Escrow & Title
In Minnesota, prorations at closing for prepaid items (such as homeowners insurance paid in advance by the seller) result in:
AA debit to the seller and credit to the buyer
BA credit to the seller and debit to the buyer for the unused prepaid period✓ Correct
CNo adjustment, as prepaid items are the seller's responsibility
DA refund from the insurance company directly to the buyer
Explanation
When a seller has prepaid insurance (or other items) that extend beyond the closing date, the buyer owes the seller for the unused period. This is a credit to the seller and debit to the buyer on the closing statement. Buyers typically obtain their own homeowners insurance, so prepaid insurance proration for policies that don't transfer is less common.
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