full calendar year. Using a 360-day year (30-day months), how much property tax credit does the buyer owe the seller at closing?Real Estate Math
- After a loan is paid off in California, the lender should provide a:Escrow & Title
- RESPA (Real Estate Settlement Procedures Act) requires lenders to provide buyers with a Closing Disclosure at least how many business days before closing?Escrow & Title
- Which of the following is an example of a specific lien?Escrow & Title
- In California, the documentary transfer tax is calculated based on: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.
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.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →