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What Is a Proration?
A proration allocates an expense or credit between buyer and seller based on their respective periods of ownership or contractual responsibility.
Why Sellers Get Confused
Seller says:
"I already paid my taxes."
That may create a credit or adjustment depending on the applicable period.
Or:
"My lender escrows taxes every month."
That doesn't necessarily mean the county has already received every future tax payment.
New Construction Warning
Be particularly careful comparing historical property-tax information on newly built homes.
A prior assessment may reflect vacant land or an incomplete property rather than the eventual completed-home tax situation.
Ask for the Math
If the figure looks wrong, ask escrow:
- What period is being prorated?
- What tax figure was used?
- Who has already paid?
- What closing date is assumed?
You should be able to understand the logic before signing.
How Lisa Helps
Lisa can explain the contract side of prorations while escrow explains its settlement calculation. If the number materially changes the seller's expected proceeds, Lisa can update the seller net.
