Definition
If the property is in an HOA, monthly dues are split at closing—the seller pays through the day before closing, you pay from then on. It's calculated daily to be fair to both parties.
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If the property is in a homeowners association, the monthly or annual HOA fees must be prorated at closing. The seller is typically responsible for fees through the proration date, and the buyer assumes responsibility from that point forward. The settlement statement will reflect a credit to the buyer if the seller paid fees beyond the proration date, or a debit if the buyer is paying the seller's portion.
Pro Tip
Obtain a current HOA fee statement and budget for these ongoing fees in your monthly housing costs. Some associations have special assessments.
Example
Monthly HOA fees are $300. The property closes April 15. The seller paid $300 for April, but only owes through April 14 (14 days). Proration: ($300 ÷ 30 days) × 14 = $140. The buyer credits the seller $140 at closing.