Definition
These are the cost adjustments made at closing to split property expenses between you and the seller fairly based on who owns it during each period. The settlement statement details all prorations.
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Prorations ensure fair division of recurring expenses. If property taxes are $2,400 annually and closing occurs on July 1, the seller pays half and the buyer pays half.
Pro Tip
Review prorations carefully to ensure accuracy.
Example
Annual property taxes were $3,600. Closing occurred on September 15. The tax bill hadn't been paid yet, so the seller's share for those 8.5 months, $2,550, was credited to the buyer at closing.