Settlement
Proration
Dividing a shared expense or income between buyer and seller at closing
Property taxes, prepaid insurance, HOA dues and collected rent are apportioned so each party bears their own period of ownership. The exam will always tell you whether to use a 360-day or a 365-day year and who owns the day of closing.
How the exam asks about it
Work out who has had the use of the money and who ought to end up with it, then assign the debit and credit. Taxes paid in arrears run one way, rent collected in advance runs the other.
Related terms
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